View of Bishan Park at sunrise.

Before Bidadari, there was Bishan. The small HDB estate has seen strong capital appreciation over the years. Singaporeans are hoping that the upcoming estate of Bidadari, with a similar history and city fringe location, will reap financial benefits for its residents in the future.

By Chang Hui Chew

Those of us who grew up in the 1980s might remember the ghost stories of the era, of how on the newly built North-South line, one might see ethereal figures on the train as it passed through Bishan late in the night. Before Singapore’s independence, Bishan was already a home for those who passed before, a cemetery for the Cantonese and Hakka communities of Singapore.

But an area in the city fringe with easy access to the Orchard Road shopping belt needed to be put to more productive uses than a memorial for those who have passed before. As such, the graves were exhumed from Bishan in the early 1980s, and construction for Bishan New Town commenced soon after.

Today, Bishan has become a popular mature estate, with red brick façade HDB flats, beautiful condominiums, a bustling mall and popular primary and secondary schools. In this edition of the Guru View, we examine the property market in this former cemetery.

The private property market in Bishan

As part of the city fringe, Bishan’s private residential market has seen a number of popular projects in recent years. While there are a small number of landed homes in the area, the private property market in the district is led by the non-landed private condominium sector.

Figure 1 highlights the movement of property prices and transactions in Bishan.

Over the period of analysis, quarterly median prices for non-landed private properties have fluctuated from around $1,100 psf, to just under $1,600 psf. These relatively large movements in prices as well as volumes are driven by new launches in the area. For instance, Q4 2013 saw prices hit $1,592 psf due to the launch of the Moshe Safdie-designed Sky Habitat, close to Bishan MRT station.

Each subsequent spike in price or volumes were due to new launches in the area. Q4 2015 saw a rise in volumes due to the sale of units at Thomson Impressions at Lorong Puntong, while transactions in Q4 2013 were driven by the sales of Sky Vue and Thomson Three.

Private property in Singapore however, is a long-term game. In the short to medium terms, prices are likely to see fluctuation (refer to Figure 2) as the property cycle waxes and wanes, in the long term, prices will see decent appreciation.

Prices and transaction volumes in Bishan

Condo rentals in Bishan

It has been a tenant’s market in the private condominium sector in recent quarters.

Figure 3 highlights the rental performance in Bishan, with volumes on a steady uptick since Q2 2016. Unfortunately for landlords however, rental prices have been trending downwards, with median rents hitting $2.80 psf per month in the second quarter of this year. This is consistent with rental performance in the Rest of Central Region thus far.

Weakened rental demand has compressed gross annual yields to 2.9 percent in Q2 2017, below the 3.4 percent the market hit in Q1 2013. After costs of ownership are added in, yields are likely to be negative.

Given that rents are lacklustre at the moment, landlords should look to tenanting units and offsetting any mortgage payments, rather than holding out for higher yields.

Before Duxton

Before the HDB units at Pinnacle@Duxton started trading at above a million dollars, Bishan already made headlines for selling billion dollar HDB maisonettes. Since 2012, there were 20 units in Bishan that sold over the psychological mark of a million dollars.

Most of the units that sold above a million dollars were maisonette units along Bishan Street 13, a short distance from the interchange and MRT station. Since the end of 2016, we’ve also seen units constructed under the Design Build and Sell Scheme (DBSS) at Natura Loft move in the resale market for over a million. Earlier this year, a five-room flat at Natura Loft sold for a record $1.18 million, stunning the market.

While the private property market in Bishan has been affected by the headwinds in the property market in the past few years, the HDB resale market in this mature estate has been relatively stable.

Figure 4 indicates that between 2013 and 2014, Bishan, a relatively small estate, saw an average of 72 HDB resale transactions per quarter. Since then, between 2015 to the second quarter of 2017, we’ve seen an average of 93 transactions per quarter.

Rental transactions and HDB prices

Despite a trough in HDB median resale prices in 2014, prices have trended upwards since then, beating the overall market, with the Housing Board’s Resale Price Index staying stable since Q3 2015.

The reason for Bishan’s HDB market’s continued performance is due to a number of factors. It’s a relatively small geographical area, located in the city fringe and minutes away by public transport from the Orchard Road shopping belt. A popular suburban mall, Junction 8, serves the residents of the area, and residents are in proximity to several green spaces, including Bishan Park and MacRitchie Reservoir.

PropertyGuru also understands that several of the million dollar units being traded in Bishan were bought by those cashing out of their private properties, and were willing to pay top dollar for preferred locations and units.

Bidadari the next Bishan

While some might wonder whether or not Bishan’s history of being a former graveyard is a reason behind its property market’s success, it has far more tangible benefits that have led to strong price appreciation over the years. Nearby Bidadari is also a former cemetery that has had its graves exhumed, with the state making exciting plans for the upcoming estate. Given this, a question on many Singaporeans’ minds is if the housing market in this former cemetery do as well in the long term as its older counterpart?

Some of the key attractions that Bishan enjoys have also been planned for Bidadari.

For instance, extensive greenery and even a lake have been planned for the upcoming estate. A development integrating the MRT station, a retail mall and a private condominium is also in the works at Woodleigh. On the North East MRT line, Bidadari is also a short ride to Dhoby Ghaut, providing convenient access to central Singapore as well.

While Bidadari looks primed for future growth, it is important that buyers take the long-term view. Those considering the location need to be aware, especially in the private market, that sellers are likely to “future-price” their properties, rather than peg it to current market rates.

That ebullience is already seen in the aggressive bids for the first site in Bidadari sold in the Government Land Sales programme. The top bid out of 12 was tendered by SPH and Kajima Corporation at $1.132 billion, or about $1,181 psf per plot ratio. This suggests a breakeven price of around $1,500 to $1,600 psf, and a likely launch price of around $1,800 psf.

In comparison, The Poiz Residences in neighbouring Potong Pasir saw a median transaction price of $1,372 psf in the month of August, according to developer reported figures from the Urban Redevelopment Authority.

In the public housing market, Singaporeans have eschewed superstition, oversubscribing for units launched by the state in recent Build-to-Order (BTO) exercises. For instance, In February’s BTO exercise, 4,018 buyers applied for the 800 four-room units on offer.

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