How have non-landed properties in Districts 1, 6 and 9 performed over the years?

In recent quarters, much of the focus of attention by the market has been on the performance of non-landed properties in the mid-tier and mass market segments. The coverage was probably driven by primary launches in these markets and with few launches in the prime districts, market research turned tepid.

This write-up would zoom in on non-landed properties in three districts in the prime areas, namely Districts 1, 6 and 9. District 1 covers Boat Quay, Chinatown, Havelock Road, Marina Square, Raffles Place and Suntec City, with District 6 covering City Hall, High Street, North Bridge Road and Clarke Quay while District 9 embraces Cairnhill, Killiney, Leonie Hill, Orchard Road, Oxley and River Valley. We will further sub-divide the sample into freehold and 999-year leasehold properties with 99-year leaseholds. In the charts, when we mention Freehold, it refers to Freehold and 999-year non-landed properties while the legend Leasehold is for 99-year leasehold non-landed properties.

District 1 prices have generally been flat for the period January 2014 to July 2024. During this period, 99-year leasehold prices trended sideways while Freehold prices declined marginally (dotted line). This behaviour could probably be explained by the fact that there were few primary launches in the district during the period of analysis. However, the sale of more units in Skywaters Residences in the coming quarters and the possible spillover effect from the sale of Newport Residences (in District 2) may create ripple effects on values in the district. The launch of Marina View Residences, a project at Marina Gardens Lane and Union Square Residences is also likely to move the average prices for the district up. (Please refer to Graph 1)

Graph 1: District 1 – Freehold/999-year leasehold and 99-year leasehold Prices

Source: Real Estate Analytics, Savills Research & Consultancy

For District 9, the average price of freehold properties transacted has seen better rate of growth than 99-year leaseholds. The faster rate of price increase for the former could be due to the district having more freehold property launches than those in District 1. In recent years, the launch of freehold projects in the Leonie Hill (New Futura) and Cairnhill area had set record prices, pivoting the price trend up. For leasehold prices, they were on track to set record prices when there were new launches such as Martin Modern and Kopar at Newton but after 2022, the momentum was lost due to a dearth of new launches.

Graph 2: District 9 – Freehold/999-year leasehold and 99-year leasehold Prices

Source: Real Estate Analytics, Savills Research & Consultancy

From Realis data, there are no freehold non-landed properties in the district 6. Leasehold properties in the district have trended up since January 2014. At the start of this period of analysis, the launch of Eden Residences Capitol created pricing volatilities as this is a super luxury boutique development, and, because of its high price, saw irregular sales. In the past few years, the sale of Canninghill Piers, a 696-unit project in the Clarke Quay area lifted the price level for the district.

Google Map lists a 900m walking distance between Canninghill Piers (District 6) to Union Square Residences (District 1). Given the closeness of these two projects, it is likely that the latter’s pricing would take a cue from the former. In 2023, the average price drawn from Realis of Canninghill Piers was S$3,174 psf (all new sale).

Graph 3: District 6 – 99-year leasehold Prices

Source: Real Estate Analytics, Savills Research & Consultancy

Rents for leasehold non-landed properties in district 1 are significantly higher than freehold ones. The reason, we believe, is that the only freehold residential property that could still command a reasonably high rent for single letting for the period January 2014 to July 2014 was Emerald Garden. The remaining properties in the district that command premium rents were leaseholds in the Marina Bay area. As Emerald Green was completed in the 90s, due to its age, there would be a discount to the newer apartments in the Marina Bay area. Over time, as new projects get completed in the district, we should see a lift in leasehold property rents there.

Graph 4: District 1 – Freehold/999-year leasehold and 99-year leasehold Gross Rents

Source: Real Estate Analytics, Savills Research & Consultancy

For district 9, leasehold rents are also higher than freehold and one possible reason is that recently, there have been more new non-landed leaseholds (in terms of units per development) launches than freehold. Also, the unit sizes for the newer leaseholds are often smaller than the older freeholds, resulting in higher rents when measured on a S$psf basis.

Graph 5: District 9 – Freehold/999-year leasehold and 99-year leasehold Gross Rents

Source: Real Estate Analytics, Savills Research & Consultancy

For district 6, rents for leaseholds have not only been high, but have been performing well too. The reason is that this district is host to Eden Residences Capitol, a super luxury project that commands top of the range rents.

Graph 6: District 6 – 99-year leasehold Gross Rents

Source: Real Estate Analytics, Savills Research & Consultancy

Yield (gross) wise, freehold yields for districts 1 and 9 have been closely tracking each other since 2014. Presently, they are in the high 2% to 3%. Although yields have softened since October 2022, they are nevertheless on the higher end of the 2014 to 2024 range. (Yields for freeholds are often lower than leaseholds due to fact that the former command higher S$psf prices.)

Districts 1 and 9 – Gross Yields for Freehold/999 year leasehold

Source: Real Estate Analytics, Savills Research & Consultancy

Leasehold yields for districts 1, 6 and 9 hover around the mid-3s to the low 4% range. As mentioned previously, because freehold property often commands a higher S$psf price, their yields are lower. For July 2024, the yields for districts 1 and 9 were both about 4.3%. The reason for this is that in July 2024, transactions have averaged about S$2,000 psf and S$2,200 psf. At this price range the yield is generally higher. This is a healthy rate because islandwide yields for leaseholds are generally below 4%.

Districts 1, 6, 9 – Gross Yields for 99 year leasehold

Source: Real Estate Analytics, Savills Research & Consultancy

Conclusion

The prices for the various districts are sensitive to the presence or absence of new launches. With a new launch, prices in the surrounding would often be given a boost. This would be likely the case for District 1 where the recent launch of Skywaters Residences (215 units) and the upcoming sales of projects like Marina View Residences (683 units), a project at Marina Gardens Lane (775 units) and Union Square Residences (366 units) is expected to generate value enhancement for the rest of the district.

Rent wise, district 1 is averaging S$7.20 psf in July 2024 with district 9 coming in at S$7.70 psf and district 6 at S$9.60 psf (May 2024). For district 1 and 9, the average gross yields for leasehold in July 2024 were 4.3%. This is above general yields on the island and offers a comfortable spread to current mortgage rates.

It appears that much is about to go on in district 1 and the hyping of activity may result in a new value and rental landscape in the coming quarters.