How Exactly Do MRT Stations Affect Your Property Value?

MRT stations raise surrounding property value, we all know that. The main question is how. As in how much and how soon. Because contrary to popular belief, MRT stations aren’t metaphorical Jackpots that just aligned three fruit. Nor are you an overnight property tycoon just because you see trains out the window. Here’s a look at how MRT stations actually impact your property price:

 

“And I’d like the staff to dress better next Tuesday, that’s when the buyers will be viewing.”

 

1. Values Rise After Construction, Fall During Construction

Sellers tend to raise their expectations when a MRT station’s announced. This often results in a momentarily higher asking price, a painful realization that no one cares, and then a reversion to normal prices.

This is different from sellers who raise prices after the station’s operational. Those guys can raise prices and be taken seriously.

So what causes this big difference? The answer is rent. I spoke to property investor Charlie Sng, who was flipping houses when Velcro diapers were still a new concept:

During construction of the station, there is a lot of noise and dust. Also, the roads around the area tend to become more congested.

The construction might take a few years. A tenant who is looking to stay for, say, two years…might never experience the benefit of the MRT station. She will only suffer the inconvenience. This can cause the rental value of the property to fall quite significantly, until after the construction.”

 

Crowded MRT Train

MRT? No, no, that’s the projected HDB flats in 2030.

 

How much does it fall by?

It depends on how bad the congestion is, and the area in general. If I had to guess, I would expect at least 10% to 20% drop in my rental income.”

In summary: Most property values fall during the station’s construction, and rise after the station’s operational.

 

2. Buyer Demographics

Okay, let’s say the MRT station’s fully operational (as “fully operational” as SMRT can make anything these days).

That means money, right? So now your asking price can match the Israeli defence budget. Well hold on to your horses. According to Charlie, not all buyers consider MRT stations to be relevant:

In wealthier areas, the presence of a MRT station has quite a minimal impact.

This is one reason I was not too excited about the Thompson line. Most of the people who want to live there can probably afford a car. In fact, one of my acquaintances staying there actually complained about the new line. He was afraid it would cause his property value to drop, because of possible noise pollution.

I think he’s exaggerating the problem, but you see my point. To an owner-occupier who can afford an upmarket property, who probably has two or more cars…why would he care whether there’s a train station nearby?”

 

In conclusion, anyone who can afford this house AND a car will probably end up in jail.

 

However, the opposite is true for mid-range properties, and for some landlords:

Many of my tenants are foreign students or short-term workers. Most rely on public transport, so they are quite happy to pay more to be near the station. So as a landlord, I would accept a higher asking price. As an owner occupier, I drive so I’m not as interested in the station.”

(PS: For more on being a landlord vs. an owner occupier, follow us on Facebook).

 

3. It Depends on The Train Line

If the line doesn’t go straight to key employment zones (e.g. Raffles Place, Tanjong Pagar), the station may not add as much value as you think. Charlie says:

Not all train stations are equally prized. Generally, MRT stations contribute the most to market value when they go direct to key employment zones.

Take a key employment area like Raffles Place. If you work there, and the station near your house is on the Circle Line, it can take you a long time to get to work anyway. It might be faster to just walk to a bus stop and take the bus.”

So now you know why certain MRT stations contribute more to appreciation than others.

 

4. The Exact Distance to the Train Station Matters

 

Man sleeping on train

“And the train station’s really convenient. Assuming you found your NS route march easy.”

 

Property developers use the term “within walking distance” very loosely.

In some cases, “within walking distance” means “if you’re the sort who likes walkathons, and thinks 15 minutes uphill is pleasant and invigorating.”

Charlie tells me that:

Property close to a MRT station carries a price premium, often around 15%. But the question is how close is ‘close’?

You try to walk to the station yourself. If it’s really easy, you can do it in five minutes or less, then yes…it’s something that many buyers might pay for. But if it takes 15 minutes to walk, some buyers will tell you that, to them, it doesn’t count as being close.

