Monday, January 20, 2014

Recent MRT lines driving rentals and values down

Recently, I have read in the news that some of the commercial rentals have been coming down due to the MRT network opening in nearby areas. What I predicted back in 2009 here has finally come true.

In other countries, it might make sense to pay a premium because their countries are big and it is not feasible to build a train station at every location within the country. However, people forget that we're Singapore, otherwise known as a little red dot in south east asia.

Building a train station even at every town is something that is definitely achievable here. So what happens if goods/services become widely available? Naturally the price will come down because there is no longer a premium.

As mentioned in 2009, the only factor that is more price insensitive is the location of the property. If the property is only 10mins away from Orchard Road, the price will remain high, no matter how many MRT lines are built.

A slight premium for a home near the MRT may be possible, but I do not see that this even justify a $500,000 price tag.

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