But project may be seen as affordable way to buy into Bukit Timah address
[SINGAPORE] While The Hillford could offer potential buyers a chance to buy into the highly desired Bukit Timah address cheaply, demand could be limited by its 60-year leasehold.
Marketed as the first retirement resort in Singapore - albeit with no age limit placed on potential buyers - the 281-unit project offers a mix of one-, two- and two-bedroom dual-key units which are equipped with built-in elder-friendly features.
Both young and old thronged the showflat when it opened on Saturday; according to a market watcher, of the more than 400 cheques that have since been collected, the majority were from younger investors.
Indicative prices for units start from $980 per square foot (psf), which translates into about $388,000 for a one-bedroom unit, $498,000 for a two-bedroom unit and $648,000 for a two-bedroom dual-key unit.
"It is like a legitimate shoebox development in a very attractive RCR (Rest of Central Region) location," said a market watcher.
Given that there are no restrictions on either ownership or tenant mix, it is not surprising that the project attracts younger investors, said Christine Li, head of research at OrangeTee.
"The indicative price is still on the high side, but given that there are fewer such small developments around the area, it probably will not deter people from buying," she said, noting that the latest launch in the area, Creek@Bukit, achieved a median price of $1,637 psf when it was launched last November.
Ms Li expects The Hillford to attract a mixed group of buyers spanning singles, downgraders in their 50s and 60s, and even investors who might have previously been priced out of the market because of the Total Debt Servicing Ratio (TDSR) and other cooling measures.
But given the 60-year leasehold cap, investors might find it harder to finance the property since it may be harder to get bank loans for a shorter lease, said Nicholas Mak, head of research at SLP International.
Unloading the property in the resale market might prove a challenge, too. After five years, for instance (assuming the buyer holds the property for five years to avoid paying Seller's Stamp Duty), the development would have a remaining lease of 55 years. Based on the remaining tenure, a 30-year-old buyer can only withdraw up to 55 per cent of the value left in his or her Central Provident Fund. This assumes that the above sum is up to 55 per cent of the lower of the purchase price or the value of the property.
Another factor that could potentially limit the scope of buyers is the design of the project, said Desmond Sim, associate director at CBRE Research.
According to the developer World Class Land, the project was designed to be "significantly different" from that of a typical condominium, given its specially tailored facilities, elder- friendly features, and provision of services such as a 24-hour concierge service and dedicated Resort Manager.
"Is this the cheapest way to get a condo in the Bukit Timah area? Yes. But at the end of the day, it is marketed and designed for the elderly so you may not get the amenities and features of a lifestyle home," said Mr Sim.
Consultants agree that the project will likely do well, regardless of its buyer profile.
Indeed, more such sites could potentially be offered, said Donald Han, managing director at Chesterton Singapore.
"(The introduction of The Hillford) creates an interesting variety of products that is available on the market ... If we don't create such spaces, a lot of demand might filter into other countries," he said.
CBRE's Mr Sim agreed: "This is a pilot project. When it does well, it will spark off other projects. Maybe in the suburbs, where costs can be further managed ... I think if the government feels they have succeeded in reducing the cost of home ownership for the elderly, they may roll out one or two more sites in different locations."
But perhaps instead of the closed-envelope system currently employed, the government should consider a point system where every developer submits two prices - a land price and a product launch price, suggested SLP's Mr Mak.
"Higher land price, higher points; lower launch price, higher points," said Mr Mak. "In this way, they will be able to award the land to the most efficient developer."
Source from Business Times