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Market Watcher Series Issue 2

Investment Returns of Suburban Integrated Developments
Integrated developments are popular as buyers desire properties that offer more than one value proposition. Integrated developments usually encompass a retail mall, office tower and/or hotel component. These properties are also linked directly to an MRT station or bus interchange, providing seamless connectivity to the rest of the island. Homeowners enjoy an all-encompassing live, work and play lifestyle, while investors reap a steady stream of rental income. 

Buyers are willing to pay a premium for suburban integrated developments due to their rarity and exclusivity. According to data from the Urban Redevelopment Authority (URA), six suburban integrated developments were launched at higher prices than other new leasehold condos within the same district. For instance, the launch price of Pasir Ris 8 (S$1,617 psf) was 14.5 per cent higher than the average price of new leasehold condos (S$1,412 psf) in District 18 in 2021. Similarly, the launch price of North Park Residences (S$1,365 psf) was 27 per cent higher than the average price of other new leasehold condos in District 27 (S$1,075 psf) in 2015. 


A limited supply of suburban integrated developments has helped prop up the prices and rents of these properties. There are only 19 integrated developments launched in Singapore, eight of which are located in the suburbs or the Outside of Central Region (OCR). In the OCR, six integrated developments were launched from 2011 to 2021 and constitute just 2.7 per cent of the total 226 private home launches (excluding ECs) during that period. 

11 out of 13 completed integrated developments commanded higher rents than other resale condos in the vicinity. For instance, the median rent of 2-bedroom units at South Beach Residences (S$8,500 per month) was 123.7 per cent higher than the median rents of other condos in district 7 (S$3,800 per month) during the first six months of this year. Similarly, the median rent of 3-bedroom units at the same project (S$18,500 per month) was 266.3 per cent higher the median rents of other condos in district 7 (S$5,050 per month). For Watertown in the suburbs, the median rent of 2-bedroom units was 10.7 per cent higher over the same period. Due to the high rents of integrated developments, the average rental yield of completed integrated developments is around 3.8 per cent; with the highest yield hitting 7.9 per cent. 




Outlook 

An upcoming integrated development to watch is Lentor Modern. The project is expected to see healthy demand as this is the first integrated development in Lentor and a major condo launch in the area after many years. There is pent-up demand as many HDB upgraders living in the vicinity may be keen to upgrade to a private condominium. 

Moving forward, the supply of integrated developments is expected to remain low. Jalan Anak Bukit, which comprises 700 residential units, 150 serviced apartments and 2,000 sqm of community space on a 32,185 sqm site may be launched for sale next year. The land tender was awarded on 30 August 2021 to Far East Organization and Sino Group at a bid price of S$1.03 billion or S$989 psf ppr. 

Another land parcel at Woodlands Avenue 2 has yet to be sold to developers and is currently placed on the reserve list under the Government Land Sales Programme. This integrated development may have 440 residential units and 78,000 sqm of commercial space. 













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