The new Thomson MRT line is set to move more than passengers. It’s going to move housing prices in the more ulu areas, like Woodlands and Springleaf. The residents there can celebrate. When they’re not digging wells and fending off tigers, that is (Do they have electric lights over there?) But residents aside, property investors might also sense opportunity. Let’s see what the potential pay-offs are:
The Thomson Line
The Thomson MRT line stretches 27 kilometres, and consists of 22 train stations from Woodlands to Marina Bay. It’s got a three-part completion schedule, with end phases in 2019, 2020, and 2021. The Thomson line connects some of the less accessible neighbourhoods to the central region.
As a side benefit, the extended line will ease the crush of passengers, reduce our reliance on cars, and supply Stomp with enough content for another decade.
But our attention is on how the line impacts property. Some general changes will be:
- Momentary decrease in rental income
- Eventual rise in capital gains
We also see three main areas that deserve attention:
- Upper Thomson Road – Great for Retailers
- Lentor – A Rent Issue
- Woodlands – An Investment Opportunity
Momentary Decrease in Rental Income
Ever lived next to a construction site? It’s like hosting an amateur rock festival in your living room. Don’t expect tenants to be overjoyed.
Properties located close to construction sites (around 300 metres) might see a drop in rental income. How steep this is depends on the tenants: Those who are rarely home during construction hours might not care, whereas those with families will start looking for alternatives.
If you’re one of the affected property owners, you’d best prepare to re-negotiate the lease.
The good news is, rental income will jump substantially once work is complete. But with the first phase ending in 2019, that’s a long time to wait. If you’re heavily dependent on rental income, you’d best consider refinancing the property loan.
Try looking on comparison sites like SmartLoans.sg, to get a lower interest rate.
Eventual Rise in Capital Gains
Property investors are already exploring the relevant areas. It’s expected that properties within 500 metres of the new train stations will appreciate by 20 – 30%. Property investor Charlie Sng says:
“In some areas, like Upper Thomson, I think the MRT station will cause prices to go even higher. Because it’s a very inaccessible area, and there is more necessity for public transport.
I am sure prices will rise in general, but I think it’s in the more ulu places that the station will really affect gains. I am not certain if the prices will rise immediately, or when the line is complete in 2021. We will see over the next few months.“
Speaking of which, here are three interesting areas to watch:
1. Upper Thomson Road – Great for Retailers
A common complaint about this area is that it’s hard to get to. The business outlets (shop houses, restaurants, etc.) are just plodding along; they’re stuck servicing the immediate residents.
In particular, Thomson Plaza has long had a lukewarm reception from businesses. Rent is very affordable, but the stores there don’t bank on passing trade. I spoke to one of the store proprietors, who only wanted to be known as Liew:
“Most customers are regulars. This area is not like in town, where thousands of people will walk by every day. And even among our regulars, some complain that they don’t like to drive so far to come here. I think when the MRT is up, business will definitely improve. The question is whether my rent will also go up.”
Slim chance, Mr Liew. Once the MRT station is built, businesses in the area can expect a lot more foot traffic…and consequently, higher rent. Thomson Plaza might see an invasion of higher paying (and more upmarket) tenants.
Still, the increased revenue might more than cover the higher rent.
2. Lentor – A Rent Issue
Lentor consists mainly of private apartments, and a lot of them are rented. The construction of the train station might drive out a few tenants.
I spoke to a landlord, who owns some properties along Lentor Green. He refused to give his name:
“I think it will be good in the long run, to have the station here. But I don’t think my tenants will be happy with the noise and the dust from construction. If they have to take care of a baby, or they are studying, it’s bad for them.
I am already prepared to lower the rent if I need to. I’m not happy, but once the station is complete, I hope I can recover my losses.”
So if you’re renting in Lentor, there’s at least one landlord prepared to lower the rent. In general, tenants there might want to negotiate aggressively, once construction starts. But you can fully expect your rent to sky rocket after completion.
3. Woodlands – An Investment Opportunity
Woodlands is still underdeveloped, which makes it ideal for property investors. Woodlands North, in particular, is earmarked for residential development.
Once the Thomson line is complete, it will run from Woodlands North, through Woodlands and Woodlands South, and right to the heart of Marina Bay. This eases Woodland’s accessibility problem, which has been the area’s bugbear for years. Yes, it’s still a long ride to town; but at least now it’s a direct route.
The Thomson line might be the winning complement to URA’s plan for a Woodlands Regional Centre (WRC), which aims to bring office and retail space to Woodlands.
This upcoming combination of factors (the WRC and the Thomson line) makes Woodlands an attractive investment option. You can also follow us on Facebook, and we’ll update you as the news develops.
How do you think the Thomson line will affect property prices? Comment and let us know!
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