4 reasons the RCR is the place to watch in 2020 and beyond
The Rest of Central Region (or RCR) is also known as the city fringe. In district terms, it refers to Districts 3 to 8, 12 to 15 and 20. According to PropertyGuru, the RCR will be the most interesting area to watch for property buyers and sellers over the next 10 years.
Here are 4 reasons for that.
1. It appeals to a wider buyer pool
Properties in the city fringe (also known as RCR) may benefit from “the confluence of demand from various buyer groups, including foreigners looking for a good buy and Singaporean investors and owner-occupiers who want to live closer to the city”, according to Tan Tee Khoon, Country Manager-Singapore, PropertyGuru.
For Singapore, strategic growth areas and infrastructural developments will augment the intrinsic locational advantage of city fringe properties.
“In the coming year and decade, we foresee the positioning of RCR projects to change as upscale developments spill over from the Core Central Region (CCR) and its prime districts to the RCR,” said Tee Khoon.
For ageing precincts such as Beauty World and Rochor, it is foreseeable that new developments or redevelopments will provide much-needed booster shots to surrounding property value. This may give rise to a ripple effect that encourages developers to hop onto the rejuvenation bandwagon and buyers to give the area greater consideration.
Furthermore, rents in the RCR have been outperforming other regions since 2014, according to the URA Rental Index for non-landed properties (Figure 2), which makes the RCR appealing to property investors seeking rental yield.
In the course of the past decade, overall median psf prices of non-landed private properties in the RCR have increased 42 percent from S$1,035 psf in Q1 2010 to S$1,802 psf in Q3 2019 (Figure 3a). “With the pace of rejuvenation of the built environment, there is likely further room for property value to increase in the RCR,” Tee Khoon noted. “The addition of new homes and amenities will create a virtuous cycle of rising value.”
In Q3 2019, the median RCR psf price was closer to the CCR price than OCR price, unlike at the beginning of the decade when the RCR psf price was closer to the OCR price than the CCR price (Figure 3a). The most recent RCR median psf price is buoyed by new launches just outside the CCR, such as Sky Everton (District 2) and Avenue South Residence (District 3).
2. It is more value for money
Back in Q4 2016, it is likely that the average home buyer did not regard new sale, direct-from-developer RCR properties as being able to command a higher price than a resale CCR property (a median psf price of S$1,597 versus S$1,691 respectively).
In Q3 2019, however, the perception was turned on its head: new sale RCR properties commanded a median psf price that was higher than that of CCR resale homes (S$1,875 versus S$1,832).
“In 2019, a newly launched city fringe condo is, in the eyes of your typical buyer, seen as ‘more worth it’ than a resale property in the city or in a prime district,” explained Tee Khoon.
New sales for projects such as Avenue South Residence and Park Colonial are pushing RCR median prices to new heights.
3. It has dominated the new launch scene in the past year
Another confirmation of RCR being the hive of development activity is the growing proportion of new launches in this region, which in the past four quarters accounted for roughly half (47.5 percent) of all new launches (Figure 4) despite only occupying 15 percent of Singapore’s land area.
Although the RCR may take a backseat to the CCR in 2020 in terms of the expected number of new residential projects, PropertyGuru foresees uptake for existing uncompleted RCR projects, such as Parc Esta and Jadescape, to continue at 2019 rates.
“What’s surprising about the newly launched residential units in the city fringe region is that, despite the price premium these homes are fetching, buyers are actually putting down their money,” Tee Khoon added.
In the past four quarters, 48.5 percent of new launch private homes sold are from the RCR, reflecting a healthy uptake of developers’ new projects (Figure 5).
4. Waterfront District poised for new developments
Spanning the eastern coast of Singapore, District 15 is the city-state’s original waterfront district. In Q3 2019, its asking price was S$1,673 psf compared to S$1,473 psf in Q4 2016—a growth of 15 percent. Compared with the rest of the districts in the RCR, District 15 ranks third after Districts 3 and 18.
With the Thomson-East Coast Line (TEL) set to open in stages in 2023 and 2024, we can expect rail accessibility to the city to increase property and land value of residential enclaves such as Tanjong Rhu, Amber and Telok Kurau, among others. Neighbouring District 16, with precints such as Bayshore and Sungei Bedok, will also benefit from upside.
With the Greater Southern Waterfront (GSW) areas still “subject to detailed planning”, it appears that Bayshore, which the URA has earmarked as a future “vibrant and sustainable garden neighbourhood”, could steal the limelight with potential new, futuristic high-rise waterfront homes.