THE WEEK OF DECEMBER 28, 2015 709

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Rewind 2015 Off the rail Iskandar Who sinks or swims in Impact of MRT on What’s hot and what’s a tumultuous market PG3 residential rents PG4 not PG6

Dear Santa Christmas wishes for a healthier property market

| BY LIN ZHIQIN | Dear government, please review interest rates have not risen to levels that will in- check for total debt servicing ratio compliance. cooling measures fluence buyers’ decisions. According to the De- Alternatively, it could be made mandatory for Tis the season to be jolly, but the property “I wish the government would be more in tune partment of Statistics’ household sector balance financial service providers to provide monthly market is in the doldrums. For our Christmas to the impact that some of the measures have sheet data, the liabilities-to-assets ratio has been statements for bank financing purposes within special, The Edge Property polled stakehold- on the livelihood of those in the real estate on an uptrend in recent years, rising from 15.1% three days of a client’s request. TDSR could be ers for their wishes that will, in their opinion, and related service industries, and recalibrate in 1Q2011 to 16.7% in 3Q2015”. This respondent relaxed for people with high income or busi- help improve the health of the property mar- some of the measures to improve transaction also wished that the government would reduce ness owners to allow them greater flexibility ket. The open-ended poll invited participants volumes. The service industry has been hit the upcoming government land sales supply to in leveraging and access to funds to create em- to submit up to three wishes that are action- hard because of the measures and transaction avoid a waste of resources on building units that ployment,” he added. able and can be adopted as genuine feedback volume is as important to the market as the would remain empty, as occupancy rates are ex- Ryan Khoo, co-founder and director of Alpha by the following groups: the government, de- price component,” said Alan Cheong, head of pected to fall to a decade low. Marketing, also wished for the government to velopers, analysts, property agents and con- research and consultancy at Savills Singapore. Paul Ho, chief mortgage consultant at iCom- work with the Malaysian government to explore sumers. The participants could choose to have Amid the clamour, an industry stakeholder, pareLoan, wished for the government “to coor- out-of-the-box solutions that would address Sin- ‘their responses aggregated and kept anonymous who opted to remain anonymous, wished for the dinate a bureau where information such as car gapore’s overly high property prices with Malay- or grant permission to be quoted. The wishes cooling measures to remain and continue to rein loan and credit card statements can be shared sia’s abundant land and benefit the citizens of have been collated, with the key themes pre- in home prices, stating that “household debts in a better manner”. “Buyers currently need both countries. He noted that “affordable hous- sented below. have not come down to meaningful levels and to undergo onerous paperwork submission to CONTINUES NEXT PAGE EP2 • THEEDGE SINGAPORE | DECEMBER 28, 2015

