A PropertyGuru case study shows an advantage to getting in early, but broader trends may lessen the network effect over time. Dr Lee Nai Jia, Head of Real Estate Intelligence, Data and Software Solutions, PropertyGuru Group, shares more.
This article was first published on The Business Times.
The expansion of the Thomson-East Coast Line (TEL) has reshaped the property landscape in Singapore’s East Coast. With seven new stations—Tanjong Rhu, Katong Park, Tanjong Katong, Marine Parade, Marine Terrace, Siglap, and Bayshore—residents gain greater connectivity and convenience.
Now, approximately 235,000 households are within a 10-minute walk to a station, with travel times between Marine Parade and Shenton Way reduced from 40 to 20 minutes. These enhancements raise the question: how has the expansion affected the property and rental markets in the area?
Immediate Impact: Boosted Convenience and Market Activity
The TEL expansion has immediately boosted market activity near the new stations. Data for Q3 2024 shows a surge in non-landed private residential listings within 0.8 km of the new TEL stations, reaching about 2,619, compared to a 2023 quarterly average of just about 410. This spike in listings represents a 4.8 times increase year-on-year, likely spurred by owners looking to capitalise on rising prices (See Figure 1). Views of these listings nearly doubled Q3 2024, illustrating the heightened buyer interest triggered by the TEL’s arrival.
Rental activity reflects a similar trend. Near Tanjong Katong station, rental listings jumped to 1,844 in Q3 2024, from just 301 a year prior. Views for these rentals also increased, climbing close to 90 per cent over the same period (Figure 2). The buzz around the TEL’s latest stage has translated directly into market dynamics, indicating that the draw of enhanced connectivity is powerful enough to shift both buying and renting trends.
The Proximity Premium: A Guarantee of Higher Prices?
Living near an MRT station has always come with a price premium, and the TEL expansion has intensified this trend. For condominiums within 0.8 km of the new stations, the median asking price per square foot (PSF) hit $2,068 in Q3 2024, up from $1,978 in Q1—a 6.8% increase compared to a year ago. However, this growth hasn’t been uniform across property types. Landed homes in the same radius saw median PSF prices increase by just 1.6%, as these residents value privacy and exclusivity.
Timing the Market: When to Buy or Sell?
There’s a clear advantage in getting in early when an MRT line opens. Property asking prices near the TEL stations rose about 6.8% from the start of 2024 to Q3, rewarding investors with capital appreciation. However, early buyers must endure construction related issues like noise and traffic congestion. The higher asking prices reflect the ease that prospective buyers can enjoy immediately.
Although buyers now face higher prices, there is significant future upside. Enhanced accessibility brings proximity to upcoming developments like the fifth terminal and Greater Southern Waterfront, increasing the area’s appeal.
Spillover Effects on other locations: Substitution Effect or Enhanced Network effect
While the expansion of the Thomson-East Coast Line (TEL) has clearly boosted property values around its stations, the impact of the new TEL stations near existing MRT stations is mixed. Sellers and landlords near these established stations now face stiffer competition from properties located closer to the new TEL stations, as property seekers are drawn to them.
Residents near existing MRT stations may still benefit from network effects, as they can now travel to more areas and have additional transit options in case of breakdowns. However, in the rental market, substitution effects seem to outweigh network effects. Nationally, the rental market softened, with median asking rents near MRT stations dropping 15.7% year-on-year. Yet, properties near TEL stations have shown resilience. In Tanjong Katong, average condo rents per square foot declined by less than 1% year-on-year in Q3.
Similarly, the prices of non-landed properties near existing MRT stations dropped in Q3, further indicating substitution effects post-TEL opening. Asking prices near Paya Lebar fell 4.6%, with property views at Tanjong Katong more than double year-on-year, while Paya Lebar saw only a 1.88 times increase.
Conclusion: Zero Sum Game?
The Thomson-East Coast Line’s Stage 4 opening has enhanced commuting and reshaped East Coast’s property market dynamics. Properties near the new stations have seen substantial price and rental hikes, underscoring the enduring appeal of well-connected locations. Early investors enjoyed significant capital appreciation albeit with a period of inconvenience due to construction.
As seen from this case study, MRT connectivity remains a cornerstone of property value in Singapore. The TEL’s impact further reinforces the importance of transport infrastructure in real estate investment decisions. However, this impact may lessen over time due to substitution effects as more lines open. With the future Cross Island Line, MRT premium significance might change. Broader trends, such as remote work and CBD decentralization, may also influence future market dynamics.
Property seekers should also note that MRT connectivity is one of many factors that impact prices and demand. They need to consider their unique needs and investment timeline, conducting due diligence to account for hidden costs.
