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Are the upcoming new launches in the east still good investments in 2023?

Updated: Mar 21



New launches are in an interesting position in 2023. While prices are at an all-time high, having normalised at around $2,000 psf, this is balanced by a major supply crunch and peak demand.


So with news of three upcoming new launches in the east, it’s an appropriate time to address the outlook on these projects; and on whether 2023 in general is the right time to buy:


How affordable are new launches in 2023?


From the fast-selling AMO Residences, down to the more recent Sceneca Residence, we’ve seen prices normalise at around $2,000 psf; this is even for Outside of Central Region (OCR) properties.


This sets a challenging quantum for most Singaporeans, as a 900 sq. ft., three-bedder unit would be around $1.8 million.


Most families will be comfortable in units that are at least 900+ sq. ft.


Now consider that, as of 2022, median income stood at $4,680.


Assuming co-borrowers of similar income levels (e.g., a working husband-and-wife team, both a median income), this is a combined income of $9,360 per month. The Total Debt Servicing Ratio (TDSR) would limit this couple’s monthly loan repayment – before factoring other debts – to $5,148 per month.


Assuming a 25-year mortgage, at the TDSR floor rate of four per cent per annum, this would cap their loan total to just $970,000.


This would require a down payment of $830,000, of which $90,000 has to be in cash.


As such, new launches in 2023 are suited to upgraders or investors; those who have secured the first phase of a property wealth progression plan.


By upgraders, I refer to those who have completed the first step of their property wealth progression journey.


For example, the average price of a 5-room flat in end-2022 was around $521 psf. At an average of 1,184 sq. ft., the average resale price of such a flat would be $616,864.


After these sale proceeds, the buyers would need $213,316 to cover the rest of their down payment. If it’s split equally, this would mean around $106,568 in each respective borrower’s CPF; this can be possible with a few years of diligent savings (remember CPF gives you a guaranteed 2.5 per cent interest, and your employer tops up your savings by as much as 17 per cent).


HDB upgraders may still have a shot at private home ownership in 2023



Those who started off with a condo, and hence have higher sale proceeds, may be even better positioned to afford a new launch.


This is why it’s important to plan your initial purchases as an owner-investor. Those who have bought the right properties earlier may still be in a position to afford new launches today; even if their income level is not exceptional.


First-time home buyers, however, should consider more affordable resale condos or a flat first. This is due to prices being high and supply being rather low, in the 2023 market.


If you’re currently a first-time buyer and aspire to owning a new condo, or an investor looking to build your wealth through real estate, drop me a note so I can show you how to plan ahead.


Focusing on new launches in the east

Amber Park is one of the more iconic developments in the East


Given that new launches have seen price increases even in fringe areas, my first inclination would be to check out in the east which is one of the most sought-after region in Singapore.


This is predicated on the following developments:


1. Paya Lebar is set to move from 2030 onward

This is a long-stated plan by URA, and the relocation of Paya Lebar will result in new neighbourhood and commercial / lifestyle hub. This space will provide improved connectivity between Serangoon, Hougang, and Sengkang, to east-side neighbourhoods like Pasir Ris, Tampines, and Bedok.


This hub will also add to general amenities in the area, and will likely see an uptick of workers within this new neighbourhood. This will provide a boost to properties with close access, as well as a potential catchment area for landlords.


2. Vision 2030 by the Kallang Sports Hub

Vision 2030 is mainly led by the Singapore Sports Hub, and will see rejuvenation of the Kallang area. This will define the Kallang area as key area for sports and athletes, while better integrating the Sports Hub and its facilities with the overall precinct.


There has already been significant improvements to the Kallang area via the Kallang Wave Mall and of course the Sports Hub itself, so this will contribute to interest in the East over the coming years.


3. The East Coast Long Island Reclamation

This is a bit of a double-edged sword. On the one hand, the Long Island project may result in some resale condos having impeded sea views, although this is still too early to determine.


On the other hand, development of Long Island – a plan that actually dates back to 1991, could introduce new, in-demand waterfront housing, stronger commercial prospects, and revivify existing stretches along East Coast beach. At risk of some (possible) blocked views, the net gain on property value will likely outweigh the drawbacks.


