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Does SERS (HDB Enbloc) drive up prices of property around it?

August 23, 2016

The Selective En-Bloc Redevelopment Scheme (SERs) injects new life into old neighbourhoods, extends HDB leases, and sometimes even makes flat owners break down and cry in relief as they are well compensated in the process to upgrade to something newer. Because let’s be frank – old flats from the ’70s are often ideal for filming horror movies in the corridors. Besides the obvious benefits to flat owners though, there are some spillover effects to neighbouring properties. The recently announced SERS (Aug 16) at Blk 513-520 West Coast Road  got us curious – does SERS drive up property prices around it? 

How would SERs affect nearby properties?

Here’s how the theory works:

When SERs takes place, the relocated residents are offered a choice of replacement units. The homes in designated “replacement sites”, however, may not appeal to everybody. Some may look for resale flats in the same area, instead of going for the designated replacements.

Some may also decide to take the compensation in cash, top it up with some savings, and make the jump to private property. These upgraders – many of whom might still want to stay in the same area – also tend to look at surrounding private properties first.

In addition, perhaps a more important effect – the land cleared from En-Bloc Sales often gets sold for higher-value uses, whether it is to build a new condo or a mall, which tend to drive up prices as they get established.

But is there any truth to this theory? Well, we looked at some real world examples:

Ghim Moh

Blocks 9 to 12, and 9A and 12A, in Ghim Moh were put up for SERs in December 2006.

Price changes in surrounding flats

We looked at nearby flats, from 1 Ghim Moh Road to 15 Ghim Moh Road. In every single instance, we found prices did rise during the Ghim Moh SERs period.

9-12 Ghim Moh Road was up for SERS demolition in recent years

9-12 Ghim Moh Road was up for SERS demolition in recent years. Photo credits: The Lion Raw

1 Ghim Moh Road, which is a nearby block of 3-room flats, saw average prices rise from $208,800 to $259,000 between 2007 and 2008. This is a price increase of 24 percent in one year. By the time it was 2011 and the last of the residents were picking their new homes, the prices had appreciated even further to $388,428.

2 Ghim Moh Road, also a block of 3-room flats, likewise saw prices rise from an average of $196,975 to $268,833. This is a 36 percent increase between 2007 and 2008.

15 Ghim Moh Road, which is a block of 4-room flats, saw prices rise from $312,666 to $376,666 between 2007 and 2008. This is a price increase of 20 percent.

What about 5-room flats? Well, 7 Ghim Moh Road, which consists of 5-rooms, rose from $545,000 to $602,500 between 2007 and 2008. This is an increase of 10 percent.

Price changes in surrounding condos

The first condo, a 99 / 103 year leasehold development called The Rochester, seemed to defy the theory. Average prices of this development in 2008 were $1.81 million, falling to $1.18 million by 2009. This was a 34 percent price decrease.

Some others, however, seemed to bear out the theory. Heritage View, another 99 / 103 year leasehold condo, had an average price of $842,104 in 2007. By 2008, the average price had risen by 23 percent, to $1.04 million.

Glentrees, an old condo that was already completed in 2005, likewise saw a surge of interest during the Ghim Moh SERs period. Average prices in 2007 were $2.1 million, higher than many of the others in the area.

Bukit Merah View

Blocks 110, 111, 113 and 114 in Bukit Merah View were put up for SERs in November 2009.

Price changes in surrounding flats

As with Ghim Moh, we found marked price increases almost across the board. However, the price rises were not as big.

The most significant appreciation following the SERs announcement was from the nearby 87 Redhill Close, which is a block of 5-room flats. Average prices were $615,000 in 2009, when the SERs was announced. By 2010, average prices had reached around $730,000, an 18 percent increase.

124B Bukit Merah View, which consists of 4 and 5-room flats, saw minimal change. It rose from $597,629 in 2010, to $638,000 in 2011, a movement of just 6 percent.

In 20 and 21 Jalan Membina view, which consists of 4 and 5-room flats, prices rose between nine to 11 percent.

Price changes in surrounding condos

Condos within one kilometre of the site saw solid gains within the SERs period.

This was led by Central Green, a fairly old 99 / 103 year leasehold development at Jalan Membina. This condo was completed in 1995. Between 2009 to 2010, it saw prices appreciate from $950,097 to just past the $1.1 million mark – a 16 percent increase. By 2011, we note prices had appreciated even more to $1.34 million, marking another 21 percent increase.

Ascentia Sky, a 99 year leasehold along Alexandra View, saw average prices rise from $1.47 million to $1.67 million, between 2009 and 2010 – a 14 percent gain. As with Central Green, prices continued to climb into 2011, eventually crossing $2 million. This was a further 23 percent increase.

Rochor Road

One of the more famous and recent SERs sites are the coloured blocks at Rochor Road (Blocks one to four). These were put up for SERs on November 2011.

Price changes in surrounding flats

Prices in the surrounding flats mostly rose during the Rochor SERs period, with a few exceptions that remained static.

SERS - The iconic multi-coloured flats of Rochor will soon be a thing of the past

SERS – The iconic multi-coloured flats of Rochor will soon be a thing of the past

9 Selegie Road, which is a block of 5-room flats, saw price appreciation from $393,500 to $447,000, between 2012 to 2013. This is an increase of 14 percent. 271 Queen Street, also a block of 5-room flats, rose from $462,000 to $514,000 between 2012 to 2013. This is an increase of 11 percent.

Prices in nearby Kelantan Road flats however, did not budge. 30 Kelantan Road, a block of 3I (3-room Improved) flats saw a negligible price increase of 0.1 percent between 2012 to 2013.

Price changes in surrounding condos

There are not many condos in the area unfortunately, but we found two within a kilometre range. Burlington Square, a 99 year year leasehold completed in 1998, was mostly unaffected. The average price rose from $1.16 million to $1.2 million, between 2012 and 2013.

But The Bencoolen, a 99 year leasehold also competed in 1998, saw a definite price increase. Unit prices rose from an average of $1.18 million to $1.38 million, between 2012 and 2013. This is a 17 percent increase.

In summary, yes SERS does bring an uplifting effect

With property, it’s always tricky to say one exact thing is a particular cause of rising or falling prices. In reality, a mix of different factors will play a part (including the state of the general property market).

But if we look at prices of surrounding properties during SERs periods, there are plenty of signs that suggest they move up. Home owners can take some comfort in that, as it might make up for the sound of drilling and demolition they’ll soon be hearing.

The SERS effect in driving up prices is not sudden though, unlike other announcements such as MRT stations, it is gradual but it is there. Our conclusion is that if you are looking to buy in a particular area (such as West Coast at the time of writing of this article), it is probably best to start looking early as soon as SERS is announced! Here’s plenty of great property options around the West Coast Road En-Bloc on 99.co!

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