In Singapore, home ownership is an important goal for many as it provides a sense of security and belonging in a city-state where land is scarce. With the country’s high cost of living, it is not surprising that housing prices have also skyrocketed over the years. However, a recent phenomenon that has caught the attention of many has emerged in the real estate market – million-dollar HDB flats.
These public housing flats, which are traditionally meant to be affordable and accessible to the average Singaporean, have been selling for over a million dollars in certain areas. While this may seem like an exorbitant amount for public housing, it has sparked a discussion about the evolving nature of Singapore’s property market and what it means for the affordability of homes for ordinary citizens. In this context, it is worth examining the reasons behind this trend and the implications it may have for Singaporeans who aspire to own their own homes.
In this article, we revisit some of the successful deals by the PropertyLimBrothers team to examine the factors that contributed to these flats crossing the million-dollar mark and breaking the record price.
Why Rarity Equals Value
Just like any tangible assets that are limited by nature, be it sneakers, trading cards, or even cars – the rarer it is, the more expensive it will be. It all boils down to supply and demand.
In the property market, certain properties and property types can command a higher premium because of their rarity. Even more so because of the scarcity of land in Singapore. In the HDB segment, flat types such as executive apartments, executive maisonettes, and terrace houses are examples. That is because they are no longer offered by HDB, meaning that there is no fresh supply for such flat types being injected into the market anymore. This leads us to recall a particular sale that occurred in 2021.
At that time, a follower of PLB watched one of our signature home tour videos and contacted us to sell their property. It was a rare HDB terrace house located at Jalan Bahagia, in the Whampoa area. For the uninitiated, there are only 285 of such units left, with 200 of them situated in Whampoa. The unit that we were contacted to sell was also one of the 56 corner terraces, making it even rarer. The owners acquired this property and had pumped in around $250,000 for renovations back in 2011. As they had already purchased a new home, the owners wanted to sell this property as soon as possible while hitting their target price of $1.2 million.
There were many obstacles that the team faced, and one of the biggest challenges was the balance lease. With only 50 years left on the lease, and a high asking price of $1.2 million, the initial concern was that buyers would not be too receptive. That is because the previous highest transaction was at $1.15 million while the market price at the time was around $800,000. Although it is a landed property, it still falls under HDB’s jurisdiction and getting a bank valuation was not possible. Because of that, the Cash-over-Valuation (COV) component might end up becoming a deal breaker.
What caught the team by surprise was the overwhelming volume of enquiries that flooded in after our signature home tour video went live. Christina, one of the listing managers for this listing, joked that there were so many text messages coming in that her Mother’s Day plans had to be cancelled.
Despite the initial worry about the balance lease, high quantum, and COV, we received over 100 enquiries for the property. This shows that there is demand for rare property types and buyers are still willing to pay the premium for such properties that are no longer in supply.
However, since COVID-19 restrictions were in place, there were still logistical challenges that we had to overcome. For instance, the maximum permitted group size for social gatherings was still capped at five at the time. This made it a lot tougher to conduct viewings for all interested parties who enquired about the property. We had to qualify serious buyers before scheduling back to back viewings, activating a lot of manpower to do traffic control outside of the property in order to comply with the restrictions.
After three weeks and 20 viewings, we received four offers that started from $1.1 million. Upon discussion with the owners, we conducted a closed bidding with three offers and eventually closed the deal at $1.268 million with a direct buyer – one of the highest HDB transactions at the time. But the job did not end there – we also assisted the direct buyer by becoming an HDB helpline, explaining the intricacies of an HDB transaction and the implications of buying a low lease property on CPF usage.
This sale was conducted by Christina Tan and Felicia Cai, listing managers at PropertyLimBrothers. Through this experience, they mastered the art of handling a high volume of enquiries and viewings, and were reaffirmed of the importance of being transparent with all parties involved in the transaction.
The Space-Value Relationship
In Singapore, we typically use per square foot (PSF) as a metric to evaluate the value of a property and determine its quantum. Because space is often a luxury in Singapore, properties that offer ample square footage are in high demand. In recent years, many HDB flats that have crossed the million-dollar mark were larger HDB flats, such as executive apartments and executive maisonettes, which are often considered a symbol of prestige and exclusivity. That is because they provide more room for families to live, work, and entertain, making them highly desirable to those who value spacious living. One example of this is a transaction that happened last year in 2022.
We were contacted by a gentleman who was trying to help his aged parents sell their executive apartment at Bedok Reservoir Road. It was originally a 3-room and 4-room flat that were repossessed by HDB and combined into an executive apartment, with the lease refreshed. Because of this, it became one of the largest floor plates in the entire block with a lease balance of 69 years when the average lease balance in the area was all around 50+ years. Being a high floor north-south facing corner unit in a curved block, it has a nice clearing because of the low-rise HDBs in its surroundings. Not to mention that it was just a short walk from Bedok North MRT station. All these intrinsic attributes made the unit extremely attractive to modern homebuyers.
