Special Focus on Growth Area - REAL ESTATE DATATREND - OrangeTee
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REAL ESTATE DATATREND
Special Focus on Growth Area Keener Sense of Real Estate
Analysis on Woodlands Regional Centre and its future growth potential 09 April 2014
Prime commercial site attracted strong interest from developers RESEARCH & CONCULTANCY
| Singapore | Residential |
A consortium of Far East Organization, Far East Orchard and Sekisui House
has put in the highest bid of nearly $634 million or $907psf ppr for the first Ding Chun
prime commercial site in the heart of Woodlands Regional Centre. It also Senior Research Analyst
beat the second highest bidder by merely 2.1%. Demand is fairly strong with
8 bids put in, which included some big name developers. Developers’ Christine Li
Head
interest in this site is a testament to the confidence in the upcoming
Woodlands Regional Centre, which could mirror the success of Jurong E-mail: research@orangetee.com
Regional Centre following its plans drawn up in the 2008 Master Plan. Website: www.orangetee.com
Woodlands Regional Centre could play a complementary role given its
proximity to Malaysia’s special economic zone - the Iskandar region. The
growth momentum in Iskandar was also rekindled earlier this week with the
announcements made by both Prime Ministers after their annual retreat.
Three possible locations for the Singapore-KL high-speed rail station have
been identified and the Woodlands-Johor Rapid Transit System (RTS) is on
track to be completed around 2018.
Woodlands Regional Centre – the Northern Gateway
In line with the decentralisation strategy announced in Concept Plan 1991
to guard against congestion and over-development in the Central Business
District and Marina Bay areas, Woodlands Regional Centre has become the
fourth regional centre after Tampines Regional Centre in 1992 and Jurong
Lake District and Paya Lebar Central in 2008.
It will be another key growth area in the north of Singapore. Envisioned as
Singapore’s Northern Gateway, Woodlands Regional Centre will incorporate
retail, business, residential and lifestyle elements into its two districts –
Woodlands Central and Woodlands North Coast. With over 100 ha of land
available for expansion, Woodland will become a vibrant live-work-play
precinct set in lush green northern waterfront over the next 10 to 15 years.
Vast untapped potential
We saw vast untapped potential in Woodlands. Being the only regional
centre with a coastal waterfront setting, residents in Woodlands can look
forward to enjoying the stunning views of the Straits of Johor. Woodlands
has 700,000 m2 of new commercial space and more than 100 ha of
development land; it will be well-connected to Malaysia via cross-border
rail link. It meets the needs of SMEs and business who can benefit from the
proximity of a major transport node and great convenience with much
lower costs than CBD area. With new transportation network, fresh
commercial space and room to grow, we believe that Woodlands Regional
Centre is set to realise its full potential as Singapore’s Northern Gateway.
Multiple growth catalysts for Woodlands
Connectivity used to be Woodlands’ major weakness, because traveling to
town could be up to 35 minutes by road and over an hour by Mass Rapid
Transit (MRT). Traffic congestion along the Causeway could also be a turn-
off for businesses and residents alike. With the development of Thomson
Line (TSL) and North-South Expressway (NSE), the accessibility of
Woodlands Regional Centre will be greatly enhanced, reducing travelling
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time to the city centre. The upcoming TSL will have three stations in
| Singapore | Residential |
Woodlands by 2019, namely Woodlands North, Woodlands and Woodlands South.
Woodlands station will become an interchange station, connecting to the
current North-South Line. NSE, expected to be completed by 2020, will cut the
travelling time to the city by about 10 minutes to about 20 to 25 minutes.
The existing Woodlands Waterfront will be expanded eastwards so that the
entire waterfront area can be opened for public enjoyment. New and
sensitively designed residential development will be built along the expanded
waterfront park. Staying closer to the water, residents get to enjoy the
breathe-taking sea views just at door step, away from the hustle and bustle of
the city.
