Location, Location, Location: Is It Truly the Key to Your Perfect Property?

When it comes to real estate and hunting for your ideal property, there’s a common saying that emphasises the importance of “location, location, location”.  But is it truly the most critical factor that you should consider when choosing your property?

While location undeniably plays a significant role in property value and convenience, it should not be the only factor you consider, especially if the reasons of your property purchase are not purely for your own stay in the long term.

In this article, we delve into the significance of location in the property buying process and explore whether it is indeed the ultimate determination of a perfect home or if there might be more than meets the eye.

Firstly, let’s look at what constitutes a property in a good location:

  • Proximity to MRT station, ideally within 10 minutes walking distance, offers unparalleled convenience and connectivity, making daily commutes a breeze
  • Central location or proximity to major business hubs such as Changi Business Hub or One North can be particularly appealing to tenants who are working in Singapore
  • For families, being within 1km of reputable schools would also be a crucial consideration in their purchase
  • Having essential amenities and major roads nearby also makes a property a highly attractive proposition for potential buyers

Case Study #1 - Is being nearer to MRT always better?

Let’s take a look at D’Nest and Ripple Bay, which are 602m and 1.51km away from Pasir Ris MRT respectively. Both projects were within 1km of reputable schools. Which project do you think would have performed better?

While both projects are transacting at similar PSFs today, we can see that Ripple Bay actually has a higher capital gain compared to D’Nest, despite being the project that was further away from a MRT station.

When further analysing the data by comparing sales of 4BR in both projects, we can see that Ripple Bay also made a higher overall profit of SGD 20k+ despite having a smaller size of 1,313 sqft vs 1,410 sqft.

This actually shows that while distance to MRT might be an important factor, it is not always the only factor that determines if your property will be more profitable.

Case Study #1 - Is a project in central location always profitable?

Let’s take a look at The Peak @ Cairnhill II, which is a freehold project in the vicinity of Orchard (5 minutes drive). It is also close to reputable schools such as Anglo-Chinese School (ACS) and SIngapore Chinese Girls’ School (SCGS), which suggests that this project is actually good for families or expats.

Despite the above factors, it still made a loss between 2017 to 2024. Why is this so? Based on my StreetSmart framework, I would attribute it to the fact that this is a smaller development project which means that there will be lesser sales, if any. Freehold properties also tend to attract long term buyers who would not sell in the short term after TOP, and this will also be reflected in the lack of transactions as seen below.

Lastly, this project only consists of 2BR units which would also result in a smaller pool of potential buyers. If we delve deeper into the layout, we can see that it isn’t the most efficient design with multiple planters and bay windows taking up space, which has also resulted in a smaller common bedroom.

In conclusion, while location is undeniably a critical factor in choosing a property, it is not the only consideration. Prospective buyers should also weigh aspects like entry price, property conditions, layout designs, development size and future development plans to make a well-rounded decision. To navigate these complexities and minimise risks, consulting a licensed real estate professional is essential as we can provide valuable insights, market knowledge, and expert guidance tailored to your unique needs. This allows you to make a well informed decision and ensure that you minimise your risk when entering into any property that might seem ideal at first sight.