If you’re in a position to buy, which new launches are good investments?



Let’s look at three upcoming launches we can consider, which are within District 15 (Marine Parade / East Coast).


These are:

· The Continuum

· Tembusu Grand

· Grand Dunman



General Comparison

Project

​Location

Lease

Unit Count

Developer

Target Preview Date at Showflat

The Continuum

(TOP in 2027)

Thiam Siew Avenue

Freehold

805

Hoi Hup Realty / Sunway Developments

30th March 2023

Tembusu Grand

(TOP in 2028)

Jalan Tembusu

99-years

638

City Developments Ltd.

23rd March 2023

Grand Dunman

(TOP TBC)

Dunman Road


99-years

1,035

SingHaiyi

Q2/Q3 2023


Comparing by Accessibility


At the moment, Grand Dunman has the best accessibility by train. It’s located within walking distance (around seven minutes) of Dakota MRT on the Circle line. This is significant because Dakota is only one stop away from Paya Lebar Quarter (PLQ).


PLQ is a major commercial hub with malls like the SingPost Centre and Paya Lebar Square, as well as several Grade A offices. The problem with staying directly at PLQ, however, is the commensurate increase in traffic congestion and noisy crowds, precisely due to its development.


PLQ is an area in high demand, but that can mean a lot of noise and crowds



Grand Dunman will allow fast access to PLQ, while being in the quieter stretch on the other side of the Geylang River.


Tembusu Grand will be the next best for train accessibility, as the Tanjong Katong MRT station on the Thomson – East Coast Line is upcoming (possibly by the end of this year). This is estimated to be around a 10+ minute walk from the project.


The Continuum doesn’t have an MRT station nearby; but its closest station is Paya Lebar. It’s not actually that far (just 860 metres or perhaps a six-minute drive), so I would expect the condo will organise a shuttle bus of sorts.


Comparing by Amenities

The area around KINEX is packed with amenities, though a bit further from the MRT



Continuum has good amenities in immediate walking distance. Continuum is just a short walk away from KINEX mall, and there are two supermarkets nearby besides (a Giant at Tanjong Katong complex, and a Sheng Siong also nearby in Tanjong Katong.


For Grand Dunman, it’s a matter of preference: do you mind having to take the MRT to Paya Lebar? If not, you may find that a single train ride to PLQ (from Dakota station) provides almost all the shopping and eating you could want.


Honestly it’s quite comparable to Continuum: while Continuum doesn’t have a direct train to PLQ, it’s also close by (six minutes’ drive), and has KINEX in walking distance.


Tembusu Grand, I feel, is more of a family area when it comes to amenities. This is because it’s close to the East Coast Road stretch where you’ll find i12 Katong, and a whole row of family-friendly pubs, eateries, and shops. This includes some new notables like Flock, SuperNova, Bella People & Coffee, etc. Also nearby the Katong area are established eateries like Punggol Nasi Lemak and Eng’s Wanton Noodle.


This area is also very well known for its large number of enrichment schools for children. It’s not as jam-packed as being near PLQ or KINEX, and it’s a more laid-back area to relax.


Katong is a favourite location for families, and is a major lifestyle hub in the east



Also, Tembusu Grand is in a well-established expatriate enclave, which may be useful for landlords to know.


In terms of schools, all three projects are tied. All three have the popular Tanjong Katong Girls’ School, Haig Girls’ School, and Chung Cheng High School within a one-kilometre Home School Distance (HSD). None of them can be decisively called better in this regard; simply pick the one closest to your child’s school, for owner-investors!


For pure investors who want to target the office crowd at Paya Lebar, I would focus on The Continuum or Grand Dunman. For those who want more family-oriented tenants, or who are owner-investors interested in a more lifestyle area, I would skew toward Tembusu Grand.


Comparison by Project Size and Units


Grand Dunman can be considered a mega-development, with 1,035 units. These massive unit counts are generally liked by owner-occupiers, but not so much investors.


