In this next part of our series on cash-flow properties, we look at the fringe region condos of Singapore. Investors often have a binary view of these properties – we find many who swear by OCR properties and won’t consider anything more central; and we also meet those who say they’d never consider these properties.
Whatever the stance, one thing is clear: the low quantum of OCR properties, coupled with the slow-but-certain decentralisation of Singapore, makes them a favourite among yield-chasers and long-term investors.
If you’re worried about them being further from town, perhaps the idea of these properties “paying for themselves” might ease the anxiety:
How did we pick the following condos?
The following is based on URA rental data over the past 12 months (for the given unit size). We’ve compared the rental rates of the units to the estimated monthly loan repayment.
(The home loan is assumed to have an interest rate of 1.3 per cent per annum, with a loan tenure of 30 years).
We then picked out OCR condo units where the median rental rate would exceed the loan repayment.
We then arrive at the following developments, where you’re most likely to find units with a positive cash-flow:
*We only used those with rental transactions of 5 and up in case of any outliers.
**The cash flow was calculated with just mortgage monthly repayment in mind, not taking into account other costs such as maintenance etc.
1. The Hillford
| Unit size | Volume | Transacted price | Median rental rate | Monthly repayment | Cashflow |
| 398 sq. ft. | 94 | $455,000 | $1,750 | $1,527 | $233 |
Current Prices
The indicative price range on Square Foot Research is $1,058 to $1,255 psf, with an average price of $1,166 psf.
Square Foot Research gives an indicative rental rate of $2.23 to $5.71 psf for the entire development, with an average of $4.60 psf. The implied rental yield is 4.73 per cent.
Location: Jalan Jurong Kechil (District 21)
Developer: World Class Developments (North) Pte. Ltd.
Lease: 60-years from 2013
TOP: 2016
Number of units: 281 units
Key highlights
The Hillford is a unique project, as it was originally intended to be a retirement villa. Nonetheless, it was a sell-out among buyers of all ages, because of the low price point – thanks to its 60-year lease, it was sold for just $1,100 psf.
This also, incidentally, makes it ideal for those looking for cash-positive properties and high rental yields. Notice that this condo has an implied rental yield of 4.73 per cent, while the average for most residential properties is between two to three per cent.
The Hillford’s location is also decent for its price. It’s 850 metres (about 10 minutes) to Beauty World MRT station, with the attendant mall and nearby eateries. A bit of a walk, but still manageable. Being a retirement villa, the project also has clinics and pharmacies; which may or may not be an amenity to you.
In summary, it helps to think of The Hillford not as a retirement villa, but a condo with a 60-year lease. You get potential positive cashflow and good yields, but you’re surrendering resale gains; whether that’s a good fit depends on your overall investment strategy.
There is also one other issue to think about. Some prospective buyers have told us there are financing difficulties, given the short remaining lease. We’ve heard of banks declining to give the full financing; and a higher cash outlay could defeat the purpose, if you’re looking at Cash-on-Cash returns.
If you’re having trouble of this sort, please drop us a note on Facebook. We’d love to hear about it, and have a few experts who may be able to help.
As you can quite clearly see, prices for The Hillford have not moved much – this is definitely one of the places that you wouldn’t be looking for in terms of appreciation potential.
2. Melville Park
| Unit size | Volume | Transacted price | Median rental rate | Monthly repayment | Cashflow |
| 1,205 sq. ft. | 10 | $738,000 | $2,675 | $2,476.76 | $198.24 |
Current Prices
The indicative price range on Square Foot Research is $610 to $764 psf, with an average price of $687 psf.
Square Foot Research gives an indicative rental rate of $1.64 to $2.74 psf for the entire development, with an average of $2.30 psf. The implied rental yield is 4.01 per cent.
Location: Simei Street 1 (District 18)
Developer: Melville Park Development Pte. Ltd.
Lease: 99-years from 1992
TOP: 1996
Number of units: 1,232 units
Key highlights
Melville Park always prompts debate. The location has the quality of being almost convenient.
For example, the Simei MRT station is located about one kilometre away, which is a 12-minute walk; it’s somewhat close, but not quite. This is also where EastPoint Mall is located, and would be the main source of retail (there’s a FairPrice here too).
The SIA training centre on Upper Changi Road East is only about a five-minute drive away. That could be a source of tenants; but condos like Changi Court, while much older, are closer.
Overall, we doubt anyone would complain about the price ($687 psf for being within 12 minutes of a mall / MRT station is tough to find these days); but it’s pricing, more so than location, facilities, etc. that make this condo stand out.
If you’re thinking of Melville Park as a rental unit, focus on families as the main tenant demographic. There are six schools within a one-kilometre radius:
- East Spring Primary and Secondary Schools
- Ngee Ann Secondary School
- Angsana Primary School
- Chongzheng Primary School
- Yumin Primary School
In addition, this is an older condo from the ‘90s, so the units tend to be larger. Even the smallest units are in the range of 936 sq. ft., which families will appreciate.
As for its resale prices, Melville Park definitely has the upper-hand when it comes to volume of transactions. Over its lifetime, it has seen 691 profitable transactions, and 338 unprofitable ones.
