Undervalued Properties In CCR? Here Is What My Research Says

In the aftermath of the recent post cooling measures, a lot of buyers and sellers are now wondering what should be their next move.

The focus is about the path of downgrading back to HDB has been “blocked” by a requirement to wait for 15 months.

As such, this move has forced current private condo owners to hold back from listing their property for sale.

As an agent, I expect an immediate slowdown in the number of listings and transactions.

However, opportunities still exist for those who wish to remain in the private property segment.

Let’s explore the numbers from the research I’ve done.

#1: Dwindling supplies on new launches in OCR and RCR

The chart below shows the new launch unsold inventories.

As of Q2 2022, there are 15,805 units available.

The breakdown of the numbers are as follows:

• OCR – 4386 units available
• RCR – 5383 units available
• CCR – 6036 units available

The Core Central Region has the most number of units available.

Based on the average annual sales from 2004 to 2021, it will only take:

• 0.78 years to completely sell existing OCR units
• 1.48 years to sell out existing RCR units
• and almost 3 years to sell out existing CCR units

With the lack of supplies in OCR and RCR areas, buyers may have to explore CCR projects to find their choice units.

The lack of supply especially in the OCR region has resulted in developers being very confident in their pricing.

We have seen it in the way AMO Residences and Lentor Modern has been priced during their launch – crossing $2,100 PSF.

I shall cover this in greater detail later on.

#2: Cooling measures likely to affect property supply in RCR and OCR areas

Based on my observations, the majority of private condo owners who cash out to downgrade to HDB are likely to be staying in the RCR and OCR areas.

With the latest cooling measures, this will reduce the number of resale units available for sale as these private property owners hold back from selling their existing unit.

With the required 15-month “cooling-off period”, these owners will likely adopt a wait and see attitude for this measure to be removed.

Alternatively, they may have to increase their selling price to factor in the 15 months of potential rental cost.

Buyers can expect the number of listings from resale condo developments to drop significantly.

With the limited supplies for both new launches and resale properties in the OCR and RCR areas…

Buyers with stronger financial power should consider to venture into CCR.

For investors, they may also consider getting smaller units in CCR.

#3: The negligible price gap between the CCR areas versus OCR and RCR areas

Over the last few years, the private property prices at OCR and RCR areas has risen much faster than when compared to the CCR areas.

Why? The demand is partly driven from HDB upgraders who sold off their flat to purchase a private condo unit in the OCR areas.

This demand from HDB upgraders has pushed up the OCR & RCR prices up – further narrowing the gap between OCR/ RCR and that of CCR.

How big is the demand from HDB upgraders?

You can refer to this chart below:

In the charts above, you will notice that in 2019, 2021 and 2022 are the years where record high HDB units are reaching MOP.

Most of the HDB upgraders with an intention to sell or upgrade will choose to do so at the 5th year mark so they can maximize the gains they can make.

However, there is something you must take note of.

The number of HDBs reaching MOP will not be high forever.

After 2022, the number is expected to drop.

This means the demand from HDB upgraders will not be as high as before.

And this might also mean the demand for OCR and RCR properties might weaken.

#4: Potential upcoming demand of properties in the CCR

This is an unavoidable factor as Singapore continues to open up further post-pandemic.

We are seeing more and more foreigners entering the private property market in Singapore as they view this location as a safe haven for their wealth.

For this group of people, the prime metropolitan area of Singapore will be the area they consider the safest bet for them.

For the ultra-wealthy, Singapore property is just another way for them to diversify their assets.

Conclusion

I wrote a very detailed article about how the CCR region might be of better growth potential compared to OCR and RCR areas.

In the OCR areas, the average property price has reached a new peak.

But with the impact from these 3 factors:

• Recent 30 Sept 2022 cooling measures
• Reduced demand from HDB upgraders
• Drop in the number of HDB flats reaching MOP

This means OCR prices might remain where it is currently and growth potential will be limited.

It also means better growth potential should be found at the CCR areas as prices there have not risen as fast as OCR areas.

Right now, the price gap between CCR vs (OCR and RCR) is now very close.

Those who can afford will probably find it more compelling to enter the CCR market now.

And that is why I hold on to this theory that CCR properties are now being overlooked and likely to be undervalued.

As someone who regularly engages with buyers and owners on the ground, the CCR factor of being part of the metropolitan and prime district of Singapore is still very strong.

This is an opportunity that might not last long as the property supply within the CCR area starts to dwindle once people recognize the price gaps is not that big.

If you have been considering to make that move to the Core Central Region of Singapore, I invite you to explore your options with me.

Drop me a message via whatsapp so we can arrange a no-obligation discussion.