I find this is true with older buyers, those in their 50′s or above. To many of them, 10 minutes uphill walk means the station is still inconveniently located. They cannot accept your higher asking price.”

 

5. Is It Already Priced In?

 

MRT next to condoMRT next to condo

“And the train was about $1.2 million, so we went ahead and added it to the sale price.”

 

URA’s (Urban Redevelopment Authority) master plan is open to the public. As such, most property developers already know where the MRT stations will be. They’ll go out of their way to buy land close to these areas.

Some pretty absurd amounts are bid for these plots. As such, the sale price of any eventual development will already “price in” the future train station. Just look in those condo brochures: Some already advertise “future site of XYZ train station”, even if said station is still three squiggles on a drawing board.

Charlie mentions that:

For such new developments, the price already includes the amenity of the train station. Even after the station is operational, there may not be further appreciation due to the station being there.”

And don’t forget: MRT station or no, get the cheapest loan. That’s the best way to see capital gains. Visit sites like SmartLoans.sg for more on that.

 

Image Credits:
jakrapongyuhui, kenteegardin, nSeika, alantankenghoe, (Thumbnail) Dave Q

Did an MRT station help your property? Comment and let us know!

Get more Personal Finance tips and tricks on www.MoneySmart.sg

Click to Compare Singapore Home Loans, Car Insurance and Credit Cards on our other sites.



More From MoneySmart

--

Get stories like this on the Yahoo app and discover more every day.
Download it now.
Loading...
  • Grenade attack on home of Kosovo TV chief over border deal
    Grenade attack on home of Kosovo TV chief over border deal AFP News - 15 minutes ago

    A shadowy activist group in Kosovo claimed responsibility Monday for an attack on the home of Kosovo's public broadcast chief, in protest over a controversial border deal. "An explosive device was thrown into the backyard" of Mentor Shala, general … More »

  • 'IS suicide bomber' kills 71 army recruits in Yemen
    'IS suicide bomber' kills 71 army recruits in Yemen AFP News - 25 minutes ago

    An Islamic State group militant rammed his explosives-laden car into an army recruiting centre in Aden Monday, killing 71 people in the deadliest jihadist attack on the Yemeni city in over a year. The army, supported by a Saudi-led coalition, is … More »

  • Brussels crime lab attacked to 'destroy evidence'
    Brussels crime lab attacked to 'destroy evidence' 35 minutes ago

    Attackers rammed a car through the gates of Belgium's national crime laboratory on Monday in Brussels and then started a fire in what officials said may have been an attempt to destroy evidence. The incident comes as Belgium remains on high alert … More »

  • Cyber threat grows for bitcoin exchanges Reuters - 1 hour 52 minutes ago

    When hackers penetrated a secure authentication system at a bitcoin exchange called Bitfinex earlier this month, they stole about $70 million worth of the virtual currency. The latest survey of 46 securities exchanges released three years ago by … More »

  • Dollar at three-week high, bonds and stocks sell off on hawkish Fed
    Dollar at three-week high, bonds and stocks sell off on hawkish Fed 2 hours 9 minutes ago

    The dollar rose to a three-week high against the yen on Monday, while bond yields surged to their highest since June and stocks sold off after senior Federal Reserve officials indicated a U.S. interest rate increase was on the cards soon. In the … More »

  • Greek economy grows in second quarter but strong rebound elusive
    Greek economy grows in second quarter but strong rebound elusive 2 hours 27 minutes ago

    Greece's economy grew modestly in the second quarter but weak demand and scant investment mean a strong rebound after years of recession remains elusive a year after the country nearly crashed out of the euro. Rating agencies Moody's and S&P are … More »

  • Global from Day One co-invests in New Zealand firm’s US$5M Series A round
    Global from Day One co-invests in New Zealand firm’s US$5M Series A round 2 hours 54 minutes ago

    Global from Day One is a cross-border technology fund with the majority of capital to be invested in New Zealand and Taiwanese startups Spotlight Reporting, a Wellington-based cloud software company, has secured US$5 million in Series A funding from … More »

