Why Two Bedroom Units for Sale in Singapore Are Attractive? Is this part of your Property Portfolio?
A article in the Business Times, dated 21 November 2018 (1) , reported property buyers are skewing towards 2 bedroom units in the private residential market. This trend started to grow from the start of 2018.
Entry-level investors aiming for one-bedroom apartments are a natural choice but with the cooling measures and prices ascending rapidly from 2008, private property purchasing pattern has changed a bit.
In this article, I present you my take on this and share what I have learned formally and from the various discussions I had with my clients. Please do your own thorough research before you make a decisions.
Why Two-Bedroom Units are Popular?
The main reason is perhaps due to the shrinking of unit sizes. I used to stay in one bedroom unit at Mandarin Gardens that is of 828 sqft. Space was luxurious and it also came with unblock views of East Coast Park. That development was completed 36 years ago. Today, there are new developments with sizes of three bedroom units from as small as 797 sqft. It was difficult for me to visualize my 1 bedroom unit to have 3 bedrooms. Perhaps, this is an extreme case.
For practical reasons, developers are building smaller units so that the loan quantum will be lower and attract more buyers. Many buyers took advantage of this trend and have been reaping profits so it has been a win-win situation between developers and buyers, especially for property investment but not for own stay.
There is also the trend of dual-key and two-bedroom dual key units were very quickly snapped up in many new property launches. Effectively, they become elusive and the trend is expected to continue.
Typically, a 2 bedroom-dual-key unit is one with two sub-types, a studio unit together with a one-bedroom unit. The two units share a common foyer and an entrance that all occupants can enter. This enables a unit to be shared by two different parties. Generally, a two-bedroom-dual-key unit yields a higher rental returns than a two-bedroom unit. Buyers would also enjoy savings in taxes and legal fees.
There is also an impact from Singapore aging population. The size of citizen aged 65 and above doubled from 220,000 in 2000 to 440,000 in 2015, and is expected to increase to 900,000 by 2030 (2) . Many senior buyers are opting for smaller units and there are also many buyers are attracted to the dual-key units so that the elders can stay with them independently or be a landlord with a tenant staying next to them.
For entry-level investors, the 1-bedroom units are also popular and are the natural choice as quantum to purchase will be lower. One main attraction of 1 bedroom and 2 bedroom units is that they are quite liquid and can be managed easily.
One of the Property Cooling Measures introduced in June 2013 was the implementation of the Total Debt Servicing Ratio (TDSR), limiting the maximum total debt limit to 60% of borrower’s gross monthly income taking all other repayment debt obligations. It has been about five and half years already.
Since then, prospective upgraders have accumulated sufficient capital since the introduction of TDSR and are able to handle the necessary down-payment for larger properties
Looking at the many properties that were completed in 2016, between one and two bedroom units, it was noted that the two bedroom units are holding up better despite downward pressure.
The impact of the collective sales in 2017 and 2018 has been pushing the property market forward. Many of those who benefited from the en bloc sales channeled their earnings into purchasing two bedroom units. Many chose to get properties for their children or consider their purchases as part of their retirement plans.
New Development Trends
In fact, some of the newly launched developments are already displaying this trend such as:
- At Stars of Kovan, which as fully sold in early 2018, the majority type of units is the two-bedroom unit type at 54% of the total.
- Over at a new property launch at Woodleigh, 74% of the 332 two bedroom types were sold as of December 2018. The two-bedroom type makes up the majority and is 41% of the total number of units.
- In District 9, in the middle of Orchard, 33 out of 44 units (75%) are of two-bedroom type in this new freehold property
- At Grange Road in District 10, 48 units out of 56 (85%) in this new development have two bedrooms.
At the start of 2019, there will be some new developments ready to be launched, with majority of two-bedroom units. One interesting launch in January 2019 at River Valley consists of only two-bedroom units in a hotel like residential development, leveraging on the developer’s hotel ownership experience.
If you are interested to acquire a two-bedroom unit to create or add to your property portfolio, you may want to consider the coming new property launches to get the best prices and units. Which properties pose the least risk? How you can win in property investments?
If you are interested to know more, kindly drop me a PM or whatsapp message so we can arrange for a 7 minute phone consultation.
(1) Business Times, dated 21 Nov 2018: 2 Bedroom Popular for Buyers
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