THEEDGE PROPERTY COVER STORY

EDITORIAL EDITOR | Ben Paul ‘Analysts should be more upfront about their forecast’ THE EDGE PROPERTY HEAD OF RESEARCH | Feily Sofi an ANALYSTS | Esther Hoon, Lin Zhiqin, Tan Chee Yuen FROM PREVIOUS PAGE ing is a large untapped segment in Malaysia and COPY-EDITING DESK | Elaine Lim, Evelyn Tung, Chew Ru Ju, Iskandar is close enough for Singapore developers Tan Gim Ean, Choy Wai Fong to operate in. This would be beneficial to and PHOTO EDITOR | Samuel Isaac Chua Singapore in the long term, as it encourages more PHOTOJOURNALIST | Bryan Tay EDITORIAL COORDINATOR | of the Malaysian workforce to live [in Iskandar] and Rahayu Mohamad commute to Singapore for work”. DESIGN DESK | Tan Siew Ching, Adrian Seow, investment director of Savills Sin- EDGE SINGAPORE CHUA/THE SAMUEL ISAAC Christine Ong, Monica Lim, Nik Edra, Mohd Yusry, Henry Lee gapore, wished that the government would “con- sider more favourably change-of-use proposals on ADVERTISING + MARKETING select sites within strategic localities, such as the HEAD | Edward Stanislaus civic district and Tanjong Pagar, away from office GROUP SALES MANAGER | Cecilia Kay use. This will make them more diverse and vi- SENIOR MANAGER | Windy Tan MANAGERS | Mabel Wong, brant as places for work-live-play.” Danna Pusta, Elaine Tan Dear developers, please adjust prices THE EDGE PROPERTY GROUP SALES MANAGER | Cowie Tan Several respondents wished for developers to ad- SENIOR MANAGERS | Diana Lim, just their prices to stimulate demand and clear Cheryann Yeo the unsold inventory. According to an academic, ACCOUNT MANAGER | Ken Tan who wished to remain anonymous, this would EVENTS MARKETING also “prevent an upward price spiral and lower Seow of Savills Singapore wished the government would ‘consider more favourably change-of-use proposals on SENIOR MANAGER | Sivam Kumar EXECUTIVE | Gerald Aw homeownership costs that have grown too high, select sites within strategic localities, away from office use’ too fast”. The same respondent also wished that DIGITAL MARKETING ASSISTANT | Tim Jacobs developers would “build developments that are ter the 30-year mortgage? How much goes into be simple and easy to build a better reputation”. COORDINATOR | Nor Aisah Bte Asmain more liveable, sustainable and environmentally that and interest payment, and what will be left Goh of Ascendant Assets and CoAssets hoped CIRCULATION friendly. [This is] to show that we can have de- for long-term investment, retirement, children’s that agents would “be able to give more holis- MARKETING velopers that look at the greater good of society education and other essential spending”? The re- tic investment advice, so that consumers would MANAGER | Coleman Lim OPERATIONS while making sufficient profit”. spondent also wished for analysts to “highlight be able to make more informed property invest- MANAGER | The wish was echoed by an analyst who hoped the oversupply situation in all segments of the ment decisions”. Alpha Marketing’s Khoo wished Cesar Banzuela De Jesus, Jr EXECUTIVES | Keith Lee, that developers would “start building homes that market, as the government has not come to terms that agents would “be more like analysts, rath- Malliga Muthusamy, Sandrine Gerber are meant for staying and not just for investment, with the supply situation and developers are still er than just doing sales, as buyers will become which would help minimise a future mismatch taking risks by bidding up land prices and selling more discerning and real estate agency is one in- CORPORATE CHIEF EXECUTIVE OFFICER | Ben Paul of expectations between investors who are sell- homes at unsustainable price levels”. dustry where a significant portion can be auto- MANAGING DIRECTOR | Edward Stanislaus ing and buyers”. Separately, two respondents from academ- mated or outsourced. This would also grow the CORPORATE AFFAIRS DIRECTOR | With regard to the retail segment, the analyst ia expressed a wish for analysts to make reports skills of agents to help them value-add to clients”. Ng Say Guan hoped that the developers would spare a thought and proprietary data and information more read- Savills’ Seow submitted a wish for “property PUBLISHER for the retailers who are struggling with high rent- ily available to the masses, so that everyone can agents to be recognised for outstanding profes- The Edge Publishing Pte Ltd 150 Cecil Street #08-01 al costs, as “we do not need another boring mall have access to the same information and the mar- sionalism, so that the market would know who Singapore 069543 with the same old tenant mix that can cope with ket will become more efficient. One academic to look for for their real estate needs”. Tel: (65) 6232 8622 the high costs simply because they are big. We wished for more analyst coverage on the impact Fax: (65) 6232 8620 need to reinvent our retail malls to stay ahead of of foreign exchange on the property market, to Dear consumers, please be wiser PRINTER the competition among regional players or we are grow awareness of the global dynamics on prop- “I wish that consumers would be less suscepti- KHL Printing Co Pte Ltd going to fall behind, and this would eventually erty as an investment class. 