Mega-developments have more room for facilities, but are also more packed



This is on account of size. Mega-developments are generally larger, and tend to have a wider range of facilities (Grand Dunman is the largest condo of the three at 271,622 sq. ft. by land size, whereas The Continuum is around 263, 794 sq. ft., and Tembusu Grand is about 210,623 sq. ft).


Having a large number of units also helps to spread the maintenance costs between more households, and units can sometimes be priced thanks to economy of scale.

Investors, however, may be worried about competition between landlords when there are so many units; and there is a higher risk of competing listings when for resale.


As such, those picking Grand Dunman should be exceptionally careful in picking units with a better facing or higher floor. Anything that distinguishes one unit from the many others will matter.


The Continuum is also rather large at 805 units, and would broadly have the same pros and cons as Tembusu Grand when it comes to size (albeit to a lesser degree).


Tembusu Grand, as a matter of opinion, has the most comfortable, mid-sized unit count at 638 units. This may be preferable to families or tenants who want more privacy, and investors can worry less about future competition from the same project.


Comparison by Price


We can estimate the price, based on the land costs to the developer. In effect, we use the land price and add typical construction, licensing, and marketing costs:

The Continuum

Tembusu Grand

Grand Dunman

Lease

Freehold

Leasehold

Leasehold

Land Price

$1.09bn (approx. $1,448psf)

$768mn (approx. $1,302psf)

$1.28bn (approx. $1,350psf)

Estimated Breakeven

$2,296psf

$2,059psf

$2,120psf

Estimated Price (starting from)

$2,775psf

$2,470psf

$2,500psf


To get a sense of pricing, we should compare to the most recent new condos in the area. We don’t compare new launches to existing resale condos, as they may be much older (e.g., a 10+ year age discrepancy would render the comparison meaningless).


Instead, we’ll look at the most recent projects in the same District:

Project

Lease

Avg Current Price

TOP Date

Liv@MB

Leasehold

$2,648 psf

2024

Coastline Residences

Freehold

$2,880psf

2023

Amber Park

Freehold

$2,613psf

2023

Meyer Mansion

Freehold

$3,045psf

2023


Based on this, we can see that Tembusu Grand and Grand Dunman are competitively priced for the area. This is partly due to their being leasehold condos, so buyers are spared the added cost of a freehold property.


(The Continuum is priced higher, but this is on the basis on its freehold status).


For investors who are not looking at a very long investment horizon, such as just within a 10-year span, these leasehold projects may be a more sensible buy. It could take as long as two to three decades before freehold status starts to make a real difference.


Other General Observations


The Continuum is the only freehold project of the three; and as always the freehold status comes with a bit of a price premium. This is an advantage as most other condos in the district and surrounding areas are leasehold; but as always, freehold properties pay off best when held in the long-term.


I would consider it more if you’re thinking of a long holding period such as 10 to 15 years, perhaps while tapping on the prospective tenant pool of Paya Lebar.




Freehold projects don’t suffer from lease decay, but the high premium means you’ll wait longer to see better returns

I’ve mentioned Tembusu Grand as a more family-oriented location; and at least part of the reason is the presence of more low-rise developments. The stretch around East Coast Road consists of many shophouses, and some small boutique condos; I know some investors are believers in low-density areas, so this will probably be of interest to them.


Grand Dunman, however, has some good low rise views as well; and I would expect the developer will have the facing toward the landed enclave along Poole Road. Again, this is a pleasant alternative to the packed PLQ area, while still being in proximity. I also feel Grand Dunman will have some foodie appeal, as it’s so close to the Old Airport Road food centre.


As a general conclusion, I would say The Continuum works for long-term investors looking to tap on the Paya Lebar area, while Grand Dunman may appeal to investors with a shorter holding period on account of leasehold status (but it can also leverage off the same proximity to PLQ).


Tembusu Grand might be better for owner-investors who are focused on own-stay use, or for landlords who specifically want to target the expatriate demographic at East Coast Road.


With regard to all three projects, do call or WA us at 9068 9692 if you want to be part of preview launches, or would like more material regarding them.


I can also help you assess whether these new launches fit your property portfolio, based on your long-term investment goals.

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