Will A Premium Facing Improve Your Condo’s Resale Value? A Case Study Of High Park Residences And Panorama

In just about any new launch, sales teams will be eager to point out “premium” stacks, where the facing is better (and prices are also obviously higher). And while you might feel the difference as a homeowner (fewer people want to look out at the neighbour’s kitchen), investors have different concerns. It’s already uncertain if a tenant will pay much more for a nicer view; so what about your resale gains? We took a look at two condo projects, to see if a premium facing impacts the resale price:

A look at High Park Residences

High Park Residences is a 99-year leasehold mega-development (1,390 units), located at Fernvale Road. The project’s higher floors overlook Sengkang Riverside Park, which provides some greenery as well as a waterfront view; this is mainly seen with stack 11.

We’ll contrast these with the prices in stack 10, which has an inside-facing view.

These were the prices we saw during the initial launch, for stack 11 with a premium facing.

The units with unblocked views sold at a premium of 5.02 per cent (about $50,000 more). We then looked at resale prices to see if this mattered for gains. We used the closest transaction period, to minimise any distortions from market factors.

Based on the initial launch price, stack 11, which has the premium facing, appreciated by around 48 per cent at resale. Stack 10, which faces inward, saw an appreciation of around 55.14 per cent; so on average, the better facing stack didn’t see any advantage at the point of resale. 

Note: Based on launch prices, the difference in three floors for stack 10 was $13,000, while the difference in one floor for stack 11 was $7,000. We’ll assume these were adjusted into the selling price.

Next, let’s look at the Panorama

The Panorama is a mid-sized (698 unit), 99-year leasehold condo at Ang Mo Kio Avenue 2. We took a look at launch prices, where we could see some stacks with premium pricing. In the following example, stack 1 – which faces the road – is cheaper than some others like stack 7, which has an inside facing.

We can see a significant premium of about 6.83 per cent for the better facing in stack 7. 

Subsequently, we looked at resale prices:

Here, the transaction involving #16-31 is in a more premium stack than the one in #19-01. Also, note that #16-31 is three floors lower. There’s a price difference of $1,958 psf (#16-31) versus $1,948 psf (#19-01), which comes to about a 0.5 per cent difference. This difference is insignificant, compared to the 6.83 per cent difference at launch.

That said, we can’t apply these learnings to all developments

Granted, it’s not a perfect comparison and never will be, as the price difference is impacted by other factors like layout, state of maintenance, situations specific to the buyer or seller, and so forth. However, we can generally see that the premium paid for a better facing (at the time of launch) hasn’t translated to equally strong gains upon resale. 

This could suggest that sometimes when it comes to a better view, the premium may be justified by owner-occupancy: if you’re going to live there with your family, and the view means something to you, then it might be worth the expense. But for the more investment-minded, it’s questionable if a better view will result in stronger resale gains (and equally questionable for rental yields, as it’s impossible to predict whether tenants will pay more for a nicer view).

Or, here’s another way to see it: if you’re a pure homebuyer, and you tend to leave the curtains drawn, then buying a unit with a “worse” facing could represent a discount with no disadvantage. If you don’t care to be gazing at the view all day, then buying a unit that’s $60,000 cheaper (as in the Panorama example above) could well pay for the renovations instead.

All this highlights the nuances of how a developer decides to price a new launch condo. If priced at a large enough premium, the price may not translate well when it comes to the resale market. Conversely, if the price difference isn’t as significant, there could well be a price arbitrage that you could take advantage of. As always, this will be project specific, and such a conclusion can’t be applied to every project in the market.

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