In Singapore, a property discussion cannot be complete without mentioning the distance to the nearest train station or MRT. As a general rule of thumb, properties closer to the MRT stations tend to command a premium as compared to those that are not. Then there are properties that are close to an upcoming MRT station as well. Buyers often have the idea that purchasing these properties will mean good rental income in the future. Well let us look at what difference does purchasing close to an MRT station really mean for a buyer.
Expect to pay a premium above developments further away from the MRT
Simply put, expect to pay 10 to 15 percent more as compared to other developments in the same area. Developers would have purchased the land at a premium and thus passed on this premium to buyers. A 99 year leasehold development close to the MRT can command a higher price as compared to a freehold development which is far from the MRT. Sellers in the resale market also know that their development is located close to the MRT and will price their units higher.
For upcoming MRT stations the story is somewhat similar. Once a new MRT station is announced by URA, home sellers immediately increase their expectations by about 10 percent. This enthusiasm dies down after a while and prices tend to gravitate back to the norm in the area. This is because construction of the new MRT station means huge disruptions to traffic around the area and unpleasant dust and noise. However, once the MRT is close to completion, home sellers tend to increase their expectations once more and push prices up by about 10 to 15 percent again.
A higher purchase price does not always result in a proportionately higher rental
Most home buyers think that paying a higher price for a property close to an MRT means that it would be easier for you to get a tenant. This was true if the asking price and condition for a property close to the MRT was the same as one far away. In reality paying a higher price for that premium location would also mean that you would have to ask for a higher rental to get a good yield. So how much is a reasonable premium? To make a sound decision a purchaser should look into whether the higher price he is paying for a property close to an MRT is giving him as good if not better yield as compared to the cheaper property.
It is easier to find tenants for properties close to an MRT
This is a no brainer point. Most tenants would want to live closer to the MRT than further. If you can accept a lower than expected rent when the rental market is weak then it would still be easy for you to find tenants. During times of week rental demand, properties close to an MRT will still have demand if landlords adjust their rents down. Properties not close to an MRT station may find it very difficult to find tenants even after price adjustments.
Not all MRT stations are equal
Just being close to any MRT station. existing or upcoming, does not mean that a property is going to have strong rental demand or huge capital appreciation. If a tenant has to change a few MRT lines just to get to the central business district (CBD) or it takes 15 stations or more to get to his workplace then that tenant is most probably not going to want to stay in that location. Purchasing a property that is 10 minutes walk to Novena MRT may sound like a better proposition than purchasing one that is right above Punggol or Sembawang MRT if you intend to rent to professionals working in the CBD.
Certain MRT stations have shopping malls next to or above them. This invariably creates a higher demand for these properties. Convenience is the primary reason why certain properties have higher demand and having amenities right at your doorstep is a huge advantage. The launch of Forest Woods, which is not exactly next to Serangoon MRT but close to, was extremely well received. The main reason was that it is close to NEX Shopping Mall which meant that convenience was right at its doorstep.
Some new developments near an MRT station (existing and upcoming)
[Marina One] www.lovelyhomes.com.sg/marina-one/
[Corals At Keppel Bay] www.lovelyhomes.com.sg/corals-keppel-bay/
[Commonwealth Towers] www.lovelyhomes.com.sg/commonwealth-towers/
[Queens Peak] www.lovelyhomes.com.sg/queens-peak/
[Sturdee Residences] www.lovelyhomes.com.sg/sturdee-residences/
[6 Derbyshire] www.lovelyhomes.com.sg/6-derbyshire/
[Pioz Residences] www.lovelyhomes.com.sg/the-poiz-residences/
[Park Place Residences] www.lovelyhomes.com.sg/park-place-residences/
[Forest Woods] www.lovelyhomes.com.sg/forest-woods/
[The Panorama] www.lovelyhomes.com.sg/the-panorama/