Using URA Master Plan to Navigate Property Investment in Singapore: Part 1
Investing in real estate is a journey guided by foresight, strategy, and a keen understanding of urban planning dynamics. At the heart of successful property investment lies the URA Master Plan—a blueprint that delineates the evolution and revitalization of Singapore’s urban landscape.
In this comprehensive guide, we delve into the intricacies of the URA Master Plan, unveiling strategies for savvy investors to capitalize on the city-state’s burgeoning real estate market.
The URA Masterplan
The Urban Redevelopment Authority (URA) Master Plan acts as a foundation for making informed choices in real estate investment. Other than offering information on urban developments and transformation, the plan showcases the main areas slated for development. This is an integral piece for investors hoping to score their next big win by capitalizing on these promising growth opportunities.
The 2 main key points I ALWAYS look into are
- TRANSFORMATION – Identify nearby future growth region that can boost property value. If the government were to invest in infrastructure in a particular location, you should too.
- Rejuvenation – Look out for Old Potential En-Bloc condominiums or Empty Land suitable for new residential development. These will boost property prices up.
Clearly Funded Regeneration Project: Make sure that the regeneration is actually funded and not just with planning permission. Years or decades could pass before the site benefits from regeneration.
Large enough scale: If the impact is too small, then the regeneration may not have a big enough impact on your values and rent.
Broad based development: Ensure that this is not just a new residential building, the best regeneration is broad based across residential, commercial, leisure, shopping, schools, transport, and employment.
Take a long view of the investment: To get the full benefit, you need to buy in early. you need to buy in early and hold throughout, the property is likely to have superior fundamentals for at least a decade or two before, if no further investment comes, the area loses its shine.
Proven developer that can handle scale: Rarely can new, less-established developers create the type of change that is required to make regeneration work.
Of course, any regeneration will have a varied mix of the above, not every area has everything perfect (the perfect deal doesn’t exist) and even if you find it, you may find, that the opportunity for the big profits has passed. The skill in buying into massive regeneration is picking the perfect time to buy when you have certainty the area is changing but before the media and ‘experts’ start writing about it.
This is a skill we have build up over many years, across countless regeneration areas. So chat with the team about the latest areas and the research we have on these. Trust us Regeneration is a powerful strategy when done well.
Deciphering the Master Plan: A Timeline of Transformation
With an updated master plan being unveiled every 5 years, 2024 marks a new chapter in urban development. Keeping close tabs on previous editions, such as the 2003 and 2019 Master Plans, will benefit investors in terms of being able to identify patterns of growth and anticipate what the future trends will be.
Here are some examples to highlight how significantly the plan’s content predicted property appreciation.
- Mayfair: This location situated in Upper Bukit Timah, is a prime example of the transformative potential outlined in the Master Plan. Over 20 years, we saw an incredible surge in property prices from 450 to an impressive 1,100 per square foot (PSF), which signified the area’s transformation into a major residential hotspot.
- Park Oasis: The PSF values of this condominium tripled from 370 to 1,100 during the same time frame, indicating a spectacular revitalization. There is no denying the Master Plan’s impact, which induces demand and expedites real estate growth.
- Ivory Heights: Another success story that witnessed a fourfold increase in PSF value over 20 years. This is one that exemplifies the transformative impact of strategic urban planning.
- J Gateway: While the growth of this particular location is from 150 to 190, this doesn’t mean that there isn’t potential for more growth and demand. It mostly depends on when you’re entering the market. With a property like J Gateway, in the next 10 years or so, you’ll still be making a very good profit.
This chart represents the comprehensive draft of the Master Plan from 2019. Please pay attention to the areas highlighted in blue, as these are currently undergoing significant transformations.
I consistently advise my clients to consider investments in these regions, as they typically yield profitable returns over time. Moving forward, the yellow regions denote industrial estates, while areas in dark blue indicate commercial nodes (this term may require confirmation). My recommendation is that proximity to these commercial nodes often enhances the likelihood of successful investments. However, please regard this advice as one factor in your decision-making process and not the sole determinant of your investment choices.