57 Loyang Drive ble to marketing gimmicks and focus on basic in- Singapore 508968 hurt our economy”. Getty Goh, CEO of Ascendant Assets and vestment principles, and also realise that there are Tel: (65) 6543 2222 The analyst’s third wish for the developers CoAssets, hoped that analysts would “research no guaranteed investments. This will reduce the Fax: (65) 6545 3333 was for them to “take more calculated risks over- on alternate forms of real estate investments, in- chances of them getting into failed investments. seas because Singapore should never be a safe cluding real estate syndication and crowdfunding, They should also subscribe to the principle of ‘in- We welcome your comments haven where the government will always step in as more people are investing in such alternative vest a little, diversify a lot’ to help mitigate the and criticism: propertyeditor.sg@ bizedge.com to help businesses if they don’t thrive. We need instruments and there is a growing demand for risks of a total loss and enjoy more sustainable more home-grown companies to venture out and such research and analysis”. returns on investment,” said REMS Advisors’ Tan. Pseudonyms are allowed but please away from the comfort zone”. “I wish that the analysts would assist buy- His wishes were shared by an analyst respond- state your full name, address and contact number for us to verify. Tan Kok Keong, CEO of REMS Advisors, ex- ers with tools for them to find their own bargain ent, who wished that consumers would “read pressed a wish for developers to “explore alterna- deals, so that eventually, buyers would be able to credible reports and be informed about the mar- tive means of fundraising to manage the market make their own decisions more independently of ket before making significant investments. Al- downturn”, which would also open up invest- the market consensus and developers’ or agents’ though property investment seems to have paid ment options in alternative instruments and help marketing,” said Alpha Marketing’s Khoo. off for the early entrants, market dynamics can investors diversify their portfolios. change and consumers should not be compla- Savills’ Cheong indicated his wish that devel- Dear property agents, please continue to cent and put all their eggs in one basket, think- oopers would appoint marketing agencies not just upgrade and maintain professionalism ing that property prices always rise. They should bbased on agent headcount, as a large headcount “I wish that property agents would become better not become fixated on property investment and ddoes not necessarily translate into better sales equipped with market knowledge because peo- end up with more debts than they should have. CT ththan other strategies, such as diversifying with ple rely on them to get their homes,” said REMS Ultimately, high property prices will take a toll on FUN mmore agencies. He also hoped for developers to Advisors’ Tan. Billy Ong, senior associate district future generations and only benefit the rich and FA mmotivate agents in the current sluggish market by director of OrangeTee, also opined that agents landlords. For the sake of the future generations, The annual cconsidering more generous commissions. should “fully adopt and embrace technology to property should not be the only investment option increase productivity”. on most Singaporeans’ wish list, which seems to Christmas Dear analysts, please shed more light An industry stakeholder, who chose to remain be the case now”. Light-Up “I wish that analysts would provide novel research anonymous, wished that agents would “stop hop- A respondent from academia hoped that con- on Orchard Road that opens up further insights into the real estate ping to another agency just because it pays a lit- sumers would “look at other factors affecting the was initiated market. Current research is just based on analy- tle more of the licence or course fees, as they can liveability, sustainability, environment and safety in 1984 by sis, such as demand and supply, which has not really develop their careers by staying loyal to the of a development, instead of focusing purely on changed for decades,” said Cheong. firm that suits them best. The biggest might not prices, to encourage developers and the govern- the Singapore “Analysts should engage in more intellectual always be the best. Additionally, agents should ment to focus on these areas”. Tourism evaluation of the market to enrich the experience stay in the business if they are passionate about Savills’ Cheong wished that consumers would Board. Since of readers and investors. They should also be more real estate because high turnovers during down- “stop blindly talking about real estate prices coming 1988, the Light- upfront about their forecast for the property mar- turns do not help to grow professionalism. Some off without checking the situation on the ground. Up has become a ket, much like equity analysts do for stocks, so that agencies should consider having paid agents for Negative talk is infectious and sends a wrong mes- platform to raise investors are able to gather a consensus view to certain market segments to retain the best in the sage because people will return in strength and funds through guide their strategy,” said Tan of REMS Advisors. industry”. cause prices to escalate again, once they realise corporate A respondent, who opted to remain anonymous, Another respondent from academia emphasised that prices are not falling sharply”. donations. wished analysts would “shed more light on the the importance for agents to be knowledgeable “to “I wish that consumers would stay focused on affordability of our homes from the finance per- be able to provide sound advice and explain all monitoring the market for local and overseas op- spective. This would benefit the market because the pros and cons to their clients, instead of just portunities. Bad times can be a good time to buy. we often think that a $1 million private home is rushing in for transactions. Maybe agents can offer Consumers should not shut off just because the affordable, but what about our quality of life af- goodwill discounts when transactions turn out to market is weak,” added Khoo of Alpha Marketing. E THEEDGE SINGAPORE | DECEMBER 28, 2015 • EP3

