The Core Central Region (CCR) has long been renowned as Singapore’s prime district, home to the most luxurious and expensive properties. However, in 2022, new condo prices in the Rest of Central Region (RCR) have started to rise further, and the price gap with CCR condos is rapidly narrowing (at least for new launches). Here are some possible reasons:
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What is the situation with new condos in the RCR and CCR?
Recent research from AnjiaSG shows that the price gap between condos in the Rest of Central Region (RCR) and the Core Central Region (CCR) has narrowed significantly:
Over the 10-year period from 2012 to 2021, the average psf price gap between new condos in the CCR and RCR was about 42.7%, which is a far cry from this year’s data shown in the chart above.
The price gap between the RCR and the Outside Central Region (OCR) narrowed significantly to 25.7% in April, and fell to around 14.9% as of August.
The gap shown in transaction prices is even more surprising, with the median transaction price for new RCR condos actually surpassing that of the CCR.
Leo Kwek, a senior local real estate agent at AnjiaSG, pointed out that the median transaction price for a new non-landed residential unit in the RCR is about S$2.472 million, while the corresponding price in the CCR is S$2,231,548.
This may lead to an increase in the sales proportion of CCR private homes this year
Private home buyers have clearly noticed these price gaps, and some have realized that for the price of an RCR property, they could also opt for a property in a prime location.
This might explain why new private home sales in the CCR accounted for nearly half of the total sales in August—a stunning achievement, as the CCR typically has the lowest transaction volume. The last time the CCR managed to capture such a high sales proportion was in 2017, before the two rounds of cooling measures.
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Nevertheless, the general consensus on why the price gap between the CCR and RCR is narrowing is as follows:
- Some condos affected the overall data
- The December cooling measures had a greater impact on the CCR
- Price changes for some CCR properties
- Changing views on the concept of ‘central’
Some condos affected the overall data
When studying such data, the first thing to note is whether there are any special transactions that could have a strong impact on the results.
When we look at transactions from the CCR over the past few months, we find that most of them come from new condos like Leedon Green and Perfect Ten, which we will analyze further in point 3. But in short, some of these condos (though not all) have shown a trend of price reductions.
When looking at transactions in the RCR, one condo stands out: Riviere. Since June, it has been the best-selling condo in the RCR, with both prices and transaction volumes increasing. Its recent average psf price has also rebounded to around S$3,000 during its launch period.
Some might be surprised that Riviere is classified as an RCR condo due to its location, and it wouldn’t be an exaggeration to consider it a CCR condo. Its next-door neighbor, Tribeca by the Waterfront, is in District 9, while Riviere is in District 3. These two districts are indeed in different regions, but we believe the boundary lines for these regions are not entirely logical.
Therefore, if we remove the data for Riviere, we can see how significant its impact is.
As shown above, the price gap has still narrowed, but it doesn’t look as dramatic as before.
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Price changes for some CCR properties
Leo noted that the top-selling private residential projects in the CCR for August included Hyll on Holland, Haus on Handy, and The Avenir, suggesting that significant price changes were the reason.
For example, the best-selling CCR project, Hyll on Holland, had sold 111 units as of August 2022.
However, data from Square Foot Research shows that the earliest transaction records for Hyll on Holland (in October 2020) had a median psf price of about S$2,729. In reality, it sold very slowly, with only four deals closed during its launch weekend. By July 2022, however, the median psf price was only around S$2,448, indicating that prices have decreased over time.
Haus on Handy sold 77 units (also making it into the top 10), with a median psf price of S$2,874 in 2019, which has now dropped to S$2,654.
The Avenir sold 73 units, with a median psf price of about S$3,245, which has now decreased to about S$3,183.
Under the impact of cooling measures and in a rising interest rate environment, developers behind these CCR projects are relatively cautious. Coupled with the effect of the five-year deadline, this might prompt them to sell remaining units at lower prices. This could explain the recent increase in transaction volume in the CCR.
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Changing views on the concept of ‘central’
Decades ago, being ‘central’ meant a high degree of convenience. But as Singapore decentralizes and each neighborhood becomes its own enclave, buyers are beginning to question the true value of Orchard Road.
For example, some buyers we know find projects like Lentor Modern more convenient than some CCR condos, with more parking spaces as well. Other buyers have mentioned that projects like One Pearl Bank or Avenue South Residence are more convenient than CCR projects like Hyll on Holland.
As Singapore develops, the concept of ‘central’ is becoming more subjective, and the market seems willing to acknowledge that the locations of some RCR projects are just as prime as those in the CCR.
2022 will be an interesting year, and it’s hard to say if the price gap will narrow further. Currently, with prices in the RCR and CCR being so high, we believe the Outside Central Region (OCR) will start attracting more buyers, but it will take some time to see the effects of rising interest rates and inflation.
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