Making An Educated Investment in “School Properties”

SINGAPORE, 5 MAY 2014 – PropertyGuru, Singapore’s #1 real estate portal by most number of page views and property listings, is pleased to offer its latest opinion piece. This market view is the combined output effort of PropertyGuru’s research team culling the latest trends from it data-box repository.

PARENTS FORK OUT PREMIUM CASH FOR HIGH CAPITAL-GROWTH PROPERTIES NEAR CHOICE SCHOOLS

Singapore parents are discovering not only are they making weighted decisions into their kids’ school choice, the qualifying within-2km distance home location holds an equally dominant priority. In other words, parents don’t just buy a property that qualifies their kids to their preferred school, the property is an investable asset that looks to long-term capital yield.

States Steve Melhuish, Co-Founder and Chief Executive Officer: “Residential properties in close proximity to prestigious schools command premium sale and rental prices. The primary one registration period between June to September will see the parent corps staking their purchase claim on above-market priced residential properties closest to these preferred schools.”

“This annual resettling of new ‘school-parents’ in particular, see a unique tranche of purchase and rental activity that influences price trends and buying behavior. The question we ask ourselves at PropertyGuru is whether shelling out premium cash is worth the cost of enabling your kid to enter the school of your choice. Whilst the general view postulates that property is and will always remain to be a safe investment class, this opinion editorial addresses and interprets the unique distance-based criteria for Primary One registration.”

PREFERRED SCHOOL ENROLMENT: LIKE WINNING THE LOTTERY

Unless one or both parents hold close associative ties with the preferred school in question, the culminating result as to whether a child makes the final cut comes down to literally, which side of the road one lives on. In other words, living within a 2km radius of said education institute versus residing in a home beyond the 2km radius is the final straw to securing a classroom spot, or not. As a result, it is safe to infer that residential properties less than 1km and between 1 and 2km from a choice school commands a higher price over homes situated outside these outlined distances. Given that demand into top performing schools often exceeds entry quota, price variation for properties is more distinct and sensitive.

TRANSACTION TRENDS IN THE CORE CENTRAL REGION

Past private home transactions show that a school’s reputation pushes up the price of nearby homes. Resale condos within the 2km radius in Districts 10, 11 and 21 that house top-name schools like Anglo-Chinese Junior and Primary schools, Nanyang Primary School, Singapore Chinese Girls’ School, Raffles Girls Primary School and Methodist Girls’ Primary School cost as much as 25 per cent more than the average non-landed private properties located outside the 2km radius. In District 10, private properties less than 1km surrounding Anglo-Chinese Junior School are selling between $1,750 to $2,890 psf – much higher than the average district psf of $1,707. Resale condos within 1km of Methodist Girl’s School in District 21 are priced between $748 to $1,688 psf – almost 1.2 times higher than the overall average district psf. In other words, there is a distinct inverse correlation between distance and psf values of resale condos where the further a property is located from the school, the less expensive it becomes.

TRANSACTION TRENDS OUTSIDE THE CORE CENTRAL REGION

Popular schools outside the core central region such as St. Hilda’s Primary School, Rosyth Primary School and CHIJ St Nicholas Girls’ School do not buck the correlating trend of higher priced property closer towards known schools. Instead, PropertyGuru’s findings show a conflicting opposing relationship where properties located at a greater distance away from these schools garnered a higher resale value as compared to those situated less than 1km away!

Rosyth Primary School – a preferred neighborhood school, private property located within 1km averages resale values of between $699 to $1,059 psf – much lower than the overall district average of $1,102 psf. In all, there is also an emerging trend where prices rise as high as 15 per cent as the radii distance increases from 1 and 2km and beyond 2km. In the graph below, there are indicative positive correlation trajectories between distance and psf where the nearer a property is located to the above-mentioned schools in these outer core central region districts, the lower the resale values significantly become.

SUMMARY DIFFERENCES IN RESALE VALUES IN THE CENTRAL VERSUS THE OUTER REGIONS

Whilst the presence of schools is an important price-point influence, location, accessibility to amenities and suitability to the parent and property buyer ultimately determines final sale numbers.

Anglo-Chinese Primary and Junior Schools reflect inflated prices as it is close to Newton and Novena MRT stations. Methodist Girls’ and Nanyang Primary schools – located within a stone’s throw away from Clementi and Farrer Road MRT stations hold just an attractive proposition to would parent-new home investors.

Expectantly, private property around popular neighborhood schools and not close to amenities and far from public transportation hubs depress final sale values. This is in converse to other private housing options further away but closer to amenities and public transport hubs which reflect high sales prices.

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