With the news for lifting of the Paya Lebar Airbase site, its no doubt that Geylang will be one of the areas with added value to look into in today’s market. Thou this will only happen nearer to 2030, it does add in the future potential of properties in this area.
It has always been a myth on buying a property in Geylang, whether its the Red light district concern or the myth that banks do not LOAN to buyers buying geylang properties. This post serves to address some of the myths and issues that are always dangling on investors mind when purchasing in this area.
Geylang properties generally has been categorized into a few areas. its easy to differentiate the areas looking at the Map attached below
MAP Picture, Courtesy from OneMap.sg
If you were to take a quick glance at the map, you will notice 4 distinct areas there.
Namely the ODD and EVEN Lanes,
EVEN lanes has 2 zones,
Lorong 4 till Lorong 22 and
Lorong 24 till Lorong 42
ODD lanes also has 2 zones,
Lorong 3 till Lorong 21 and
Lorong 23 till Lorong 41
Banks favour the ODD lanes, especially lanes starting from Lorong 23 onwards till Lorong 39, its safe to invest in. As mostly its residential properties area. All local banks support up to 80% financing.
For EVEN lanes, properties located from Lorong 24 onwards is generally safe. Lorong 4 to Lorong 22 is classified as the RED LIGHT DISTRICT.
Financing in this area(Lor 4-22) will be difficult in a sense that only Maybank and Hong Leong Finance can loan depending on case by case basis. The percentage of the loan amount will differ as well. (Mostly up to 50% to 70% financing here by Maybank and Hong Leong)
Lorong 24 onwards will be slightly less stringent. However, local banks like UOB, DBS and OCBC are quite conservative about this lanes as well. Thus loans also is on a case by case basis.
As for Lorong 40 and Lorong 42 thou on EVEN lanes, its a all clear zone, all banks support financing for this lane. (3 Popular major developments lies here, Waterina, Sunny Spring and Aston Mansion)
However, with the recent new launches(Mickey Mouse units) banks are opening up to loans in even lanes.
End of the day, its important to double check with your banker on the financing before committing in EVEN lanes.
4 Major Factors to look out for!
1. Tenants Pool and Demographics
What are the type of tenants residing in Geylang?
Mainly expats from UK, America, France, Australia, New Zealand.
Another class of expats are from China, mainly students and some working professionals
You will be surprise to know that a lot of the properties bought over these 3 years were by expats and they mainly bought the properties here for own stay due to the proximity to town. Some bought for investments due to the large pool of tenants available here.
2. Location!!! – Near MRT
Is it near MRT? Aljunied MRT or Paya Lebar Circle Line interchange MRT
Very importantly, choose properties that have a close proximity to MRT stations here, most of the tenants like Geylang is because its only 4 MRT stations from Aljunied MRT till City Hall Interchange. From Paya Lebar Circle Line interchange, its merely a few stations away as well. Expats here seldom drive, thus the mentality is that they would rather pay a lower rental to stay here, which is so convenient, than paying so much higher to stay in Orchard or River Valley. The properties here mainly caters to expats with a budget of $3k to $4k budget range for a 2 bedder or 3 bedder apartment or condo.
Thus choose a project near to MRT for easy rentability and to avoid any lag time while searching for new tenants when u bought over the property.
3. Does the project has facilities?
To cater for faster speed of rentability after you bought the apartment, its important to choose a development with facilities like Gym, Pool and Security. a Balcony will be a plus point (Alcove, Sims Green, Waterina, Atrium Residences have balcony layouts)
4. What is the “Right Price?” and Rental Yield in the development?
Do some homework on the past transactions preferably at least past 3 to 6 months. And also the median rentals going rates at the area. However, when some buyers are out looking for properties in the market, they tend to offer prices based on the past transactions which end up not being to purchase one as the psf price range in Geylang is still inching up month by month. Thus Sellers tend to price their properties here slightly higher than the last transacted prices of their neighbours.
A better approach to make a decision on making an offer for a property will be using the comparative approach, which is to compare the price according to the other similar properties in the same development that are currently for sale to give you a gauge if the price you are offering is too high.
However this is not all to it in making your decision, it depends on a couple of other different factors as well namely;
a. Level of the unit; High flr, low flr?
b. Facing of the unit: Facing MRT track? or unblock or pool view?
c. Condition of the unit? Do u need to spend a lot to touch up the unit before putting up the unit for rental after buying it?
d. Is the unit rarely available? Eg. 2 bedrooms are more rare than 3 bedrooms unit in this area.
e. What is the indicative bank valuation of the property?
Are you getting a reasonable amount of Rental Yield, it is advisable to check the ongoing asking rental rates in the development as well to work out the rental yield that u might be receiving.
Recent News Article on new URA measures on the minimum plot size for all new flat developments in Singapore to be minimum 1000sqm and there is a limit to the number of units that can be built in low density estates. Would it have an impact on the recent hype of “mickey mouse” or shoebox developments that are flooding the geylang area in the Lorongs?
Recently for the past 6-12 months, there has been an increasing amount of new launches in geylang, especially in the Lorongs, where couple of adjacent old landed properties has been enbloc by developers and redeveloped into 20-40 shoebox units developments.
With the introduction of this measure by URA, partly to prevent overcrowding, developers might have to rethink their marketing strategy now. Will these kind of enbloc activities still continue or the new launches might come to a stand still here in geylang? Lets wait and see….
Below is the link to URA website on the new measures
1. Ministry of Manpower opens a Continuing Education and Training campus in Paya Lebar Central in 2013. The eight-storey campus will focus on tourism, hospitality, food and beverage, retail, security and aerospace.
2. A 2ha plot at the corner of Sims Avenue and Tanjong Katong Road was recently released for sale as part of the Government Land Sales Programme. It is zoned for office, hotel and commercial use. Another big field of developers could line up for this site, say market watchers, with an expected top bid of as much as $960 psf ppr. The tender closes on Oct 18 2011.
3. The old Lion City Hotel site and the former Hollywood Theatre next door will become a learning and enrichment hub, with a residential component. The UOL group emerged tops in a six-cornered fight earlier this year, with its bid of $313 million for the site.
4. Malay Village Redeveloping and new civic centre called Wisma Geylang Serai added.
5. Hotels, shops, parks and other facilities are on the drawing board for the area, as part of the Urban Redevelopment Authority’s 2008 Masterplan. There is about 12ha of land available for development and a potential commercial floor space of more than 5 million sqft.
On the recently published news on Straits Times, on good bargains for Freehold properties on Singapore. We can see that a good deal of the transacted properties that they are mentioning are majority in Geylang. I have placed the attachment below for your reference.
Of course, some of the properties mentioned are in the heart of the Red Light District, thus it has to depend on your preference and risk appetite as well as financing as not too many banks will support the even lanes from Lorong 6 till Lorong 22.