Recently, the newly launched integrated development Pasir Ris 8 made headlines for its phenomenal sales, prompting a DBS analyst to suggest it was a sign of an asset bubble. Now that the transactions have been published and the dust has settled, we decided to take a deeper dive into the sales data of Pasir Ris 8, stack by stack, unit by unit, to uncover the truth and the lessons that can be learned.
Why Pasir Ris 8?
This condominium is an excellent case study to help buyers and professionals looking to buy property in Singapore better understand the intricate pricing rules of Singapore real estate. Firstly, all transactions occurred within two days, which eliminates the time variable’s effect on property prices. Market expectations can change over time, which can interfere with pricing studies. Secondly, the development is quite large, which effectively eliminates outliers. Furthermore, the developer, Allgreen Properties, was able to adjust prices multiple times within two days. This means the transaction prices accurately reflect the underlying supply and demand of a well-functioning market; in other words, the actual price (or very close to it) that buyers were willing to pay. (In contrast, a dysfunctional market would mean either excess supply or excess demand.) For example, during the toilet paper panic buying at the start of the pandemic, most stores ran out because they couldn’t adjust prices, even though consumers might have been willing to pay more. The end result was that stores ran out of toilet paper, consumers went home empty-handed, and no one knew the true price consumers were willing to pay for it.
After studying every single transaction, let us now present the transaction analysis that can deepen our understanding of the Singapore property market.
Don’t Believe the Hype
Amidst the sensational news reports, there was a lot of hype surrounding Pasir Ris 8, so much so that Allgreen Properties had to adjust prices six times over the launch weekend. Some potential buyers even expressed their frustration on social media about waiting to buy, only to be told the price had increased. However, the reality is that out of 417 transactions, almost all (412) were concluded between S$1,400 and S$1,800 per square foot (psf). This price range is very normal for any specific property development. Only two transactions breached the S$2,000 psf mark (which we will discuss later), and only three exceeded S$1,800 psf. In other words, all the noise and hype came from just 1.2% of the transactions, or 5 out of 417. So, the next time you experience Fear Of Missing Out (FOMO), remember to look beyond the surface.
Avoid Placing Premium Units in Poorly Located Stacks
Despite the strong sales, it was surprising that several stacks were not touched at all. The ones that didn’t sell a single unit were stacks 2, 6, and 45. A look at the site plan and unit layouts can better explain why this happened. Stacks 2 and 6 consist of premium three-bedroom + guest room units, while stack 45 is made up of standard three-bedroom units. Stacks 2 and 6 are closest to the main road, Pasir Ris Central. Stack 45 has a pedestrian bridge right outside. Potential buyers might have been deterred by the noise from traffic or pedestrians.
Every development has its blocks or stacks in the least desirable locations. However, you might want to avoid placing premium units in those stacks, or at least have other redeeming qualities, such as better views. In this project, the average selling price for a three-bedroom unit was between S$1.6 million and S$1.9 million, which is definitely not a small sum. With such a budget, buyers have many options, including choosing a better-located unit within this development or simply opting for other developments.
How Much Would You Pay to Avoid a View of the Guardhouse?
How much more would you be willing to pay to avoid a view of the guardhouse with vehicles coming and going? After looking at the sales data, we now have an answer. Typically, buyers are willing to pay an additional 2-3% to avoid a view of the guardhouse from their balcony. For example, the average price of stacks 38 and 37 in Block 14 was about 2.8% higher, or approximately S$34,000 more, than stack 33 in the same block. The three stacks mentioned have similar layouts and sizes, all being premium two-bedroom units. Similarly, the average price of stacks 22, 24, and 25 in Block 12 was 2.3% higher, or about S$58,000 more, than stack 27 in the same block.
What About Paying More for a Pool View?
At Pasir Ris 8, only two stacks of two-bedroom units have a pool view. These are stacks 60 and 62. The average selling price for these units was S$1,697 psf, with a total price of about S$1.2 million, which is 6.5% higher, or about S$68,000 more, than the two-bedroom units without a pool view. The premium for pool view units might even be a conservative figure, as initial buyers looking for two-bedroom units likely snapped these up before the prices increased.
S$2,000 psf? Where Are These Units?
Well, as I mentioned earlier, only two units crossed the S$2,000 psf threshold. Both units belong to stack 65. These are two-bedroom units located on the 8th and 9th floors of Block 20. While we may never know the real reason why these buyers were willing to pay such a high price per square foot, we can make an educated guess.
Blocks 18 and 20 are considered premium residential blocks, especially the outward-facing stacks. Residents in these stacks get a good view of Pasir Ris Park and possibly a sea view of Serangoon Harbour. However, after a closer look at the Urban Redevelopment Authority (URA) Master Plan since 2008, the land across from these blocks has been zoned for residential use. It is highly likely that the views of the park and the sea will eventually be blocked once the new residential area is built. I guess everyone should enjoy the view while it lasts!
For further enquiries, please get in touch:
WeChat: sgleokwek
Telegram: sgleokwek
WhatsApp: Message us
