MRT and condo price fluctuation

MRT and condo price fluctuation
Article contributed by: Property Buyer Singapore Home Loan Consultants

Singapore is Digging everywhere in building MRT stations

Property Buyer Singapore Home loan consultants investigates the effects of MRT on Singapore property prices.

There are a total of 78 stations in operation (As at today) and many more being built. (Wikipedia).

How many properties are located within 1km radius of MRT? And 2km of MRTs?

How will property prices go up or down?

Is having the MRT convenient? Do you feel convenient or it is really convenient?

Is there readily too much availability of private condominiums claiming to be near MRT?

Before you get excited about being close to MRT, have you thought of the Over-crowding in MRT trains?

Will distance away from city centre be no longer important?

Will prices rise because of a MRT station or prices rise because of sub-urban developments?



Estimation of how many properties are within 1km of MRTs

SMRT stands for Singapore Mass Rapid Transit. A public train system.

According to Wikipedia, there are 78 MRT stations in Singapore. Based on a 1km radius coverage, the area is Pi x Radius x Radius.

3.1416 x 1km x 1km= 3.14 sq km

Based on 78 MRTs, area coverage = 78 x 3.14 sq km = 245 sq km.

Singapore's total size is 710.3sq km.(Singstat, http://www.singstat.gov.sg/stats/keyind.html)

Go to google map and open up a Singapore map, you will easily see that in the heart of Singapore is the Mac-Ritchie and Pierce reservoir water catchment area and there are other areas reserved for military use. There is a scale on the bottom left of the screen. You can roughly calculate that the size of those non populated areas may be around 100sq km in total.



WHAT IS THE SIZE OF SINGAPORE'S ACCESSIBLE AREAS?

So Singapore’s accessible areas are 710.3 – 50 – 50 = 610.3 square kilometres.


So 78 MRT stations will cover 245 sq km out of 610.3sq km. If we assume that all accessible areas are populated evenly, the 78 MRT stations already cover 40.14% of the accessible land area in Singapore.

In other words , if we draw a 1km area around each MRT station, we will end up with those areas covering 40.14% of singapore's usable land.


There are many properties across singapore, it would be easy to assume that properties are spread out fairly evening throughout the Singapore geography.

If we make the above statement, therefore roughly 40.14% of all properties in Singapore are within 1km of an MRT station.



How many number of units of Private housing is 40.14%?

Wow, that is a lot of properties that are near to an MRT station.



So there are some 250,334 (URA Q2, 2010) units of Condominium and apartments property units and many hundreds thousands of HDB flats.



40.14% of that is some > 100,494 of choices of private property on the market that is potentially near to MRT stations.

Technically you have some 100,000 units of private property to choose from. Even if these properties are not put up for sale all at once. Each year, there would be a turn-over of 3 to 6% which amounts to 3,000 to 6,000 of buy and sell activities on these private properties.




DOES STAYING NEAR TO MRT REALLY MEAN SO MUCH?




Let’s look at the travelling time and the number of train one must get off and get back on in order to get from one place to the other.




Is distance to your place of work no longer important if you have MRT near your home?

Is distance to your children’s school no longer important if you have MRT?

It's worth not to get carried away by MRT. The overall lifestyle needs and distances from all your lifestyle needs are important too.




MRT needs to maximize share holder return - Over-Crowding is the least of their worry



So many far away places are now covered by MRT. Does it mean that it is more valuation property? Yes to an extent, but that still does not address the distance issue.

Sentiments?



What are the effects of MRT on prices of Singapore properties?



If people start to realise that being near to a MRT station is no magic pill and neither is it a paradise, they will not bid as much.




For those properties which are far away from town, being near to an MRT will command a good premium, while those farther away will have likely lesser value.




For those properties which are near to city centres or near town, being near to MRT should have a smaller premium as access becomes more varied and not singularly dependent on the MRT.




To Summarise The Effects of MRT on Properties

For Far away locations

Near to MRT means easy access. Alternative modes of access not great.

Not near to amenities

Not near to working place

Not near to business centres

Not near to schools, etc.



So perhaps access to MRT gives a greater premium compared to those in the same area without MRT within easy reach.



For Central and Prime locations

Access to amenities – Good

Near to many places

Near to shopping areas

Near to schools

Near to business centres

Modes of transport varied and plentiful (such as Bus, train, taxis, etc) and distances near.

Such locations do not significantly (perhaps should not) be affected by whether there is MRT or not.





Will Premiums shrink for those properties near to MRT?



The premiums one pays to properties which are near to MRTs will shrink over-time. Singapore Property Buyer may need to focus on your own lifestyle core needs, rather than what is good to have in order not to overpay.

Those very far locations touting MRT as a feature should generally not be valued higher than those that are nearer to city centres or with good locations (but without MRT) except when there is HYPE. (people who buy into Hype may lose out)

At some stage developers want you to think that distances doesn't matter as long as there are MRTs. Now If you will only imagine how you will squeeze with all the people on the super crowded and not very regular frequency MRT train . Getting to town is no mean feat, then the choice will always be LOCATION and smooth connectivity as a priority, be it railway, MRT, bus, boat, car or whatever transport.

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