3. Orchid Park
| Unit size | Volume | Transacted price | Median rental rate | Monthly repayment | Cashflow |
| 872 sq. ft. | 20 | $588,000 | $2,100 | $1,973.36 | $126.64 |
Current Prices
The indicative price range on Square Foot Research is $608 to $743 psf, with an average price of $699 psf.
Square Foot Research gives an indicative rental rate of $1.30 to $2.71 psf for the entire development, with an average of $2.10 psf. The implied rental yield is 3.61 per cent.
Location: Yishun Street 81 (District 27)
Developer: Far East Organisation
Lease: 99-years from 1991
TOP: 1994
Number of units: 615 units
Key highlights
There is a subset of property investors who seek out older condos, to derive higher rental yields (because rental income isn’t affected by the remaining lease, and the quantum tends to be lower). Among this group, Orchid Park will be a familiar name.
To start off blunt, this is not the most exciting condo location. There’s no MRT station nearby, and the immediate surroundings are just HDB flats. The closest amenity, next to the condo facilities themselves, seems to be the football court across the road.
However, Orchid Park is also close to the Lower Seletar Reservoir, which makes for a spectacular view from most floors. The condo itself is just 300 metres (four minutes walk) to the Reservoir Park – this area has a huge playground, kayaking, fishing, etc. So if you want a as close to nature vibe as possible, without paying Bukit Timah prices, this is a solid choice.
The main problem is that your tenants will have to be drivers, or be willing to use the bus. This isn’t the most accessible condo, and they will have to travel out for their shopping, groceries, etc.
The performance of Orchid Park is pretty similar to Melville Park, which is unsurprising as they are from the same era. Since it was completed, it has recorded 343 profitable and 148 unprofitable transactions.
4. Kingsford Waterbay
| Unit size | Volume | Transacted price | Median rental rate | Monthly repayment | Cashflow |
| 484 sq. ft. | 73 | $510,000 | $1,770 | $1,711.59 | $58.41 |
Current Prices
The indicative price range on Square Foot Research is $1,065 to $1,341 psf, with an average price of $1,231 psf.
Square Foot Research gives an indicative rental rate of $1.58 to $4.89 psf for the entire development, with an average of $3.40 psf. The implied rental yield is 3.31 per cent.
Location: Upper Serangoon View (District 19)
Developer: Kingsford Huray
Lease: 99-years from 2014
TOP: 2018
Number of units: 1,165 units
Key highlights
To say Kingsford Waterbay got off on the wrong foot would be a huge understatement. The developer was penalised twice for safety issues during construction, a stop-work order was issued, and it was this project that initially caused Normanton Park to be given a no-sale license.
(Normanton Park is now up for sale, and is doing quite well).
There were a lot of unhappy buyers in the early days of this project, with complaints about poor quality finishing; at one point the 300-metre pool had to be drained for a month. Nonetheless, the developer did carry out rectification works, and we haven’t heard any complaints in a long while.
Kingsford Waterbay isn’t near any MRT station, but it is a mixed-use development with six retail stores and a childcare centre. It’s also about 750 metres (a 10-minute walk) to Punggol Park.
That said, the positive cash flow here is quite minimal – so we wouldn’t harbour too high hopes for this one.
Despite all the issues, Kingsford Waterbay has done quite well on the resale front. It has posted 30 profitable transactions and 3 unprofitable ones so far.
5. Kovan Grandeur
| Unit size | Volume | Transacted price | Median rental rate | Monthly repayment | Cashflow |
| 366 sq. ft. | 13 | $475,00 | $1,600 | $1,594.12 | $5.88 |
Current Prices
The indicative price range on Square Foot Research is $1,303 to $1,435 psf, with an average price of $1,369 psf.
Square Foot Research gives an indicative rental rate of $2.74 to $5.14 psf for the entire development, with an average of $4.18 psf. The implied rental yield is 3.66 per cent.
Location: Tampines Road (District 19)
Lease: 99-years from 2010
TOP: 2011
Number of units: 74 units
Key highlights
This is a boutique development (only 74 units) that banks on its proximity to Kovan MRT station. It’s around 800 metres (10 minutes’ walk) to the MRT station; along the way you’ll pass the Kovan 209 Market and Food Centre.
In addition, there are two schools very close by. Xinghua Primary School is around 350 metres away (five minutes’ walk), and Yuying Secondary School is about two more minutes away. Holy Innocents Primary School and Serangoon Junior College are about 700 to 730 metres away respectively.
Retail and groceries do take a longer trip – it’s about a three-minute drive to Heartland Mall, and we understand there’s a shuttle bus service.
Here’s what’s unfortunate about Kovan Grandeur: the location makes it good for families, yet the development consists primarily of one to three-bedroom units. These range from 388 to 570 square feet.
This decision is a bit of a puzzler, as it restricts tenants and owner-occupiers to small families. Perhaps it’s simply that the unit count was too small already.
In any case, this project’s cashflow is minimal and a break even one at best (remember this isn’t inclusive of maintenance costs etc) so again, we wouldn’t get over zealous about it.
Prices here have been quite stagnant although it has registered 49 profitable and 10 unprofitable transactions so far.
Find out more about property investment strategies and unique rental units in the coming days. 2021 is looking to be as interesting as the intense year before; and follow us on Stacked as we track the aftermath of Covid-19 on the Singapore private property market.
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