THEEDGE PROPERTY YEAR IN REVIEW Who sinks or swims in a tumultuous residential market?

| BY FEILY SOFIAN |

he residential market in 2015 CHERN JIANG LEM will likely be remembered for its low transaction volume, soft rental market and rising mortgagee sales. However, T2015 had its bright moments and may be better summed up as a year of divergence, where prices headed in different directions to seek a new equilibrium. Developers sold 7,144 private homes between January and Novem- ber this year. With no new project being launched in December, the full-year tally will likely be similar to last year’s 7,316 units. In compari- son, developers sold almost 15,000 units in 2013. Notwithstanding this, several launches such as High Park Resi- dences and North Park Residences witnessed brisk sales. In November, meanwhile, MCC Land sold 277 of the 350 units launched at The Poiz Residences at a median price of $1,440 psf. Another positive highlight in 2015 2015 had its bright moments. The high-end segment, for example, led the rebound in secondary market transactions, clocking in 17% more caveats to date than in 2014. was the pickup in secondary market transactions with 5,967 private homes ment. Although that market has been Table 1 changing hands between January and rather sleepy, prices have remained November, compared with 5,515 in buoyant. Excluding land plots that Resale prices of four-room HDB fl ats in 2014. The high-end segment led the are less than 1,400 sq m, the mini- fi ve towns increased in 2015 rebound, clocking in 17% more ca- mum area stipulated by the Urban veats to date than in 2014. Redevelopment Authority for GCBs, AVERAGE PRICE ($) MEDIAN PRICE ($) THE EDGE PROPERTY HDB, With a median resale price the average transacted price held 4Q2014 4Q2015 GAIN (%) 4Q2014 3Q2015* GAIN (%) of $1,667 psf, prices of high-end firm at $1,392 psf from January to Bishan 526,032 531,342 1 525,000 537,500 2 non-landed homes are at attractive November 2015, on par with 2014 Clementi 509,750 551,000 8 497,500 507,500 2 levels, comparable to prices of new prices, which averaged $1,399 psf. Geylang 455,752 518,966 14 425,000 490,000 15 projects in the city fringe and at a Despite market doldrums, a Kallang/Whampoa 509,405 543,400 7 515,000 580,000 13 narrow premium to new mass-mar- bungalow at 35 Ridout Road was Queenstown 667,976 667,583 0 667,500 685,000 3 ket projects. Goodwood Residence sold at a historical high price of $91.7 *Latest official data chalked up the most number of re- million in May this year, which works sale transactions in 2015, with 31 out to $1,251 psf over a land area of units changing hands at an average 73,281 sq ft. This year also saw one such transactions in 2014 with a total rage and median prices increasing. year. Separately, their median re- price of $2,371 psf. Other actively transaction above $40 million for a value of $567.8 million. The average resale prices for four- sale price rose 2% from $497,500 transacted projects were The Sail bungalow at 45 Belmont Road, or room flats in Bishan, for example, in 4Q2014 to $507,500 in 3Q2015. @ Marina Bay (26 transactions at $1,420 psf over its land area. The latest Five HDB towns bucked inched up 1% from $526,032 in The biggest price appreciation ac- $1,889 psf), d’Leedon (18 transac- big-ticket transaction was for a bun- market trends 4Q2014 to $531,342 in 4Q2015. Their crued to four-room flats in Geylang, tions at $1,670 psf), Urban Resort galow at 16 Cable Road that changed In the public housing sector, five median resale price, meanwhile, amounting to 14% in terms of aver- Condominium (17 transactions at hands for $22 million in November, HDB towns bucked the downtrend in climbed 2% from $525,000 in 4Q2014 age price and 15% in terms of median $2,274 psf) and Aspen Heights (16 or $1,293 psf of its land area. prices owing to their prime location to $537,500 in 3Q2015. HDB has yet price. Kallang/Whampoa took the sec- transactions at $1,484 psf). Including land plots which are and a dearth of new supply. While to release the 4Q2015 resale statistics ond spot with a price appreciation of Here’s more of what’s hot and less than 1,400 sq m, 28 bunga- the HDB resale price index had fallen as at the date of this study. 7% in terms of average price and 13% what’s not in 2015: lows in GCB designated areas have by 1.8% in the first three quarters of In Clementi, resale prices for four- in terms of median price (see Table 1). changed hands between January and this year, four-room flats in Bishan, room flats averaged $551,000 in Bulletproof segment November this year, leading to a to- Clementi, Geylang, Kallang/Wham- 4Q2015 compared with $509,750 in ‘The biggest loser’ Good class bungalows have histori- tal transaction value of $618.5 mil- poa and Queenstown saw their ave- 4Q2014, reflecting an 8% gain this Although the proportion of unprofitable cally proven to be a bulletproof seg- lion. In comparison, there were 25 deals have been trending up, they are Table 2 still a minority, accounting for 8.5% of secondary market transactions in Large units accounted for the bulk Eleven non-landed homes put up for mortgagee sale 2015. In fact, the market malaise in of unprofi table deals in 2015 in December 2015 with an average size of 1,589 sq ft 2015 involved mostly large units and properties with large price quantum <500 sq ft, THE EDGE PROPERTY URA, PROJECT NAME ADDRESS AREA (SQ FT) in general as they bear the brunt of 500 to <700 sq ft, 3% euHabitat, #03 Jalan Eunos 527 KNIGHT FRANK JLL, DTZ, COLLIERS, a tighter credit environment and in- 9% Goodlink Park, #02 Sembawang Road 2,120 terest rate hikes. Units of 1,300 sq ft Hillsta, #19 Phoenix Road 635 or bigger accounted for 49% of un- 700 to <900 sq ft, profitable deals in 2015, followed by 9% Montebleu, #13 Minbu Road 807 those in the 1,100 to less than 1,300 Orange Grove Residences, #01 Orange Grove Road 2,422 sq ft size range (see chart). Orchard Scotts, #02 Anthony Road 2,174 On TheEdgeProperty.com, resale ≥1,300 sq ft, 900 to <1,100 sq ft, Park Green, #10 Rivervale Link 1,346 49% listings for non-landed homes that 12% People’s Park Complex, #16 Park Road 1,119 were classified as undervalued have Seletar Park Residence, #01 Seletar Road 1,077 an average asking price of above $2 million. Separately, the 11 non-landed 1,100 to St Thomas Suites, #19 St Thomas Walk 2,013 <1,300 sq ft, properties put up for mortgagee sales Tan Tong Meng Tower, #13 Thomson Road 3,240 18% in December averaged 1,589 sq ft in size (see Table 2). E EP4 • THEEDGE SINGAPORE | DECEMBER 28, 2015

