• Joshua Loo

Review: Verticus, Freehold Property in Balestier

Updated: Sep 3

Introduction


Having a freehold property right in the Rest of Core Region (RCR) can potentially be one of your great real estate investments. Singapore’s comprehensive land planning ensures that no area will become obsolete through the practice of collective sales. RCR properties are generally located exceptionally well, as it is close to Central Singapore, which is well developed. This means that it is usually priced more affordably than its central counterparts while maintaining the convenience of living close to the Central Core Region (CCR) of Singapore.


Every so often, we are presented with a new launch that will make investors giddy with excitement! However, are new launches worth the initial high cost of investment? This showcase article will be a condo review of a new launch in Balestier, called Verticus.


UPDATE: As of 03 September 2020, Verticus have sold up to 13.58% (22) out of 162 units available. Majority of the units sold are its 1 Bedroom, followed by 2 Bedroom and 3 Bedroom units.

What Makes it Attractive?


Rich in History



Verticus is located in Balestier, which is a subzone located in the planning area of Novena in the Central Region of Singapore. Although small in size, Balestier manages to have a good mix of commercial, industrial, and residential zoning types.


Balestier retains most of Singapore’s old-world charm, despite rapid gentrification in its immediate area with improved resources and more expensive housing. This shows that Balestier still has functional space for growth! From its rows of 1920s Chinese baroque styled shophouses presents with a huge array of food options like Boon Tong Kee chicken rice to cafes like Wheeler’s Yard. These shophouses are all protected under conservation status by URA.


There are modern conveniences within Balestier such as Zhongshan Mall and business hotels. Shaw Plaza is another mall present in Balestier, presently it is undergoing redevelopment, but we will be hearing more news on it soon.


There are more exciting things to do in Balestier which we are unable to go in depth, click here for a full list of interesting things to do in Balestier, including heritage trails.

Attractive Rental Pool


The Health City in Novena aims to be the largest single healthcare complex in Singapore. As well as the existing Tan Tock Seng Hospital, the project, which will cover a total of 600,000 square meters, will also include a new community hospital and the Dover Park Hospice in an integrated intermediate care hub. It is set for completion by 2030.


In addition, the office tower at Zhongshan Mall provides another source of tenancy. C-level executives and managers can consider Verticus at Balestier for lease.





What is good about all Balestier properties for rent is that it sits below the average PSF in comparison to Novena properties. This will bring in a large crowd of healthcare professionals who are working in Novena, who might find the rental pricing in Novena to be out of their budget and want to be more conservative in their housing expenses.


The rental PSF between Balestier and Geylang is very similar, this might attract professionals working in the Central Business District to rent in Balestier instead as they are able to shave off 5 minutes through the CTE route on their daily commute.


Full Condo Facilities


It is unusual for a single stack development to have full condo facilities such as a tennis court.


Low Maintenance Fees


Verticus have a very low maintenance fee, starting from $280 onwards from its smallest unit to $400 for the largest. Having a low quantum makes substantial savings in the long run for the investor.


To put things into perspective, every $100 saved per month over the tenure of your bank loan of 25 years is $30,000! Investing the same amount in SPDR STI ETF’s modest return to 7% (With Dividend reinvestment) brings this sum to $81,211!


Drawback


Verticus Price



The sale and rental prices of the Geylang area is also included so as to draw a fair comparison to another city fringe area with good potential for capital growth and rental yield.


The Geylang area was chosen as it draws many parallels to Balestier. Paya Lebar Quarter, has numerous office and retail developments, which is similar to the Novena area with malls like Velocity and Square 2. Geylang is also another gentrifying area, where in the past few years, shophouse prices have been increasing steadily due to the influx of F&B businesses.


As expected, condo prices in Balestier does not draw the amounts that Novena will bring, but it does bring its convenience if you drive. This is because it is a short 5-10 minutes’ drive towards the heart of Novena.


One important point to mention is that the Balestier consists of mainly Freehold condominiums instead of leasehold tenure. This could mean that most investors are most likely buying properties in this area with a long term buy and hold investing approach instead of flipping, which should be a similar strategy that you can adopt.


