Is it time to look into Prime District Properties?
WARNING: Buyers who are tempted to buy or speculate in prime properties on the illusion it’s discounted today should read this first.
Some “experts” are suggesting now might be a good time to look into buying properties in Prime Districts. They are either living in the past or are simply ignoramus of the history of the location.
Have any of these "experts" grew up or ever owned properties in these expensive areas during the early 1980s to 1990s Singapore?
Have they witnessed the locality’s past developments and infrastructure?
These "experts' have not.
Here's a pop quizz to test your level of expertise and knowledge of Prime District:
1. What multiple factors heralded the golden age of prime properties from the 80s to 90s and started its decline after?
2. Ever heard of Miramar Mansion and Newton Heights condos along Newton Road?
3. How many en-bloc sales happened on the site of Miramar Mansion and Newtion Heights since 1985?
4. What are the recent developments sitting on those sites today?
5. What is the current development in between Miramar Mansion and Newton Heights?
6. Price and size of a 4-bedroom condo in 1985?
7. What shopping malls were in the vicinity from 1980?
8. What was public infrastructure like during the 80s in Newton area?
9. What was Singapore’s economy like during the 80s?
10. Where was the closest National Library if you lived in Newton during the 1980s?
You may be stumped for answers.
I rest my case when buyers lack sufficient knowledge of Prime Districts.
I know the answers to the questions since I have spent most of my growing up years along Newton Road from the early1980s to the mid-1990s.
And if you have intentions to buy/invest in Newton locality or prime districts, I strongly suggest you find those answers first.
Some “experts” are simply speculators who give real estate a bad name.
They speculated like gamblers during the hot times of the 80s to 90s before getting hit hard by the 1997 Asian Financial Crisis and yet failed to learn any hard lessons from it today.
Know the lands well before starting on any battle campaigns
As a school boy, I lived and schooled in District 10 & 11 (specifically Newton Road) for more than 12 years since 1981.
The condominiums I lived in are Miramar Mansion and Newton Heights along Newton Road.
Both properties are separated by one other development in the middle.
The former is a 1,970-sqft 4-bedroom apartment, while the latter is a 3,500-sqft 3-level penthouse apartment which served as our family weekend home.
Since 1981, I’ve witnessed Newton area’s past developments and transformations that had cause & effects on its property prices since the 1980s versus today’s maturity of the locality.
Here’s what you need to know about prime properties before you even consider them.
Definition of Prime Properties:
Districts 9, 10 and 11, i.e., Orchard, Cairnhill and River Valley; Bukit Timah, Holland Road and Tanglin; and Novena and Thomson.
1980s District 11: Brief History of Locality
Large air-con shopping malls meant for the privilege few
In the 1980s, large air-conditioned shopping malls were largely absent from residential public housing developments.
The government’s key priorities then were to build sufficient public housing and provide quality jobs – not built fancy shopping malls like those we have today.
Therefore, shopping malls were considered very attractive location magnets especially for wealthy property buyers in those days – and mostly exclusive for private residential areas.
Goldhill Square and Goldhill Shopping Centre (Now rebranded as United Square) were the only large shopping malls in the entire locality of Newton/Dunern/Novena area and therefore extremely popular with many wealthy shoppers.
The next expensive shopping destination was just next door – Orchard road. There were no other large malls to be found nearby.
Novena Urban Planning Area – a future development
In 1985, a large empty piece of grassland sits directly opposite Goldhill Square – The future Novena Urban Planning Area still 15 years away from its developmental infancy.
There are only two popular attractions from the early 80s that are still in existence today – Newton Food Centre and Cairnhill Community Club.
From 1985 to 1995, the food centre was the only largest and most convenient food centre to find any hawker food for miles!
In 1985, buses (non-aircon), cars and taxis were the only form of transport around the island. Mass Rapid Transit was unheard of and the North-South line was only in its mid-late stage development.
The MRT system was officially launched on 12 March 1988.
In 1988, Newton and Novena MRT Station provided a tremendous boost in prices for properties strategically located within its vicinity.
There was only East-West lIne and North-South Line back then!
My wife who onced lived in the west had to take a 20 min walk through a dirt patch from her Kampong in the early 1980s to get to school! No MRT and lack of efficient transport which was not uncommon before the full MRT andtransport system we have today.
The Golden Age – Residential En-Bloc Fevers of the 80s & 90s
There was great property price escalation from 1986 to 1995 in Prime District.