THEEDGE PROPERTY PROPERTY TAKE

Does the MRT network affect private ins hav

the non-landed residential rents? me fron rou Chart 1b ommon sense would have it that the thr more accessible a private residential the estate is, the higher its value would Correlation between rents and degree centrality one be. Research on the impact of accessi- for fi nal MRT network to 1 bility on housing prices has used the CMass Rapid Transit (MRT) network as a proxy are measure. From what we have sourced from the to M Internet, academic and commercial research Hal

published thus far has focused on two issues. RESEARCH & CONSULTANCY SAVILLS CHARTS: pec One is how MRT lines affect property values qui spatially — that is, how private residential values change in relation to their distance from Nu an MRT station. The other is how property | BY ALAN CHEONG | Thu prices change in the period straddling the to s pre- and post-MRT station announcement. ren Other academic research has used the MRT interchange or the stations at the end of each ma network as partial inputs to develop hedonic line. For example, the Jurong East, Dhoby we price indices or conduct town planning studies. Ghaut and Tanah Merah stations are consider- for Many of these studies rely heavily on regres- ed nodes because at these points, other lines get sion-based techniques. are joined to them. Punggol and Pasir Ris are the

For this piece, we shall take a different ap- examples of end stations. Buona Vista cen proach and analyse the accessibility measures For the existing MRT network, in decreas- Decreasing closeness centrality var of major interchanges and end stations in our ing order of centrality, the stations and rents of MRT networks. The study shall lean on the non-landed private residential units are plotted ure tools for basic network analysis used by socio- in Chart 1a. It shows Serangoon as the node num Chart 2a logists. For this analysis, we will go further with the greatest degree of centrality, followed cen and correlate the various degrees of accessi- by Bishan and Dhoby Ghaut. Intuitively, this exa bility via MRT networks to rents and then see is true because in our existing network, these Correlation between rents and closeness tion which measures of accessibility are stronger are the MRT stations with the greatest number centrality for existing MRT network Ris in expressing a relationship to rents (and, im- of adjacent nodes. tivi plicitly, capital values). However, when we correlate the degree (se In this analysis, we will focus on two stages of centrality with the gross rents compiled in of accessibility — existing (excluding the Down- 3Q2015, visually, we find that although the app town Line 2) and future (the final state, when relation between the two does not contradict em all the current and future MRT stations that the logic behind this construct, the fit is rather lea have been publicly announced are complet- poor. Also, from a statistical standpoint, the ma ed). For rents, we are using non-landed prop- relationship between rents and degree cen- me erties located within a 500m radius of the MRT trality is not significant. This could be owing dire node. The terms “station” and “node” will be to the fact that the logic behind measure of the used interchangeably. centrality penalises nodes such as City Hall/ tha Before we begin, we will need to understand Raffles Place, which lose out to Serangoon in min the importance of nodes: terms of the number of adjacent nodes (inter- Not all nodes are equally important changes and end stations). Also, the Orchard Leb Centrality analysis: This is to find out the MRT node is absent because under the pres- cou most important nodes in a network. The three ent MRT network, this is not an interchange. of commonly-used measures are degree centrality, Now let us look at the second state, where Buona Vista in t closeness centrality and betweenness centrality all the publicly announced MRT stations that Decreasing closeness centrality tion are either currently in operation or planned for suc Degree centrality the future are functioning. The picture changes This is a measure of the degree of importance quite dramatically, with Dhoby Ghaut having Bet of a node and is determined by the number of the greatest degree of centrality, followed by centre with excellent links to public transport, the statistical test for correlation between rents The nodes adjacent to it. Therefore, the more the Outram Park and Paya Lebar. Serangoon is does not quite rank high in this measure (see and closeness centrality is still not significant. ber number of adjacent nodes is to a particular relegated to eighth position. Chart 1b). When we expand the MRT network to its nod node, the greater the degree of centrality. For The interesting observation is that in both By plotting the monthly rents against the final state, we have a slightly different picture. twe this analysis, a node is taken as either an MRT states, Jurong East, the much-touted regional ranked nodes, although we still get a poor fit, Bishan is no longer the node with the highest and the correlation has improved. Nevertheless, it closeness centrality. Instead, the honour goes to cen Chart 1a is still not significant to support the hypothe- Outram Park, followed by Orchard and Marina by sis that the greater the degree of centrality, the Bay. Unfortunately, the fit has dete riorated and one Correlation between rents and degree higher the rent. This suggests that this measure even without the need to conduct any statisti- sho centrality for existing MRT network of centrality with regard to rents may not be cal test on the significance of the correlation, tha applicable to our MRT network. one can clearly see that it is almost non-exist- me ent. Therefore, as with the degree centrality Hal Closeness centrality case, the closeness centrality as a determinant Central nodes are also important because they for rents may not be applicable to our MRT is c can reach the whole network more quickly network (see Chart 2b). com than non-central nodes. It is a measure of how Lin close a node is to other nodes. It is computed Direct routing twe by taking the total number of nodes minus If we reorganise the analysis from that of nodes two one and dividing that by the total number of to the number of direct routes between major The shortest paths to each and every node in the employment and shopping centres and also end thr network. To get the shortest path, we use the stations, the ranking changes. To provide an of t least number of interchanges transversed to illustration of what we mean by direct routes, swe get from the node in question to the destina- say we arbitrarily start at the Pasir Ris MRT nod tion node, and we do that for all nodes. The station and go from there to the City Hall/ Eas greater the number, the more central a node is. Raffles Place (a major employment centre) sta- The Buona Vista Visually, the correlation of the closeness cen- tion using the minimum number of routes. In imp trality with rents looks better than that for de- this case, because the Pasir Ris MRT station is tion gree centrality. For the existing MRT network, linked directly to the destination by the East- Decreasing closeness centrality the fit is better than that of the previous meas- West line, the number of routes is one. If we ma ure, namely degree centrality. Nevertheless, want to get to Orchard Road from Pasir Ris exe THEEDGE SINGAPORE | DECEMBER 28, 2015 • EP5

If you wish to contribute columns, please write in to [email protected]

instead, the number of routes is two, as we for comparison purposes. As previously men- Chart 2b have to change lines at City Hall. tioned, these are City Hall/Raffles City (down- Using the closeness centrality measure, town) and Jurong East. These nodes were also Correlation between rents and closeness centrality the fit is much better than our previous two chosen because of the hype surrounding how for fi nal MRT network measures. Nevertheless, on the correlation Jurong East would develop as an important front, the link between rents and the direct regional centre. We wanted to use this meas- routes between major centres is still weak for ure to extract information on how Jurong East three-bedroom units. For two-bedroom units, measures up to the downtown node in terms the relationship becomes significant only if of it being able to fulfil its function of infor- one relaxes the level of significance from 5% mation infusion and dissemination. to 10% (see Chart 3). For the City Hall/Raffles Place node, the be- Ignoring statistics for the moment, if we tweenness centrality measure is 29, while that are to use direct routing to determine rental for Jurong East is 13, clearly showing that the to MRT connectivity ranking, we find the City former is far much more important than the Hall/Raffles Place node come out on top of the latter. This finding is relevant because it ap-

