Following that, the Government released a land parcel for sale in Tanjong Pagar in September 2001. The site was won by Far East Organization and has been developed into a 649-unit residential development with commercial on the first storey called “ICON”. ICON was the best selling project in 2003. Based on caveats, ICON was sold at an average price of $700 psf in 2003. This was followed up quickly with a “white” site in Marina Bay in March 2002. CDL was the highest bidder for the site. The developer chose to develop the entire site into a 1,111 unit residential development called “The Sail at Marina Bay”.
The immense success of these two projects spurred interest in residential living in the city. A number of projects such as Lumiere and The Clift quickly followed suit. Some older office developments were demolished to make way for residential developments. Notable examples include Robina House and UIC Building. Many of these projects in the CBD are either pure residential developments or residential developments with commercial at the first storey.
However in the past five years, the trend seems to be geared towards mixed use developments such as V on Shenton, Marina One Residences, and Wallich Residence. These integrated developments offer a mix of residential, office, retail and even hospitality uses. They offer convenience to the residential occupants, office tenants and hotel guests. The varied needs of these users throughout the day ensure continued footfall within the retail components and create the much needed buzz that will last through the night. The supply of residential units in the CBD have grown by leaps and bounds since the 1970s. As of 2Q 2018, there are an estimated 6,610 residential homes in the CBD.
Prices in CBD on upward trajectory for more than ten years. Despite the fluctuations in islandwide property prices, resale prices of residential developments in the CBD was on a downtrend from 1996 to early 2000s. This is probably due to ageing stock, lack of new supply and concerted efforts by the Government to revitalise and rejuvenate the city. When more concrete plans to revitalise the CBD materialised after the announcement of the Concept Plan 2001, prices of residential developments in the CBD started to stir. Coupled with the news in 2005 that an IR will be built in Marina Bay, prices started to escalate.
Prices of new launches and resale homes have been on a growth trajectory for more than ten years. From its low of $700 psf in 2003, prices of new launches have jumped 290% to a record high of more than $2,700 psf in 2018 to date. Resale prices growth is even more impressive. It soared more than 450% from $350 psf in 2003 to almost $2,000 psf in 2018 to date. The explosive growth in prices in the CBD outpaced the 82% change in URA property price index over the same period.
Property prices in the CBD have been outperforming the rest of the island for more than ten years. Also rental yields in the CBD are comparable to islandwide yields which means that rents have kept pace with the increase in prices, pointing to increasing acceptance of city living. This is something that savvy investors have identified and have returned to the CBD scouting for good deals. Transaction volume have been increasing since 2016.
As of 2Q 2018, the supply of completed residential units in the CBD is low at around 6,610. Currently there is no new supply of residential units in the pipeline. With limited supply and increased interest, this points to support for an increase in prices in the CBD. Based on URA’s developer sales, the number of unsold residential units as of end-August 2018 is around 700. Buyers can either look at the newly completed mixed use residential developments such as V on Shenton, Marina One Residences or Wallich Residences. If one is willing to go slightly further to the fringe of the CBD across the Marina Bay area, there is the mixed use 190-unit South Beach Residences. Rental yields in this district is similar to the CBD. Besides the great views from South Beach Residences, one can also see the Singapore Grand Prix and the National Day fireworks. These make for a choice investment for investors as well.