Resale waterfront and city homes gaining in popularity

Homebuyers' demand for resale units remains strong amidst fewer new project launches in 2008-09.

Waterfront and city living continues to be popular choice for homebuyers. Secondary sales of homes in the prime inner city and Sentosa districts reached $750.8 million in 2009. This is lower than the 2007 peak of $2,082 million but higher than the average secondary sales levels between 2005 and 2008 of $737.8 million. In comparison with new sales in 2009, resale transactions in the prime inner city and Sentosa districts were 15 percent higher than new sales in these areas where $652.4 million of new homes were sold, according to a CBRE Research report.

CBRE Research analysed caveats in the prime inner city districts 1 and 2 which cover the Marina Bay, Shenton Way and Tanjong Pagar belt as well as district 4 of Sentosa including Sentosa Cove, Keppel Bay and Harbourfront areas which have seen several waterfront projects completed since 2004.

The primary market is supply-led and is dependent on the number of new projects launched while the resale market shows a wider market demand. The healthy resale volume and transaction values reflect ongoing, sustained demand for homes in these new prime areas.

Secondary sales in these new prime areas are also contributing to a rising share of the total resale transaction values. In 2006, the resale transaction values in Districts 1, 2 and 4 accounted for only 2 percent of the total resale market. In 2009, this rose to 6 percent.

Joseph Tan, Executive Director, Residential said, "Despite them being 99-year leasehold, living in the inner city and Sentosa continues to be attractive to home buyers. The convenience of working and living within the city is a major pull. The limited number of new launches in the inner city district is an added draw. No major residential projects will be launched in that area for some time after the recent Marina Bay Suites. The buzz created by the integrated resorts and emerging prime office hub will ensure sustained activity in the resale market. New residential projects in Sentosa Cove over the coming months will also further transform Sentosa to a lively residential enclave and this will continue to drive resale activity there. Apartments in the inner city and Sentosa will be sought after by investors and owner-occupiers alike due to their potential for high appreciation in values and attractive rental yields."

The number of new, non-landed homes sold in the prime inner city and Sentosa precincts was 286 last year. This compares with 482 units sold in the resale market. The most popular development was Caribbean @ Keppel Bay which sold 200 units, followed by The Sail @ Marina Bay at 128 units. Despite the relatively fewer new projects launches in 2008-09, homebuyers' demand for resale units in these prestigious addresses remains quite robust. In the first five months of 2010, resale demand reached 246 units or 51 percent of last year's volume.

An ongoing, sustained demand for residential units in these areas could prompt developers to convert or redevelop older office blocks to high-end residential uses as in the case of Starhub Centre and 76 Shenton Way. Mr Tan added, "We estimate that about 1.3 million sq ft of offices will be converted to mainly residential use up to 2013."