There were a few challenges that the team faced. Firstly, the owners had stayed for over 20 years and the unit was in its original condition. This means that the buyer will likely have to do a full renovation. On top of that, there is the COV component to worry about, which could be a barrier for young couples. With the owners being aged, they wanted to challenge the $1 million mark as this would likely be their last move to realise the cash appreciation in their property. The team empathised with this and went into the deal with that in mind.
We addressed all foreseeable concerns in our signature home tour video, which helped a lot in justifying the price point for prospective buyers. During the viewings, we sold the rarity of the unit and the possibilities of the space – converting the large and underutilised foyer space to a potential fifth bedroom, different seating areas, an open concept kitchen, a study, or even a home gym.
Demand was overwhelming as we received a constant stream of enquiries due to the rarity of the unit. We had a total of 28 viewings, with almost five groups of potential buyers viewing the unit each week. Three offers came in below $1 million before the eventual buyer made the fourth offer – the only one that crossed the $1 million mark. After some negotiation to push the limit for the best interests of the owners, we closed the deal at $1,048,888.
The eventual buyer was a direct buyer who was in the market for a resale HDB that had ample space because they were used to their previous landed home. They were impressed by the size of the single floor plate and were willing to pay the COV and higher premium because the amount of space was rare for an HDB flat. This shows the demand for larger HDB flats. In fact, we still had enquiries coming in even after the sale was completed.
This sale was conducted by Lee Jun Wei and Kevin Lim, listing managers at PropertyLimBrothers. Speaking about his experience, Jun Wei mentioned that the deal provided a confidence boost and helped him build authority as he was often underestimated because of his young face and status as a new agent. He added that he learnt a lot about empathy from this deal and established a good relationship with the sellers, whom he is still in contact with to date.
Location Still King
The soaring skyscrapers that dot the city’s skyline stand as a testament to the insatiable demand for prime real estate in Singapore. The value of a property is often determined by its location, with properties situated near the city centre or near popular amenities commanding top prices. The closer a property is to key transportation hubs, prestigious schools, shopping malls, and vibrant entertainment districts, the higher its value tends to be. The convenience and accessibility of such locations are highly sought after – bonus if it comes with a nice unblocked view of the landscape or lush greenery.
In today’s property market, location is still the most important factor. We are compelled to recall a transaction that happened last year in 2022.
It was a 5-room flat at City Vue @ Henderson that just cleared its MOP. What was unique about the unit was that it cleared its MOP in just 2.5 years instead of the usual 5 years because the seller obtained it through Selective En Bloc Redevelopment Scheme (SERS). It was also a high floor (above 40 storeys) and standalone corner unit with fantastic unblocked views of the Greater Southern Waterfront, Sentosa, the Singapore Flyer, and the central business district. Furthermore, it was situated in the highly sought after Redhill and Tiong Bahru area.
The unit had no renovation done – everything was originally from HDB, simple curtains and furniture, and only lower cabinets were installed in the kitchen. In comparison, other units on lower floors in the same block were nicely renovated and listed at around the same asking price. There were also concerns that the upcoming BTO nearby with a higher plot ratio might block part of the view. Furthermore, because this was an open listing, the team had to move fast as there were other agents who were marketing and showing the unit.
We quickly did some cleaning up and produced our signature home tour video to address the concerns, justifying the high price point with our analysis in the process. No filtering or qualifying was done for prospective buyers who wanted to view the property, since the team had to compete with other agents. Christina, one of the listing managers who conducted the sale, mentioned that one of the prospective buyers found our team more genuine and decided to engage us after finding listings by other agents marketing the same unit with rendered photos while our team used original ones.
After several viewings and a couple of offers, the team closed the deal at $1.375 million. The eventual buyers were an elderly couple who downgraded from a private property to stay near their son. They were able to sign the option and exercise immediately without waiting for valuation since they were cash buyers.
The deal was conducted by Christina Tan and Jeremy Yong, listing managers at PropertyLimBrothers. By replying to enquiries and conducting viewings in a speedy manner, the team managed to close the deal ahead of competitors while serving the needs of both the sellers and buyers.
When it comes to the factors that contribute to some HDB flats crossing the million-dollar threshold, three main factors stand out: rarity, space, and location. Rare HDB flat types, such as executive apartments and maisonettes, are highly sought after and command higher prices due to their scarcity. The availability of space, both within the flat and in the surrounding neighbourhood, is also a key consideration for buyers, and larger flats or those in more spacious areas are often valued more highly. Finally, location plays a significant role in determining an HDB flat’s price, with proximity to amenities and transportation infrastructure being a key factor.
Given these factors, it is no surprise that some HDB flats have crossed the million-dollar mark, and this trend is likely to continue as demand for quality public housing in Singapore remains strong. However, as we continue to propagate in our podcasts and webinars, these million-dollar transactions that make the headlines are outliers and make up a small percentage of total transactions. There are still affordable options that are within reach for Singaporeans, now with even more support from the government in the form of additional grants.
If you are on the hunt for your next home and want a second opinion, feel free to contact us here. PropertyLimBrothers, always happy to show you the place.