Yeah, “Sky Habitat” is right; because that’s how far the buyers of this Bishan Condo have kicked off from Earth. Sky Habitat is an official stamp; the final statement that yes, we have finally crossed the point where we have more money than brains. In this article, we examine the three lessons we desperately need to learn from Sky Habitat. There would be four, but apparently “Don’t be stupid” isn’t a choice some buyers can make:
What is Sky Habitat?
It’s an overpriced condo in Bishan, designed by architect Moshe Safdie (also known as “Who?” to 99% of Singaporeans). You can see more on the price at H88.
At an average price of $1747 per square foot, Sky Habitat is Singapore’s most expensive suburban project. It’s also one of the most heavily marketed properties: The 3D model alone is two storeys tall, and take a look at their video flythrough. It’s the perfect backdrop to a Bond villain lifestyle.
Despite high prices, a non-central location, and being a 99 year leasehold, some buyers remain enthusiastic about the place. During the initial offering of 180 apartments, 125 were sold within the first day. Which, in a sane world, is 125 more than we’d expect.
But what can we learn from the illogical success of Sky Habitat?
1. The Centre Cannot Hold
As H88 suggests, the “gap between suburban homes and homes in the central region are narrowing”. Right now, developers still visualize Singapore as “District 9 and the surrounding dumps”, but that’s changing.
Sky Habitat shows how property prices in out-of-central regions are beginning to climb. It’s no longer a safe bet that places like Bishan will always be cheaper, or that heartland regions will remain open to lower income earners. The intrusion of high priced projects will influence prices in the relevant district, and we might see an unsustainable price inflation.
There are significant ramifications, which might impact first time home owners a decade from now. Don’t be surprised if, 10 years down the road, you realize your moderate income won’t get you a place near your parents in Tampines.
Investors take note: Maybe it’s time to stop obsessing over Orchard and River Valley, and turn your attention elsewhere.
2. Property Is Always Sentiment Driven
Market inefficiencies are a thing of the past, right? I mean, anyone can get accurate info on market prices, loans, and property reviews. No one needs to make uninformed purchasing decisions.
Well, too bad one connection the Internet won’t provide is a connection to reality. Whether you’re a property investor, home owner, or
leech on society banker, let Sky Habitat reinforce an old lesson: When it comes to property value, sentiment is king.
If you’re making an investment, don’t just read the numbers. Regular home owners aren’t property investors, and they don’t always work on logic. As CapitaLand proves, they could fence off a clogged outhouse and sell it at $1,700 a square foot, provided the brochure’s in full colour. Learn to recognize architectural appeal and strong marketing as key factors.
If you’re a home owner, don’t get suckered by a pretty building. When your’re down to your last 50 bucks from ridiculous loan payments, the marble tiling will look a lot less attractive.
3. Our Property Market is Hideously Inflated
This building is the equivalent of fetching your morbidly obese friend, and giving him vouchers to every buffet in town. You can practically hear the eulogy at his funeral. It’s wasteful, decadent, and suggests imminent problems.
The developers paid over $550 million for Sky Habitat’s land, which was around $118 million more than the next bidder. A huge price tag, but theirs was a confidence born of faith. Faith in our illogical spending habits, and faith in an over-inflated property market.
Why would buyers purchase something this overpriced, when there are surrounding properties in Bishan that are cheaper? The location is the same. No matter how good Sky Habitat looks, it’s not going to be significantly more convenient. The only plausible answer is that buyers are getting presumptuous. They’ve begun to overrate the value of prestige, and are ignoring fundamentals of location and function.
This isn’t so much a lesson as an omen: If the government’s got a grip, we should see a hair trigger on those cooling measures. I’d expect, in fact I’d hope, to see another round soon. This property bubble is huge, and getting more wobbly by the day.
What do you think Sky Habitat signifies? Comment and let us know!