Introduction
A review on whether or not Parc Central Residences is suitable for families, real estate investors, both or just a trophy house. This review is done by researching with URA’s Master Plan 2019 for this particular district and location as well as using real estate investing formulas. Find out if this new launch is right for you
| Name: | Parc Central Residences |
|---|---|
| District | 18 |
| Tenure | 99-Year Leasehold |
| Expected TOP | 2023 |
| Address (Multiple) | Tampines Street 86 |
| Number of Units | 700 |
| Bedroom(s) Type | 3 – 5 Bedrooms Available |
| Best for | Family or Investment |
| Worst Case Scenario Pricing (PSF) See Calculation Below | $1,395.34 PSF |
| Average Case Scenario Pricing | Contact Me |
| URA Masterplan 2019 for District 18 and Parc Central Residences | East Region |
Mini Conclusion
Always remember the market value of property is highly dependant on the rent you can ask for. If you are in a property where people are willing to pay a higher rent for as compared to another similar property in the vicinity, even if you are not renting out, your property value will naturally be higher.
Also, We will be using Alps Residences, another leasehold condominium which TOPed in 2019. This development will be used as a comparison for the calculations.
Are there any points to take note of that might affect the valuation of Parc Central Residences? Here are a few
- Parc Central Residences is an Executive Condominium while Alps Residences is a private property. Many difference between them but the biggest one would probably be that there’s an MOP of 5 years before you are allowed to sell and it will only turn private in 10 years time for an executive condominium.
- Alp Residences just TOPed in 2019. The market forces has not yet affected the true market value of the property much. Over the next 2 – 3 years, you would be able to see the actual growth rate of the area.
- The other property you can do a calculation against would be Arc at Tampines which is also an Executive Condominium. This will be a logical and more accurate choice to do the calculation against. Let me know if you need the calculation done at the end of this review or whatsapp me.
The next section will be on the calculations using Real Estate investing formulas. If you are interested to know more about Parc Central Residences and more specifically on your preferred unit type, feel free to contact me here. A free report will be sent to you once we meet up to discuss your needs, wants and requirements.
If you are interested to see how the calculations are done for investing, you can read further below
Calculations
This is a quick overview on Parc Central Residences and how you would apply real estate investing research, principles and calculations before buying a unit in Parc Central Residences for real estate investment purposes.
The unit we will be analysing will be for a 3 bedroom Unit, Mid floor (7th floor) and also be comparing it with Alps Residences which is 120m away.
This is not a review to tell you how awesome this development is, I will be doing this on a separate page of my website, under the listing section.
Also, I will only be comparing only one unit from Alps Residences, which is not the usual practice. For clients interested in Parc Central Residences Condo, I will usually compare 2 additional units or developments or based on which other development my clients want me to do the research on. For this area, we have multiple condos to do the calculations against. Namely, Tapestry, Santorini, Arc at Tampines, Waterview, The Tropica among others.
Developer(s) Involved
Hoi Hup Sunway, a joint venture between Hoi Hup and Sunway Developments bought over the 268,384 square feet site for SGD 434.45 million which works out to be around SGD 578 PSF.
Hoi Hup
Hoi Hup was incorporated in 1983 and has developed more than 7,300 homes. In addition to Parc Central Residences, it is also involved in the following new launch projects. Ki Residences, Parc Canberra as well as the Whitley Residences.
In addition to the new launches in Singapore, it has already completed 19 other residential properties in Singapore. Hoi Hup seems to be only developing residential properties in Singapore. They do have commercial projects done in the UK.