Profitable en-bloc residential sales were very common in prime districts in those days. Every private property owners would speak and dream of it.
For instance, Newton Euro Asia is the latest development on the old site of Miramar Mansion. It was there for 14 years since 2002 – being the 3rd or 4th development since 1983.
This prime site was very popular with developers with 2 successful en-bloc-sales done before the 1997 Asian Financial Crisis hit.
During the glorious 80s to mid-90s, luxury developers were so bullish on property prices that en-bloc sales were done on average every 8 years in the locality!
After the Asian Financial Crisis, the number of successful en-bloc sales plunged and were pitiful compared to the heydays.
Since 2009, developers have shifted their focus to mass markets (Outside Central Region) for greater profits to make.
Singapore’s Economy from 1980 – 1995
In the 1980s, Singapore became the world’s leading producer of hard disk drives – an early form of memory storage used in computers at the time.
The first two decades of Singapore’s economic history could be described as the “take-off” phase.
The economy grew by an average of about 10% each year during this period, and Singapore emerged as a newly-industrialised economy at the forefront of developing countries.
In 1985, the Singapore economy went into recession – the only time in our history the domestic economy contracted while the global economy was still growing.
The recession was a significant milestone in Singapore’s development history. It led to a fundamental review of the policies and strategies that prevailed at the time.
From 1985, the transition from a labour intensive model to higher valued services brought in a great number of well-paid foreign expertise and wealthy businessmen into the country.
In fact, the key story post-1985 recession up till the Asian Financial Crisis of 1997, was the rise of Singapore as one of Four Asian Tiger economies.
1980s Property Prices versus Today
Miramar Mansion along Newton Road , my home then (1,970-sqft), was bought in the region of $500,000 or $253 psf between 1983 -1985. (Note that 1985 was a recession year)
In 1985, a new 4-room HDB flat (1,130-sqft) in a new non-mature town cost on average $50,000 or $44 per square foot.
In Feb 1995 just before property prices plunged to the abyss, a 1,970-sqft 4-Bedroom apartment in Miramar Mansion was sold (likely en-bloc sale) at $1.29million or $655 per square foot.
The annualised gains for the owner was 10% p.a appreciation rate or more.
However, between the years October 2004 to December 2007, 6 out 10 sales transactions were unprofitable for Newton Euro-Asia. (Future descendant of demolished Miramar Mansion on the same site)
In other words, you have a 60% chance of losing money buying into this property in this period.
Another property down the road – Newton One (Future descendant of demolished Newton Heights on the same site)
Before you think $1,650 per square foot was still a good buy in October 2009, consider this. By September 2015, the latest transacted for a similar size unit was $1,833 per square foot.
On paper, you may have booked a profit – 1.7% annual appreciation rate. But if you take into consideration holding costs like bank interests, property expenses and annual inflation rate of 2.7% over the same period, you would have made a real loss selling today!
A similar 1,195-sqft unit in Trilight (Between Newton One and Newton Euro-Asia) bought in 2009 for $1,679 per square foot was sold for $2,218 per square foot in 2015 – making an annualised return of a measly 4.75% p.a. excluding heavy property expenses, negative cash flow from low rentals and costly bank interests.
As a comparison, an old resale apartment in Geylang was transacted in 2009 for $555 per square foot.
A similar unit within the same development in Geylang was sold for $879 per square foot in 2015 – making an annualised profit of 8% per annum – And these returns are not inclusive of ongoing rental income and free cash flow over the same period!
With changing economic landscape, the golden age of prime properties is over.
The days of glory speculating in luxury properties are spent.
The golden years of making good money in Prime District properties are over.
Today, you'll easily find a shopping mall with an MRT station located within 5 mins in the OCR region.
Shoppers have wide choices within 10 mins of their homes without having to travel to Orchard road for their shopping needs. And we have not yet factor in ONLINE SHOPPING today.
Commercial entities and employment have shifted from the city to the outskirts of Singapore.
Many large regional centres and new real estate develoments are spouting up all over the island in the coming 10 years and beyond.
Transport and food convenience can be found all over the island.
Making good money in Prime Distict properties are in the bygone years.
The 1997 Asian Financial Crisis has seen the demise of foolish speculators and with them the dream of riches and ego.
They once had luxury cars, expensive homes, jewels for the wives; everything a materialistic man of their status should have.
Now they just had memories.
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