Hot Pick: Hillview Avenue And Hume Avenue

Source : Asia Property Report, Nov 17, 2007

Savills Singapore observes, predicts and reasons for its latest Hot Pick

Observations
Since we published our forecast in June 2007 for the then undervalued Bukit Timah Road (up to King Albert Park), prices have moved up significantly. Recent transactions for the stretch of Bukit Timah Road between 6th Avenue to King Albert Park have already crossed the S$1,600psf mark (in Cascadia).

Predictions

# We expect the upcoming launches of projects such as Jardin (by Far East Organization), Floridian (by Far East Organization and Wing Tai Asia) and Cascadia (by Allgreen) to bring prices along this stretch of Bukit Timah across the S$2,000psf mark. We believe this is achievable by the second quarter of 2008, thus surpassing our previous Hot Pick forecast for the area by half a year.

# Price increases will continue to rise along Bukit Timah Road up into Upper Bukit Timah Road: the recent demand from displaced tenants in Newton, Holland and Bukit Timah Road and demand from HDB upgraders have pushed both rentals and sales prices of developments along the Upper Bukit Timah stretch higher.

# However, we still feel that the 30 or so condominiums along Hillview Avenue and Hume Avenue (most of them 999-year leasehold or freehold) have been overlooked and are still undervalued. Some of the condominiums located there include MeraLodge, The Petals, Chantilly Rise, Hillington Green, Parc Palais and Hume Park 1 and 2.

# Since January 2006, the condominiums along Hillview Avenue and Hume Avenue have traded from an average of S$455psf to S$640psf. That’s an increase of about 25% per annum. The average prices of S$640psf today still present great value as we believe that by the end of 2008, prices for condominiums here will achieve between S$900-S$1,200 psf.

Reasons

# The price gradient is rather steep compared to recent transactions at Bukit Timah Road, just two kilometres away and trading at almost double the price.

# Recent transactions of above S$775psf achieved at Hillview Regency coupled with new launches of projects such as Hillvista (by Far East Organization) and Park Natura (by UIC/SingLand) at Bukit Batok East Avenue 6, will lift prices above the S$1,000 psf mark.

# The overhang of vacant units that arose from a surge in supply of apartments in Hillview Avenue and Hume Avenue about 7-10 years ago have dropped significantly in the last year. As utilisation increases, rentals will strengthen, leading to higher capital values.