CHARTS: SAVILLS RESEARCH & CONSULTANCY SAVILLS CHARTS: pecking order. Again, Jurong East does not pears to throw cold water on the enthusiastic quite rank high; in fact, it is behind Woodlands. belief that Jurong East, as a regional centre, can carry its own weight as a disseminator of Number of stations information. City Hall Thus far, all the above measures do not appear Owing to its much lower level of connecti- Buona Vista to show any convincing correlation between vity, this regional centre is going to find it rents and MRT nodes or direct routes between difficult to come close to our traditional City Decreasing closeness centrality major activity centres. As a final push (which, Hall/Raffles Place node. Therefore, for Jurong we must highlight, runs the risk of data-mining East to rise up the ranks, much more has to for the sake of discovering a pattern), we did be done to improve the direct paths between Chart 3 get a significant correlation between rents and it and other major nodes and to make these the number of stations between major activity paths the shortest ones that pass through the centres. The fit is also the best amongst the regional centre. Correlation between rents and closeness various measures that we have thus far used. It does not mean that Jurong East cannot centrality for fi nal MRT network We have used the closeness centrality meas- become an even more vibrant regional centre. ure as the basis of computation. As for the But to turn that into reality may be a very ex- number of stations between the major activity pensive exercise as the capital expenditure centres, taking the Orchard MRT station as an needed to have additional MRT networks to example, we counted the total number of sta- improve accessibility to this centre will be gar- tions to get there from end points such as Pasir gantuan — something that can only be justified Ris, Woodlands, the Tuas Link and other ac- if massive pump-priming works are needed to tivity centres such as City Hall/Raffles Place boost the economy. (see Chart 4). As this measure gives the best results, it Conclusion appears to suggest that tenants place more This brief analysis of centrality using our MRT emphasis on choosing an abode that has the network and social network analysis can be least number of stations between them and applied to quantify the various accessibili- major interchanges or end stations. This also ty measures. However, once we correlate the means the least number of start-stops, which nodes with the rents of non-landed properties directly translates into minimal travel time. As located within a 500m radius of MRT stations, there is logic behind this correlation, the risk most of the relationships turn out weak or in- that this outcome is the result of pure data- significant. Using rents from apartments that Decreasing closeness centrality mining is lessened. are located near stations that are currently op- What is of interest is that a node like Paya erational, the only significant relationship is Lebar is currently underperforming. This that of rents with the number of MRT stations Chart 4 could be so because rents there are reflective between major interchanges and end stations. of 3Q2015 conditions and as this hub is still In the analysis of movement from major in the process of development and gentrifica- nodes to major nodes, we find that the lower Correlation between rents and closeness centrality in tion, rents should pick up once developments the number of MRT stations from one to the terms of total number of stations (fi nal MRT network) such as Paya Lebar Central come to fruition. other, the higher the rents. This implies that tenants place emphasis on the minimal number Betweenness centrality of stop-go interruptions in their travel and not nts The betweenness centrality counts the num- how well connected their MRT station is. This ant. ber of shortest paths that passes through one stop-go interruption can also be interpreted as its node from other nodes. Nodes with high be- travelling time. ure. tweenness are important in communication This is enlightening because we have con- hest and information diffusion. The betweenness stantly been bombarded by a barrage of talk s to centrality is computed as follows: We start of that if an MRT station is planned near a parti- ina by counting the number of shortest paths from cular development, prices/rents will go up. It and one node to another, then count the number of may, or it may not, but if every major housing sti- shortest paths between one node and another estate is ultimately going to be served by an on, that passes through the subject node. For this MRT station located within 400m of it, then ist- measure, we compare two nodes, namely City the location factor becomes trivial. lity Hall/Raffles Place and Jurong East. It may not help boost rents much if a ant To illustrate how the betweenness centrality property is located at a node from which to MRT is computed for Jurong East, we assume a get to other major nodes, one has to traverse commuter at Woodlands wants to get to Tuas many stations. A property with comparable Decreasing closeness centrality Link. The total number of shortest paths be- physical attributes located further from oth- tween the two nodes is one (here, there are no er nodes (distance wise), but from where the des two routes with the same number of paths). traveller needs to traverse fewer stations to ajor The total number of shortest paths that pass get to the other nodes should command high- along these lines will continue to command Lebar. Rents around this node are presently end through Jurong East is also one. The division er rents. For example, two properties are lo- higher rents than those located near the up- underperforming, probably because the area an of the latter to the former gives one as the an- cated 8km from Orchard Road. If you need coming MRT lines (which are populated with is still in the early stages of development and tes, swer. By summing up all the ratios for every to make stops at 20 MRT stations to get from more stations per line)? If the answer is yes, gentrification. MRT node pertaining to any pass through at Jurong one property to Orchard Road, but just five then Orchard Road and City Hall/ Raffles Place However, with the makeover of the district all/ East, we get the betweenness centrality for it. stops to reach the same destination from the nodes can still be expected to fetch the highest and improved accessibility when the final MRT sta- The higher the betweeness centrality, the more second property, the latter property will com- rents in future. lines join up, the probability of rents improv- . In important the node is in terms of communica- mand higher rents. Also, properties located along the first MRT ing from the current baseline is high. E n is tion and information diffusion. Given that the traditional North-South and networks are also likely to command high- ast- Computing the betweenness centrality East-West MRT lines have less frequent start- er rents than comparable ones located along Alan Cheong is head of research and consul- we manually is a very tedious process, so for this stops, drawing from what we have discovered, new stations. It is also interesting to note that tancy at Savills Singapore. He can be reached Ris exercise, we restricted ourselves to two nodes could it be that properties located near stations the node with upside rental potential is Paya at alan.cheong@savills. com.sg. EP6 • THEEDGE SINGAPORE | DECEMBER 28, 2015

