Prime-central districts price gap narrows

Prime-central districts price gap narrows

Price-spread shrinks to 1% in 2005-06 from 7% in 2004, says DTZ

By KALPANA RASHIWALA

THE gap between the average selling prices for private apartments and condos achieved by developers in the traditional prime districts compared with emerging central districts narrowed to just one per cent in 2005 and 2006, the latest analysis of caveats by DTZ Debenham Tie Leung shows.

The price-spread between the two areas was 7 per cent in 2004. In that year, lifestyle projects like The Sail @ Marina Bay in the Central Business District and The Berth by The Cove at Sentosa Cove were introduced, boasting waterfront housing.

Central districts cover districts 1 to 4 and include the CBD, the HarbourFront area and Sentosa Cove. The established prime districts are 9, 10 and 11.

The gap was at its widest in 2002 at 29 per cent. The price convergence between the two areas in the past couple of years reflects the steady increase in prices of lifestyle projects with waterfront housing themes in the central districts.

DTZ said: 'With most of these new exclusive projects being 99-year leasehold, compared with still predominantly freehold homes in the traditional prime districts, the price convergence reflects the dwindling importance of tenure but a growing preference for unique lifestyle concepts.'

The property firm's executive director, Ong Choon Fah, said that projects in the central districts could overtake 99-year projects in the prime districts on a selective basis.



'There's potential for this in the Marina Bay area because it offers the whole live, work, play concept in a waterfront setting that will also have gardens, a museum, and the Marina Bay Sands with one million sq ft of retail space.'

DTZ's analysis of caveats captured by the URA Realis system also shows that while 2,063 apartments/condos sold by developers in the prime districts last year was almost unchanged from 2005's figure of 2,061 units, the number of non-landed homes sold in the central districts rose 9 per cent last year to 884, the highest since 1996.

The increase was on the back of several lifestyle projects launched in the popular Marina Bay and Sentosa Cove waterfront locations.

The concept of inner-city living in the traditional CBD received a boost last year, with the launch of The Clift and Lumiere, which further buoyed developer sales in the central districts.

While primary market sales of non-landed homes in the prime districts were flat last year, it was a different story in the secondary market, where strong collective sales activity drove up the number of prime district non-landed homes sold by 88 per cent to 3,603.

This is an all-time high and surpassed the last peak of 1999 by 34 per cent, a result which was helped by prime-district en bloc sales.

DTZ estimates that about 2,310 non-landed homes changed hands through en bloc sales in the prime districts last year.

'However, taking into account developments which were collectively sold towards end-2006 and which will be recorded in 2007, as well as some transactions where caveats have not been lodged, less than half of the prime apartments transacted in the secondary market are estimated to have been sold individually,' the firm said.

The secondary market in prime districts was also boosted by price gains in prestigious developments like Ardmore Park.

DTZ predicts that momentum in the prime districts will strengthen - particularly in the primary market as developers launch new projects on en bloc sites.

'Together with strategic projects like The Orchard Residences and Scotts Square, average selling prices in prime districts will continue to rise,' it said.

The secondary market in prime districts will also benefit from further price recovery and steady rental increases, which should fuel investor interest.