Navigating Investment Opportunities Across Singapore
The real estate market in Singapore provides a diverse array of investment opportunities across various regions:
North: In areas like Woodlands, it is crucial to consider your investment timeline. For short-term investors looking to buy, hold, and flip within three years, Woodlands may not be ideal due to its long-term growth trajectory, requiring 20-30 years for significant returns. Woodlands Regional Centre, however, offers potential for those with longer investment horizons, particularly with new developments like Sinoko Food and local food centers enhancing its appeal for sustained investment. Punggol is considered a secure option, likely to show promising growth over the next decade for investors prepared to commit for this duration.
West: The rapidly developing Jurong area, along with surrounding areas like Jurong West and Lakeside, present exciting investment opportunities worth exploring. This is because of the insurgence of SMEs or small business enterprises. The one issue with this location is if you look at the recent transaction of JQ, prices have already peaked at around 2,700 PSF. The norm with most Jurong properties is that owners tend to overestimate their valuations making them less affordable options. My advice would be to look further beyond the Jurong area, into its outskirts such as Lakeside, Jurong West, and all the way to Boon Lay.
The next promising location is the One North Area. This is an area with high-income earners, a plethora of commercial areas like the Science Park, and surprisingly a scarcity of residential areas and developments. The lack of these amenities makes this location have a tremendous amount of potential for future growth and something that you can invest in for the next 5 to 10 years. If the prices are a bit out of your budget, it’s also just as fine to look around the outskirts of this area.
East: The eastern region entices investors with its growth trajectory and strategic positioning, showcasing developments in Changi Business Park, the Changi Aviation Hub, and the rapidly expanding Punggol. On the surface, these locations make them unfeasible investments as they appear too far east. There’s not much linking these specific locations to the rest of Singapore. However, if you look at the transport master plan under URA (Ministry of Transport), you’ll notice that these locations are where they’re building future MRT lines. These new lines especially the cross-island MRT lines, starting from the Changi area will link all of these locations together. As a result of this, I predict the Changi area, Tampines area, and Pasir Ris area to show very strong signs of growth. They also have a low-risk high return margin as the prices are still relatively on the cheaper end of the spectrum. Changi Business Park is also another location with multiple plots of land available for commercial units so do give these spots a check.
Lastly, we have the decentralized area of the Paya Lebar Airbase. The Tanjong Pagar area will be shifted into Tuas and the airbase area will be transferred into the Paya Lebar area. As a result of this, the airbase will now be able to accommodate multiple plots of land. To put it simply, it’s a future hub that’s going to be cleared out and turned into a residential area with HDBs. Unfortunately for investors, you’ll have to wait 20 to 30 years for the area to be developed as it is too early. As an alternative, the ideal location for investors looking for a shorter timeframe is the Tampines North area. With plenty of developments like HDBs and BTOs coming up in that area as well as the new train station, I’d like to put this over the Paya Lebar Airbase.
South: As the Greater Southern Waterfront takes shape, neighborhoods like Marina South present attractive investment opportunities for those with the patience and foresight to see things through. Most of us have heard the news that all the land in the Greater Southern Waterfront will be cleared and will open up prime locations for investment. In my opinion, these properties and developments will be available in 15-20 years. Unless your exit strategy is looking for a five-year investment, this location is another area you can’t go wrong with.
Crafting an Exit Strategy for Maximum Return
A clear exit strategy is critical to a profitable real estate investment. Investors can maximize profits and take advantage of market opportunities by coordinating their investment timelines with significant urban development milestones.
It’s critical to know when to sell in order to maximize profits and capital growth. An example of how to understand these timelines is by comparing an area like Woodlands and another area like Buona Vista. If you’re looking to buy, hold for 3 years, and sell, an area like Woodlands which is more of a long-term project will not see much profitable growth while Buona Vista is ideal in the short term. If you have the resources and time, Woodlands will be very profitable in the next 20 to 30 years.
A thorough grasp of the URA Master Plan and its ramifications is necessary to successfully navigate Singapore’s real estate market. In the ever-changing realm of real estate investing, investors can steer towards success by utilizing historical trend insights, adopting the Plus System, and creating a customized exit plan. To fully realize the potential of Singapore’s real estate market, information and foresight must be leveraged. It is not just about buying and selling.