View of Boon Lay MRT station and bus interchange. (Photo: Allkayloh / Wikimedia Commons)
Finance Minister Heng Swee Keat announced new measures in Budget 2016, with the biggest story being the future development of Jurong West into a new mixed-use precinct. Property experts are excited about this, but some residents have their reservations.
By Romesh Navaratnarajah
Property developers had hoped that as part of Budget 2016, the government would ease the restrictive cooling measures to prevent private home prices from sliding further.
In fact, the Real Estate Developers’ Association of Singapore (REDAS) had been repeatedly calling for the measures to be tweaked in the run-up to the budget announcement on 24 March. For developers, their biggest worry is having to pay extension charges if they fail to sell homes within certain timeframes, and facing additional stamp duties on unsold homes.
Despite all their pleas, Finance Minister Heng Swee Keat said in his maiden budget speech that “it is premature to relax the property cooling measures”.
Fear of rising prices
The lack of property-related measures in the budget came as no surprise to analysts. “(The) absence of changes to market cooling measures was expected, as the government has conveyed its concern that premature easing of market cooling measures might lead to a market rebound,” said Tay Huey Ying, Head of Research at JLL Singapore.
Christine Li, Director and Head of Research at Cushman & Wakefield, believes the government is reluctant to scale back the curbs because they have been effective in keeping residential prices affordable.
“A premature lifting of the cooling measures, particularly the Additional Buyer’s Stamp Duty (ABSD), could result in buyers rushing into the market for fear that property prices may rise due to increased demand,” she said.
First introduced in 2011, the ABSD was revised upwards in January 2013 to rein in Singapore’s skyrocketing property prices.
Singaporeans are required to pay an ABSD of seven percent for a second property, and 10 percent for a third and subsequent property. However, foreigners are required to pay an ABSD of 15 percent for their first and subsequent property purchases.
“Given that the only beneficiaries of lifting the ABSD would be property developers, Singaporeans who can afford a second property, permanent residents and foreigners, it does not serve the interest of the masses,” noted Li.
Still, CBRE Research expects the government to continue monitoring the residential market.
Fresh start
Separately, families with young children living in HDB rental flats can apply for housing grants of up to $35,000 to own a 2-room flat under the Fresh Start Housing Scheme, but with shorter leases, said Mr Heng.
To be eligible for the scheme, “you must be a family unit, demonstrate your ability to stay employed, and ensure your children attend school”, said Khalil Adis, Founder of Khalil Adis Consultancy.
The Fresh Start Housing Scheme was first announced by Prime Minister Lee Hsien Loong during last year’s National Day Rally, but was fine-tuned after the Housing Board and National Development Ministry held public consultations to gather suggestions on implementing the scheme.
Future industrial park
Meanwhile, experts felt that the future development of the Jurong Innovation District (JID) was probably the most exciting news for the real estate sector. The ambitious project is expected to transform the sleepy Jurong West area into a new mixed-use district.
“50 years ago, we transformed Jurong from a swampland into a thriving hub for the manufacturing industry that powered Singapore’s economic growth. Now, we will make another leap to create the industrial park of the future,” said Mr Heng.
“This has the potential to transform how we live, work, play, learn and create.”
Desmond Sim, Head of Research (SEA) at CBRE, said the new precinct will have positive effects on the surrounding area, which mainly comprises public housing blocks and industrial properties.
Tay added: “As the development of the JID takes shape, we can expect demand for real estate, ranging from homes, offices and retail, to hospitality and industrial to rise, and along with this, a general rise in real estate value in and around the JID.”
Adis expects property prices in Jurong West and Boon Lay to appreciate by at least one to three percent, while the rental market is likely to get a boost from the spillover impact of the various industries.
Rivalling Silicon Valley
With catalytic projects such as the High-Speed Rail (HSR) terminus connecting Jurong and Kuala Lumpur, and the Jurong Region MRT Line being planned, Li thinks the creation of a technology hub in the western part of Singapore is strategic.
“With Launchpad @ one-north already running at full capacity, the JID serves as an alternative location for budding tech and creative entrepreneurs to ride on a big wave of big data, IoT (Internet of Things) and e-commerce, and prepare themselves for the smart nation in the next decade.
“Over time, the scale of the tech and creative clusters in the western part of Singapore could possibly rival that of Silicon Valley in San Francisco, and will further attract regional and international tech and creative companies to set up offices here. As such, residential, office, retail, and particularly the F&B sectors in the west, will benefit over the medium to long term,” she explained.
Adis agrees, adding that the opening of the Tuas West MRT Extension in 2016 and the Jurong Lake District Master Plan will benefit the property market in Jurong West and Boon Lay.
With so much buzz surrounding the area’s future development, Tay expects to see an increased level of real estate development and investment activity in this locality in the coming years.
“Potentially, the Government Land Sales (GLS) Programme might soon start to incorporate land parcels in and around the JID to kick-start the transformation.
“The development of the JID will also complement the development of Jurong Lake District by creating a larger draw for the population to work, live and play in the western corridor of Singapore.”
Mixed views from residents
At the moment, residents who live in Jurong West and Boon Lay have mixed views about development plans for Jurong.
Marketing manager Meenakshi Shunmugham, who has lived in the area her entire life, told PropertyGuru that her estate has been neglected for the longest time, and more development needs to happen for it to catch up with the rest of Singapore.
“I’m happy that this area is getting some attention after all this time. Having said that, I’m very scared because I’m looking to buy a house close to my family, but I notice many flat sellers taking advantage of the recent news to quote ridiculous asking prices.”
She also worries that the area will become overcrowded, putting a strain on public transportation. “Everything is coming to Jurong. Not only is it positioned as the second central business district (CBD), but the port is also moving here, and now innovation. I’ve yet to see what concrete plans the government has for public transportation here, and whether it can support so many people.”
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