Judging by some of the things you hear and read you would assume it is essential when looking to buy a property to get one in close proximity to an MRT station. But is this actually true? Yes, there are advantages to being within a quick stroll to the rail network, but it isn’t quite as black and white as that, and those properties that are considerably further away certainly should not be dismissed out of hand.
By 2030, the MRT network will have doubled in size, increasing to a total length of approximately 360km. By then, Forth-fifth of Singapore homes will be less than 10 minute stroll to the train station. That in itself changes the dynamic, meaning that having a property near a station no longer becomes the exception, but the norm, and the definition of “near” a station will also becoming altered, and the question will start to be “just how near?” And where does that leave the remaining 20% of homes?
Everything else being equal, property near an MRT station can command a higher price than one further away. On average, this difference in price is between 10 and 15 per cent. These properties also tend to hold their value better in times of downturns and conversely experience better appreciation during booms.
If choosing a property for investment, then generally it is always good to have one as near to an MRT as possible, as rental yields will be significantly higher, and it will be easier to get a tenant. However, when a new MRT station is announced, properties being developed in that area often immediately put their prices up by up to 10 per cent. More often than not these prices then tend to return to previous levels, before once again increasing just prior to the station actually opening. One thing to consider when buying a property for investment in an area near to a future MRT station is that during the build process, rental yield may well drop, due to the noise and dust, or you may find it difficult to get tenants in at all.
So what about the rest of the properties, the ones that aren’t currently within an easy walk of a station, and never will be? They have many things in their favour. First of all, as mentioned above, building an MRT station is a lengthy, noisy and not particularly aesthetically pleasing process. Even when it is completed, there are the downsides of noise pollution and heavy traffic congestion, particularly at peak times; something that some people find outweighs the convenience factor.
Properties not situated near to MRT stations are considerably cheaper. Whereas the rental yield will obviously be lower, your initial investment will similarly be lower. Developments that fall into this category, are an attractive proposition to buyers and tenants alike who are looking for a private condo with all the modern facilities, but do not have the budget to pay for one in a prime area – i.e. one nearer to an MRT station.
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