Sunway Developments
Sunway Developments is established in 1974 and has consistently ranked as the number 1 real estate developer in Malaysia at The Edge Top 10 Property Developers Awards for over a decade now. Apart from developments in Malaysia, it has properties in China and now in Singapore. Their website doesn’t say much about Singapore properties in Singapore, so I believe Parc Central Residences would be their first foray into the Singapore residential property market.
| Developers Involved | Hoi Hup | Sunway Developments |
|---|---|---|
| No of Residential Developments in Singapore (Uncompleted) | 4 | 1 |
| No of Previous Residential Developments in Singapore (Completed) | 19 | 0 |
| No of Overseas Developments | 0 | 15 |
Comparison between Alps Residences and Parc Central Residences
| Development | Alps Residences | Parc Central Residences |
|---|---|---|
| Tenure | 99 Leasehold | 99 Leasehold |
| Number of Units | 626 | 700 |
| TOP | 2019 | 2023 |
Calculation of Growth Rate (For Alps Residences and East Region)
My research shows the transaction record for the following 3 bedrooms unit at 111 Tampines Street 86 (#07-3X), 1,066 sqft at Alps Residences was as follows
Transacted at 8 October 2016 – 1053 psf
Transacted at 28 December 2020 – 1248 psf
Time Period: 50 Months (To be rounded down for calculation purposes)
The annual growth rate for Alps Residences would be estimated to be around 4.09%. Naturally, the more units you use, the more data you have and the more accurate you will get and. And as mentioned, I usually use 2 other units surrounding the unit I’m planning to buy to have a better estimate of the growth rate in that area.
The annual growth rate for East Region based on SRX Property Index from December 2010 to December 2020 is 2.80%.
Let’s just take this at face value. There are many ways we can discuss if we meet why the growth rate should be higher or lower.
Real Estate Investing Formulas used
Before we begin, note that these formulas are usually used for properties which are already existing, similar in age and size. Parc Central Residences will only be completed in 2023 and will be 4 years newer than Alps Residences by then. See more in the conclusion section.
Gross Rent Multiplier
The Gross Rent Multiplier Formula for Alps Residences for a 3 bedrooms unit is as follows
GRM = Sales Price / (Annual Rent of Unit)
= 1,330,000 /(2,800 x 12)
= 39.5833 (Rounded to 4 decimal space)
With the following assumptions taken
- Sales Price of 1,330,000 SGD taken for the unit #07-XX 3 bedrooms unit which was sold on 28 December 2020
- Assumption of the monthly rent of 2.800 SGD based on the worst-case scenario (No stats given for the floor level, lowest was 2,800 SGD/ Month on 1st March 2020 and highest was 3,500 SGD/Month on 1 September 2020).
Income Capitalisation Method (Modified)
Using the Income Capitalisation Method Formula, the Cap Rate for Alps Residences is calculated as follows
Cap rate = Annual Net Operating Income / Market Value
= (Rent Income – Property Tax – Property Insurance – Annual Maintenance Fees – expected Maintenance and Repair – Vacancies Loss) / Market Value
= (33,600 – 3432 – 120 – (400 * 12) – (2 * 2,800)) / 1,330,000
=0.0148
Assuming the following
- Expected Maintenance and Repair is 0
- Maintenance Fee for Alps Residences is assumed to be 400 SGD
Calculation for Parc Central Residences using Cap Rate and Gross Rent Multiplier
Using Gross Rent Multiplier for Parc Central Residences
For the assumption of rent for Parc Central Residences, we can assume to be SGD 2,800 similar as they are the same size at 1,066 sqft. Thus the Gross Rent Multiplier and the Income Capitalisation Rate will be the same. But for the sake of calculation, I will just display them below.