With the pace of development to accelerate over the next 10 to 15 years,
more commercial activities will be injected into Woodlands Regional Centre,
according to the latest Draft Master Plan 2013. A mix of retail and office
spaces and integrated developments will be rolled out progressively, in line
with the decentralisation strategy to bring jobs closer to home. The first
commercial site in Woodlands Regional Centre was put up for public tender in
December 2013.
Vibrant commercial activities and job opportunities will increase the
popularity of the housing estate. When fully developed, this regional centre
will be able to provide approximately 100,000 new jobs. Currently, there are
more than 500,000 residents in Woodlands and the neighbouring Yishun and
Sembawang towns. The addition of new jobs is a substantial one and could
boost demand for housing in the region should the regional centre flourish.
Besides improvements in the accessibility within the country, visiting Malaysia
and Singapore will also be made easier when the Singapore-JB Rapid Transit
System starts to operate in 2018. We expect that more Malaysians commute to
work via the new MRT line, or send their children across the Causeway for
education.
More Singaporeans will also take advantage of the weakening Malaysian ringgits
and cross the Causeway for weekend shopping. With better connectivity, more
synergies between Singapore and Malaysia can be created to leverage on each
other’s strength. If that happens in the foreseeable future, property prices in
Woodlands could surprise on the upside going forward.
Attractive rental market
Currently, potential tenants do not have much choice when it comes to renting
a completed private home in Woodlands. Supply of condominiums in
Woodlands is limited, as only five projects have been completed in the area
over the last decade or so. Out of the five, three projects were completed
more than a decade ago. Some tenants have to resort to renting apartments
and condominiums in nearby housing estates such as Yishun and Sembawang
while working in the industrial parks in Woodlands. In 2013, rental yields of
District 25 (Woodlands) and 27 (Yishun and Sembawang) stood at 4.0% and 4.2%
respectively, both outperforming the island wide average of 3.8%. Once the
regional centre turns into a full-fledged business hub with full employment of
the 100,000 jobs, local and foreign workers from the industrial clusters and
offices could further enhance the attractiveness of its rental market.
A bright investment prospect
In order to assess the possible growth and development trajectory, we took a
closer look at Jurong Regional Centre as parallels could be drawn between the
two regional centres. In view of planning, Jurong and Woodlands regional
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centres share common grounds. They both have a development period of 10 to
| Singapore | Residential |
15 years. Comprising of two precincts, the two regional centres are able to
combine commercial, leisure and living together, and provide green lifestyle to
residents at the same time. They both have support from business parks and
educational institutions to boost commercial activities. Five years after Jurong
Lake District was unveiled, the regional centre has taken shape with
completions of shopping centres, like J Cube and JEM, and relocations of
government authorities. Meanwhile, property prices in Jurong are on par with
the growth of the area. Prices of non-landed private homes in Jurong grew by
64% since 1Q2008, outperforming the Outside Central Region (OCR) average of
58.5%. Currently, prices of non-landed private homes in Woodlands are lower
than OCR in all types of sales. Looking at the path of Jurong Lake District has
taken through, we believe that Woodlands housing market could have more
upside potential when infrastructure and commercial developments are ready.
Exhibit 1: Winning bids for GLS tender sites
Tender prices trending up
In the past five years, GLS launched
5 residential land parcels for tender
in Woodlands, including private and
EC. The latest site sold was an EC
site which attracted 7 bids, signaling
developers’ confidence in the area.
This is also the first site affected by
the measure that required a waiting
period of 15 months after awarding
the land. The project will be
available earliest in August 2014.
Twin Fountains and Forestville were
launched in May and June 2013. Both
projects achieved respective take-up
rates of 83% and 65% in the six
months after launch, despite the
Source: URA, OrangeTee Research impact of property cooling
measures.
Exhibit 2: Non-landed private home prices in Woodlands vs OCR
1,600
S$psf Upside potential for home prices
1,400 Over the years, home prices in
Woodlands have been lagging behind
1,200
that in the OCR. This is due to the
1,000 lack of amenities and inaccessibility
of the area. We believe that with
800 the upcoming TSL, the future NSE
600
and the development of commercial
hub, these disadvantages could be
400 mitigated.