THEEDGE PROPERTY PROPERTY TAKE Property prices in hold steady in a mixed market

roperty prices in Iskan- Tuas to Iskandar Malaysia Malaysian property price index (1Q2000 to 2Q2015) NAPIC dar Malaysia are hold- and China’s Alibaba report- ing steady, according edly looking to start a logis- 300 to data from KGV In- tics hub in Johor. Johor ternational Property Fuji Oil Asia announced 250 Selangor PConsultants, a property val- in September that it will Kuala Lumpur uation firm based in Johor build a food products plant Penang Baru. This is in line with data in Iskandar Malaysia to sup- 200 from the Malaysian National port its long-time client, Property Information Centre chocolate maker Hershey’s. 150 and Valuation and Property The plant will be operation- Services Department, where al in 2016. Eternal Materials 100 the housing price index for | RYAN KHOO & SAMUEL TAN | Co, a Taiwanese synthetic Johor has remained flattish polymers manufacturer, will 50 for the past year. be setting up a new man- For residential property, it is cur- transactions in Johor were at values ufacturing facility to be operational 0 rently operating in a two-tier mar- above RM500,000, which is signif- by 2017. Italy’s Unigra announced

ket. The luxury high-rise segment icant but not representative of the in October that it will open a food 1Q20003Q20001Q20013Q20011Q20023Q20021Q20033Q20031Q20043Q20041Q20053Q20051Q20063Q20061Q20073Q20071Q20083Q20081Q20093Q20091Q20103Q20101Q20113Q20111Q20123Q20121Q20133Q20131Q20143Q20141Q2015 is struggling and this is the seg- entire market. oils and fats production facility in ment that primarily targets Singa- Moving forward, the property Johor. There have also been various poreans and Malaysians working market will be encouraged by pop- announcements by Korean, Chinese, marketing activities and more dis- property owners are Singapore dol- in Singapore. On the other hand, ulation growth, driven by continued Russian, US and Japanese MNCs to counts are on offer. Various activi- lar earners and have holding pow- the mass market segment is see- business investments and job crea- set up their facilities in Johor. We ex- ties and events are happening every er. But with high household debt in ing robust transaction activity with tion. Iskandar Malaysia’s population pect 1Q2016 to be a busy period as weekend across Johor Baru, entic- Malaysia and Singapore, consum- price increases seen in some areas. has grown to an estimated 1.6 mil- Ascendas’ Nusajaya Tech Park opens ing buyers to come over and see ers’ ability to take on more proper- Young Malaysians are seeking to lion to 1.8 million in 2015 from 1.3 its doors and some 20 manufacturers what is on offer. Despite the slow- ty deals as investments is doubtful. get onto the property ladder and million in 2010. Recently, Johor has start their operations there. down, it is important to remember Only demand from genuine home- with a young median age in Ma- seen an influx of multinationals ex- that many developers are still flush owners will be constant and that is laysia, the demand for mass mar- panding or relocating here, owing to It is a buyer’s market with cash from the earlier boom where you will see the mass market ket homes is strong. Affordability, the ease of doing business, weaker The slowdown in property prices years and the risk of non-comple- home segment perform in Malaysia. however, means that many locals ringgit and proximity to Singapore. in 2015 compared with the boom tion is low, considering that many The residential property market can only afford to purchase homes Many Singapore-based MNCs, unable year of 2013 (transactions in 1H2015 developers in Malaysia today are will likely remain in this stagnant in the RM500,000 ($163,321) to to expand because of the high cost fell 14.6% in volume and 31.5% in in a much better financial position, two-tier environment until there is RM600,000 price range. This does and lack of options in the city state, value compared with 1H2014) is at- with relatively low gearing and for- a significant change in market con- not overlap the luxury high-rise are looking at the next best thing, tributed to the plethora of choices eign debt, unlike during the 1997 ditions. segment, which is now suffering which is an expansion of operations that have now come onto market. Asian financial crisis. and with which the Singapore pub- in nearby Iskandar Malaysia. Exam- Buyers today are spoilt for choice, With high employment rates in Ma- Looking for catalysts in 2016 lic and media tend to be more fa- ples include Microsoft announcing whether in the primary or second- laysia and Singapore, large-scale fire Optimists are looking forward to the miliar. Transaction data in 1H2014 that it will develop a data centre in ary market. Property developers sales are not expected at this point. upcoming high-speed rail and rap- shows that only 17% of property , Coca-Cola relocating from have become more creative in their Even in the higher-end segment, many id transit system announcements in 2016 to drive up market sentiment. The sites for HSR in Singapore and Prices of residential houses in selected schemes in Johor Baru (RM’000) Iskandar Malaysia have been iden- tified, with Singapore’s Land Trans- 2013 2014 2015 port Authority and Malaysia’s Land AREA 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Public Transport Commission show- STANDARD TWO-STOREY TERRACED HOUSES IN SELECTED SCHEMES ing progress in the construction plan- Taman 390 400 420 430 450 480 480 500 520 550 550 ning. The start of the physical works East Ledang 835 835 900 900 1,100 1,200 1,300 1,300 1,350 1,350 1,350 by end-2016 will give the Iskandar 580 580 600 600 650 650 680 700 720 750 750 Malaysia property market a big con-

