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Huge interest in Hillford but lease matters

WARM RECEPTION: Over 100 pairs of shoes were seen at the entrance to the showflat for The Hillford in Bukit Timah after it was opened to visitors.


    Jan 08, 2014

    Huge interest in Hillford but lease matters

    WHILE The Hillford could offer potential buyers a chance to buy into the highly desired Bukit Timah address cheaply, demand could be limited by its 60-year leasehold.

    Marketed as the first retirement resort in Singapore - albeit with no age limit placed on potential buyers - the 281-unit project offers a mix of one-, two- and two-bedroom dual-key units equipped with built-in elder-friendly features.

    Both young and old thronged the showflat when it opened on Saturday. According to a market watcher, of the more than 400 cheques that have since been collected, the majority were from younger investors.

    Key pull factors for the project include its attractive quantum and location.

    Indicative prices for units start from $980 per square foot (psf), or about $388,000 for a one-bedroom unit, $498,000 for a two-bedroom unit and $648,000 for a two-bedroom dual-key unit.

    "It is like a legitimate shoebox development in a very attractive RCR (Rest of Central Region) location," said a market watcher.

    Given that there are no restrictions on either ownership or tenant mix, it is not surprising that the project is attracting younger investors, said Ms Christine Li, head of research at OrangeTee.

    "The indicative price is still on the high side, but given that there are fewer such small developments around the area, it probably will not deter people from buying," she said, noting that a freehold project in the area, Creek@Bukit, achieved a median price of $1,637 psf when it was launched in November.

    Ms Li expects The Hillford to attract a mixed group of buyers spanning singles, downgraders in their 50s and 60s, and even investors who might have been priced out of the market because of the Total Debt Servicing Ratio framework and other cooling measures.

    But given the 60-year leasehold cap, investors might find it harder to finance the property since it may be harder to get bank loans for a shorter lease, said Mr Nicholas Mak, head of research at SLP International.

    Unloading the property in the resale market might prove a challenge, too.

    After five years, for instance (assuming the buyer holds the property for five years to avoid paying Seller's Stamp Duty), the development would have a remaining lease of 55 years.

    Based on the remaining tenure, a 30-year-old buyer can withdraw only up to 55 per cent of the value left from his Central Provident Fund. This assumes that the above sum is up to 55 per cent of the purchase price or value of the property, whichever is lower.

    Another factor that could potentially limit the scope of buyers is the project's design, said Mr Desmond Sim, associate director at CBRE Research.

    According to the developer, World Class Land, the project was designed to be "significantly different" from that of a typical condominium, given its specially tailored facilities, elder-friendly features, and provision of services such as a 24-hour concierge service and dedicated resort manager.

    "Is this the cheapest way to get a condo in the Bukit Timah area? Yes. But at the end of the day, it is designed for and marketed to the elderly, so you may not get the amenities and features of a lifestyle home," said Mr Sim.