200
0
2005Q3
2012Q3
2003Q1
2003Q3
2004Q1
2004Q3
2005Q1
2006Q1
2006Q3
2007Q1
2007Q3
2008Q1
2008Q3
2009Q1
2009Q3
2010Q1
2010Q3
2011Q1
2011Q3
2012Q1
2013Q1
2013Q3
Woodlands New Sale Woodlands Resale Woodlands Sub Sale
OCR New Sale OCR Resale OCR Sub Sale
Source: URA, OrangeTee Research
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Exhibit 3: Non-landed private home prices in Jurong vs OCR
| Singapore | Residential |
1,600
S$psf Before the announcement of 2008
1,400 Master Plan, non-landed home prices
in Jurong underperformed the broad
1,200 market in the OCR. Soon after the
development plan of Jurong Lake
1,000
District was unveiled, prices moved
800 up quickly. Median prices have
increased by 64% as of 4Q2013.
600
400
200
0
2003Q1
2003Q2
2003Q3
2003Q4
2004Q1
2004Q2
2004Q3
2004Q4
2005Q1
2005Q2
2005Q3
2005Q4
2006Q1
2006Q2
2006Q3
2006Q4
2007Q1
2007Q2
2007Q3
2007Q4
2008Q1
2008Q2
2008Q3
2008Q4
2009Q1
2009Q2
2009Q3
2009Q4
2010Q1
2010Q2
2010Q3
2010Q4
2011Q1
2011Q2
2011Q3
2011Q4
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
2013Q4
Jurong OCR
Source: URA, OrangeTee Research
Exhibit 4: Gross rental yields as of 4Q2013, by districts
Gross rental yields are fairly
attractive in Woodlands compared to
other locations. Rental yield in
District 25 stood at 4.0% in 4Q2013,
higher than the islandwide average
of 3.8%.
Source: URA, OrangeTee Research
Exhibit 5 : Rents of popular projects with strong leasing demand
There are 5 completed private
projects in Woodlands. The most
popular ones with strong leasing
demand are Casablanca and
Rosewood, which were completed in
2006 and 2003 respectively.
When Woodlands Regional Centre is
fully developed, an estimated
100,000 new jobs will be added. This
could help to boost rental demand in
Woodlands.
Source: URA, OrangeTee Research
See terms of use on last page. Page 4 | 5Exhibit 6: Past and upcoming launches in Woodlands as of Feb 2014
| Singapore | Residential |
Launch No. of units
Project Name Type % sold Developers display confidence
Date unsold Tender for the first commercial site
Woodhaven Condominium Jun-11 88% 41 at Woodlands Square was closed on 8
Parc Rosewood Condominium Jan-12 100% 0 April 2014. The site successfully
Twin Fountains Executive May-13 84% attracted 8 bidders, and the winner
67 is a consortium formed by Far East
Condominium
and Sekisui House. They offered
Forestville Executive Jun-13 70% 195 nearly $634 mil for the site, or $907
Condominium psf ppr. This is also 2.1% higher than
Expected Land price the second highest bidder
Project Name Type Developer Capitaland. The land price also came
Launch $ psf ppr
in at the higher end of the estimates
Woodlands Ave 5/Ave 6 Executive Aug-14 Qingjian by market watchers. It shows that
341
Condominium developers are confident in the
Expected Land price prospects of Woodlands Regional
Project Name Type Developer
Launch $ psf ppr Centre.
Woodlands Square Commercial N/A Far East & 907
Sekisui
Source: URA, OrangeTee Research
Exhibit 7: Change of Woodlands in Master Plan 2008 and 2013
Woodlands Central
Master Plan 2008 Master Plan 2013 Legend
Dark Blue: Commercial
Light Blue: Mixed Development
Beige: Residential
Purple: Business 2
Woodlands
Woodlands MRT for
Square site Thomson Line
Woodlands North Coast
Master Plan 2008 Master Plan 2013 Legend
Dark Blue: Commercial
Dark Turquoise: Business Park
Light Purple: Business 1
Purple: Business 2
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Source: URA Master Plan, OrangeTee Research
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