Taman Molek 700 750 750 750 760 760 770 780 800 800 800 RESEARCH CONSULTANTS PROPERTY KGV-INTERNATIONAL fidence boost. (Type Sapphire) 531 531 531 531 540 540 540 540 550 550 550 Pessimists point to the weak global economy and political un- Taman Ponderosa 450 450 470 470 500 500 520 520 530 540 540 certainty in Malaysia as reasons STANDARD TWO-STOREY SEMI-DETACHED HOUSES IN SELECTED SCHEMES to hold back. The high incoming Taman Bukit Indah 700 750 780 800 800 820 850 850 880 900 900 residential supply (until 2018) in East Ledang 1,700 1,800 1,900 2,000 2,100 2,200 2,200 2,300 2,400 2,400 2,400 Singapore and Iskandar Malaysia Horizon Hills 1,480 1,500 1,500 1,550 1,580 1,580 1,600 1,600 1,650 1,650 1,650 also weigh upon any possibility of Austin Heights 1,000 1,100 1,100 1,200 1,200 1,200 1,250 1,300 1,400 1,400 1,400 a quick recovery. Savvy investors 750 800 800 820 830 850 900 950 950 1,000 1,000 may, however, consider the bad Bandar Seri Alam (Type Sapphire) 842 842 842 842 900 900 900 900 950 1,000 1,000 environment as the start of a bar- Taman Ponderosa 820 850 900 1,000 1,000 1,200 1,300 1,300 1,400 1,500 1,500 gain-hunting phase and prepare Senibong Cove 1,100 1,100 1,200 1,200 1,300 1,400 1,500 1,500 1,500 1,600 1,600 themselves to take positions. E TWO-STOREY CLUSTER HOUSES IN SELECTED SCHEMES Taman Bukit Indah 1,000 1,100 1,200 1,250 1,280 1,280 1,300 1,300 1,200 1,200 1,200 Ryan Khoo is co-founder of Singa- Horizon Hills 850 950 1,000 1,100 1,200 1,250 1,280 1,300 1,300 1,300 1,300 pore-based Alpha Marketing, a real estate investment consultancy that Austin Height 470 480 500 550 600 750 750 800 800 800 800 focuses on the Malaysian market, Senibong Cove 548 600 650 800 820 830 860 900 950 950 950 especially Iskandar Malaysia. The SELECTED APARTMENTS/CONDOMINIUMS views expressed here are his own. Sky Executive (750 sq ft) 350 380 400 400 430 430 450 450 460 480 480 He can be contacted at ryan.khoo@ Ujana (1148 sq ft) 685 735 735 735 735 735 735 735 735 735 735 alphamarketingsg.com. Straits View (1600 sq ft) 700 700 700 700 700 750 750 750 750 750 750 Tropez (958 sq ft) 660 670 670 670 660 650 650 640 630 620 620 Samuel Tan is executive director of KGV Danga View (1038 sq ft) 390 400 410 420 430 440 440 450 450 450 450 International Property Consultants, Molek Pine 2 (1469 sq ft) 700 700 750 800 800 800 800 800 800 800 800 a property consultancy firm based in Johor Baru, with offices in Kuala Note: Prices shown are based on both transacted and listed prices on a sample size of mentioned location/project Lumpur and Penang. He can be con- tacted at [email protected]. THEEDGE SINGAPORE | DECEMBER 28, 2015 • EP7

THEEDGE PROPERTY DEAL WATCH Unit at Concourse Skyline

selling at 2012 prices EDGE SINGAPORE CHUA/THE SAMUEL ISAAC

| BY TAN CHEE YUEN | Marina Promenade and Marina Reser- eraged $3,750, or $5 psf a month. Based voir, Pan Pacific Serviced Suites Beach on the listing price of $1,590 psf, the av- rospective buyers looking for water- Road and historic shophouses in Kam- erage rent translates into a potential gross side living in the city might be keen pong Glam housing ethnic shops, eat- rental yield of 3.6%. E on this listing. A 786 sq ft mid-floor eries and pubs. unit at Concourse Skyline is listed The nearest MRT station is Nicoll on TheEdgeProperty.com at $1.25 Highway of the Circle Line, which is Pmillion, or $1,590 psf. Concourse Skyline 200m from the development. Concourse is a 99-year leasehold apartment on Beach Skyline is also within walking distance Scan the QR code Road comprising 360 units. from the Bugis MRT station and Bugis for value deals at The asking price is on a par with a Junction shopping mall. Schools within Concourse Sky- comparable past transaction in Decem- 1km of the apartment include St Mar- line and nearby ber 2012, when another 786 sq ft unit on garet’s Primary School and Farrer Park projects the seventh floor changed hands for $1.25 Primary School. million, or $1,591 psf. There were two rental contracts involv- As we are not party to the contract between Completed in 2014, Concourse Sky- ing 700 to 800 sq ft units in the develop- the client and agent, we are not able to line’s immediate vicinity comprises ment this year. Rents for the two units av- verify information provided by the agent

Table 1 Table 2

Historical transactions for 786 sq ft units Rental transactions for at Concourse Skyline 700 to 800 sq ft units at Concourse Skyline in 2015 CONTRACT DATE FLOOR PRICE ($) PRICE ($ PSF) THE EDGE PROPERTY URA, URA, THEEDGEPROPERTY.COM URA, Dec 14, 2012 Low 1,250,000 1,591 LEASE DATE MONTHLY RENT Dec 8, 2010 Mid 1,020,500 1,299 ($) ($ psf) Feb 24, 2010 High 1,523,795 1,939 Sept 2015 3,700 4.9 Feb 2, 2010 Mid 1,405,000 1,788 June 2015 3,800 5.1 A 786 sq ft mid-floor unit at Concourse Skyline is listed on TheEdge- *Low floors: L1 to L7; mid floors: L8 to L15; high floors: L16 and above Property.com at $1.25 million, or $1,590 psf