Using the GRM of 39.5833 to find the sales price for Parc Central Residences
Sales Price = 39.5833 * (2800 * 12)
= 1,330,000 SGD (Rounded to whole number)
Using Income Capitalisation Method for Parc Central Residences
Market Value for Parc Central Residences = Net Operating Income / Cap Rate
= (Rent Income – Property Tax – Property Insurance – Annual Maintenance Fees – expected Maintenance and Repair – Vacancies Loss)
= (33,600 – 3432 – 120 – (400 * 12) – (2 * 2,800)) / 0.0148
= 1,330,000 SGD
Where the following assumptions are made
- Maintenance Fee is 400 SGD (Assumed)
- Expected Maintenance and Repair to be 0
Using the Time Value of Money Formula
Using the Time Value of Money Formula and using the worst case scenario growth rate percentage of 2.80% and the 4 year difference between Parc Central Residences and Alps Residences, the price per square feet we should be looking to pay for a 3 bedrooms 1066 sqft mid floor unit would be $1,395.34 PSF
Conclusion
Do note that the formulas we are using are originally used for existing properties which are similar in age and with rental prices already available. We know that this is not the case as Parc Central Residences will only be ready in 2023.
In addition, we need to also consider the following points
- Parc Central Residences will be 4 years newer (2023 – 2019) than Alps Residences.
- The estimated rent we are using is of the worst case scenario at 2,800 SGD. What do you estimate the rent will be in 2023 for this area with the knowledge of the URA Master Plan 2019?
- Alps Residences average rent is already transacting at an average of 3,150 SGD for the year 2020.
- Parc Central Residences will be using smart home technology 4 years newer than Alps Residences
Buying a unit at Alps Residences instead would require renovation cost which can cost upwards of 30,000 SGD to 80,000 SGD and equipment/ appliance cost of 10,000 SGD to 15,000 SGD. If you will be taking the lower end of the renovation cost and equipment cost of buying a unit at Alps Residences, this is easily an additional 40K SGD worth of renovation cost you will be saving if you buy a unit from Parc Central Residences.
Congratulations! If you’ve read to this point, you are probably really looking at buying a unit at Parc Central Residences.
This is just a brief thought process on how I would go through with clients who are interested in buying a unit in Parc Central Residences.
If you are looking at buying a 3 bedrooms 1066 sqft unit in Parc Central Residences, I’ve already done for you 33% of the work. You can find out and do the same calculations for 2 other developments or units which are close to Parc Central Residences with similar facilities to get a more accurate Gross Rent Multiplier and Cap Rate for Parc Central Residences.
If you are looking at buying 3 bedrooms (other layouts or other sizes), 4 bedrooms or 5 bedrooms in Parc Central Residences, why not send me a WhatsApp message or a quick email via the contact form below and let me represent you in buying a unit.
There are several advantages when I represent you in buying a new launch
- NO COMMISSION REQUIRED. Probably the biggest advantage. If I sell this development, the developer pays me the commission, not you.
- Free Real estate investing report with calculations on your preferred unit will be done for you upon meetup. Not only will you have all the necessary information, I will also pass you all the floor plans, the images, the pricing and launch price discounts (if any).
- If you are looking to buy a unit for investment, I will research the best unit type this condo has to offer to provide you with the maximum returns from your investment money.
- If you are looking to buy for own stay, I will research and let you know the best floor level and direction facing to get to maximise your sales price.
Basically, I will study these units and provide you with the highest chance of increasing the future capital appreciation potential of your unit
My obligation is only to you. You can look for me for advice for anything real estate related, any time and any day. I don’t work for Parc Central Residences. I have no obligation to sell this development for them and therefore, I have no need to pressure you to buy this unit. If you want to buy, buy, otherwise, we move on and will look out for another unit that is more suited for your needs.
I am part of a team that is very strong in financial calculations. If you are really looking to buy, my team will find different ways and different means to make sure you will be able to afford it. Throw us questions and problems you are currently facing and which your previous agents are unable to answer, let us impress you with what we can do to get you your preferred unit
Buying a condominium (especially for a new launch) for anyone is most probably one of the biggest ticket purchase in their lifetime
Think of me as your friendly and knowledgeable real estate investor friend who’s doing you a favour to make sure the purchase of your new condo is really something worthwhile to purchase or at the very least, something that won’t lose you money in the future.
What are you waiting for? Let’s start!
Disclaimer
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