Owning a freehold will result in lower rental yield, due to the estimate ~10% PSF increase over leasehold prices. This will mean that it is best to leverage it with a mortgage with stretch tenure up to 30 years, to reduce your monthly repayments to the bank and maintain good cash flow.


Lack of Public Transport


Singapore’s rapid development in public transportation makes Balestier lack of a MRT/LRT station an oddity. At present, the area is serviced by a few bus routes. It will be preferred if you own your own transportation so that there will be no need to rely on it.


Taking a drive along Balestier road you will notice that there is heavy traffic congestion, however, it serves as a slight inconvenience - you will get through it in 5 short minutes usually.



One interesting point to note is that based on the Land Transport Master Plan 2040, there are current feasibility studies being done on the possibility of an MRT station to be located at Whampoa. At present, there are 3 potential sites that are currently studied. Site 1 presents with the best possible location for MRT station, at a walking distance of 7 minutes from Verticus at Balestier. This could potentially mean that public transportation within Balestier/Whampoa will be improved, but take note that nothing is finalized.


Size of unit


The overall design presents a "utilitarian" arrangement to a unit, so as to meet the price quantum that is most attractive to potential buyers. The unit should be lightly furnished to counter that.


However, this provides an interesting conundrum for buyers as URA tightens rules to curb proliferation of shoebox units in heartlands. With Verticus still being released just slightly under the size of new units after the release of this regulation, this might be the potential buyers' last chance to purchase a 1 Bedroom in the RCR at this quantum.


The floor plan for The 1 Bedroom is a little unusual, as the toilet is only accessible through the kitchen. Take note that breaking down that wall to create an ensuite might not be possible due to the plumbing works behind.





Strong Freehold Competition



Taking a look at the past 10 years of new launches, all of them are freehold condominiums. However, one interesting fact that you should take note is the average PSF varies by a large sum, from as low as a $1000PSF to highs of $2000 PSF.


Looking back at 2015, we had a similar situation where the last freehold launch was Neem tree, had a launch price of ~$1600 PSF, greater than the average by $200 PSF.


The last transaction as of 18th May 2020, was in February the same year, at $1950 PSF. This shows that even with strong competition, it is possible for a property to thrive should that be good demand which we believe will be increased upon completion of Novena Health City in 2030.




Mortgage Repayment Numbers


This price is on a 2 Bedroom (635 sqft) at $1,244,000. In the view that this will most likely be purchased by investors who have an existing property count, we will be adding in 12% ABSD, which is the tax for this purchase being the second count for Singaporeans. Legal Fees of $2,000 will be the rough average.


The bank loan interest rate is currently based on fixed loan rates given at this point and is subjected to changes.


Take note that these numbers are only for illustration and are not finalized.


The following progressive schedule payments provides you with a rough estimate on when the payments will be made.


Take note that these numbers are only for illustration and are not finalized.




Summary


New launches in highly developed areas will always be met with strong competition due to the lack of a first-mover advantage. This is with good reason, as the right benefits in place accompanied with strong demand, the purchase can still be highly rewarding.


Verticus provides plenty of benefits, such as its well-situated location in close proximity to Novena which is the bedrock for Singapore's Healthcare industry.


In addition, it is a choice pick for investors who has a strong preference for its characteristic Chinese cultural influence, and the area is also serviced by a huge variety of famous eateries and cafes.


It will provide with a good pool of tenants who are working in the Novena area, this pool is expected to increase, come to the end of 2030 when Novena Health City is completed.


Low maintenance fees will help ease cashflow liabilities, which can add up to be a huge cost over an extended period.


However, its price, lack of public transportation, size of the unit, and strong freehold competition places pressure on it, prevent Verticus from being an extraordinary purchase.


Other Reviews


KOPAR AT NEWTON

TREASURE AT TAMPINES

MARINA ONE RESIDENCES

PARC CENTRAL RESIDENCES



Are you keen on finding out if Verticus is an ideal investment for your specific financial circumstance? Contact us at +65 96329840 or send your queries to estatemagnates@gmail.com! Our consultations do not have a charge, so let us assist you!


The views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author’s employer, organization, committee, or other group or individual. The author does not accept any responsibility whatsoever for any harm or loss arising from accessing or relying on information contained in this blog post.

 

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