Allow me to first explain why the debut of Piccadilly Grand is an essential new launch to keep an eye on, and why this project will set a precedent for the real estate market for the next two to three years.
This is not just the first large-scale private residential launch in 2022, but also the first significant launch since December 2021, when the most recent property cooling measures were imposed.
This makes me think of when the Total Debt Servicing Ratio (TDSR) was put in place in June 2013.
It was perhaps the worst cooling measure undertaken in the previous decade.
Back then, WingTai Asia‘s The Tembusu, a condo with 337 units, was the very first private residential launch.
It was released in August 2013, and the response was really overwhelming. During the actual launch, more than 60% of the units were sold.
As a consequence, it has provided property developers the market confidence and set the tone/benchmark for future new launch project pricing.
This project was going to be HOT
Honestly, I wasn’t surprised when 50–60% of the units are sold on the first day.
This new launch in Farrer Park should be one of the top few projects to consider only based on its superior location (that’s what most house buyers or investors search for).
It looks like every time the government tries to slow down the housing market, the market only gets stronger.
In July 2018, the government raised the Additional Buyer’s Stamp Duty (ABSD) and decreased Loan-to-Value ratios, the most recent cooling step prior to the ones in December 2021.
The market underwent a brief “downturn,” but recovered within two to three months.
For example, residential projects like Parc Esta (next to Eunos MRT), Jadescape (at Marymount), and The Tre Ver (at Potong Pasir) have all sold out.
“Just right” price
Now, let’s talk about price, which is the most touchy subject.
Let’s get right to it and look at how much Piccadilly Grand costs compared to other projects in the Rest of Central Region (RCR).
The average price per sq foot (PSF) is derived from sales between October 2021 and April 2022.
Despite being the newest project among the others, Piccadilly Grand’s pricing is mostly in line with the present market, as shown.
At this point, it’s clear that the developers are being sensible and careful.
And to show that even more, let’s look at the price at which they break even.
The typical computation and cost estimate demonstrates that the breakeven price for developers is $1,837.
So, if this new development in Farrer Park is sold for $2,000 to $2,200 per square foot (psf), the maximum profit is only 19 percent.
These days, that’s really the norm.
But I don’t think these prices will last long, especially when the market recovers in the next 1 to 2 years.
So, at this point, are you going to overpay? I don’t think so at all.
The strategy to exit
As long as you have money, getting into the market or buying a property is always easy.
The difficulty arises while selling or liquidating property.
I’ve been telling my acquaintances and clients for years to make “future plans”.
When you buy something new, you should think about what it will be like in 4 or 5 years, not now.
So, what should we do? Usually, one of the most important things I look at is the demand for housing in the area.
First, you should look at how many people are looking for private homes in the area right now.
I’ll focus on some of the area’s more recently finished projects, such as Cityscape at Farrer Park and Sturdee Residences, in this case.
I think there’s a good amount of interest in the area.
But you may have also noticed that people who buy homes or invest in the area are quite “quantum sensitive.”
The majority of transactions that happened during the last year (April 2021 to April 2022) included either smaller-sized units or units priced at less than $2 million.
I think it’s pretty clear which types of units at Piccadilly Grand will sell well.
To sum it up …
In conclusion, I believe that Piccadilly Grand is an excellent investment, particularly for the smaller unit types.
Taking into account the demand in the area, I do think that’s the best bet.
You may likely comprehend why the developers priced more than fifty percent of the condos at less than $2 million.
Many people would ask, “Why aren’t they building bigger homes if there aren’t enough bigger units in the area?”
Well, first of all, it’s very hard for property developers to build bigger homes for less money.
From a business point of view, it makes no sense, especially for Piccadilly Grand when you look at the demand in the area.
As long as land prices keep going up, homes will only become smaller, unless the economy starts growing faster than the real estate market in the years to come.
For this new launch at Farrer Park, it works perfectly.
Does this imply that you shouldn’t go for the larger units?
Let’s be honest: Farrer Park isn’t the most popular place for people to buy homes.
However, if you are already familiar with the region, I see no reason why you shouldn’t.
The government also has a big plan to build more public housing in Farrer Park.
This will undoubtedly raise demand for houses in the Farrer Park neighbourhood in the future.
We all know what happens to the prices of homes when demand goes up.
Overall, I believe that Piccadilly Grand is a decent deal in the current market and is worthy of consideration.
When viewed from all angles – quality, convenience, or affordability – it virtually meets all requirements.
However, you would likely be better suited to looking at alternative projects if you were aiming for larger units for quick returns.
And if you think the prices don’t make sense to you, then you can always explore buying a resale property.