  • Oil falls towards $49 on high output, strong dollar
    Oil falls towards $49 on high output, strong dollar 3 hours ago

    Oil fell towards $49 a barrel on Monday, pressured by high output from Middle East OPEC members and as a stronger U.S. dollar weighed on commodities. Iraq, which has exported more crude from its southern ports in August, will continue ramping up … More »

  • New suspected MH370 debris found in Mozambique
    New suspected MH370 debris found in Mozambique AFP News - 3 hours ago

    A South African hotelier said Monday he had picked up a piece of aircraft wreckage off the Mozambican coast in the latest possible find of debris from the missing MH370 flight. Mozambique's aviation authorities in Maputo said they had been informed … More »

  • Unbiased New Launch Review – Lake Grande
    Unbiased New Launch Review – Lake Grande Propwise.sg - 3 hours ago

    By KK Tong (guest contributor) 23 July 2016 was the official launch date of Lake Grande, a 99-year leasehold development (lease starting from 9 June 2015) in Jurong West. On the launch weekend, 436 units out of a total of 710 units were sold. The … More »

  • Australia's richest woman considers bid for country's largest ranch - source Reuters - 4 hours ago

    Australia's richest woman Gina Rinehart is partnering with Chinese developer Shanghai CRED to bid for S. Kidman & Co, the country's largest private land holding, a source close to the sales process said on Monday. Rinehart's participation in a bid … More »

  • iPhone spyware spotlights Israel's secretive surveillance industry
    iPhone spyware spotlights Israel's secretive surveillance industry AFP News - 4 hours ago

    The discovery of sophisticated spyware to infiltrate and remotely take control of iPhones without leaving a trace has put a spotlight on Israel's secretive surveillance industry, considered among the world's most advanced. Apple rushed out a … More »

  • China Stock Traders Feel Heat With 774 Probes in Two Months (3) Bloomberg - 4 hours ago

    Liu Shiyu, who was appointed chairman of the China Securities Regulatory Commission in February, has emphasized the need for a tough stance on market excesses. The moves come amid signs China’s policy makers are also looking to cool gains in the … More »

  • SE Asia Stocks-Fall as Fed rate hike signals get louder Reuters - 4 hours ago

    By Aparajita Saxena Aug 29 (Reuters) - Most Southeast Asian stock markets closed lower on Monday after comments from U.S. Federal Reserve Chair Janet Yellen hinting at an interest rate hike weighed on ... … More »

  • US rate guesswork weighs on stock markets
    US rate guesswork weighs on stock markets AFP News - 4 hours ago

    Stock markets across the world dipped Monday as investors tried to second-guess the US Federal Reserve on the timing of its next interest rate hike. In a much-scrutinized speech, Fed chief Janet Yellen on Friday hinted at a US interest rate rise by … More »

  • Yuan Trades Near Five-Week Low as Fed Signals Renew Pressure Bloomberg - 4 hours ago

    China’s exchange rate fell as much as 0.24 percent as a gauge of dollar strength extended gains. The odds of a Fed rate increase in September shot up to 42 percent following comments from Chair Janet Yellen that the case to raise U.S. borrowing … More »

  • Marilyn Monroe’s Tokyo Honeymoon Spot Worries About Yen Rise (2) Bloomberg - 4 hours ago

    (Bloomberg) -- Tokyo’s Imperial Hotel, the luxury inn that counts Marilyn Monroe among past guests, raised room rates last year to levels it last charged before Japan’s bubble burst in the early 1990s. A surging yen now threatens those gains. … More »

  • Gold hits near 5-week low after Fed strikes hawkish note
    Gold hits near 5-week low after Fed strikes hawkish note Reuters - 4 hours ago

    Gold slid to a near five-week low on Monday after comments from top Federal Reserve officials fuelled speculation that U.S. interest rates would rise sooner rather than later, weighing on the dollar. Speaking at a meeting of leading central bankers … More »

  • Dollar at 3-week high, bonds and stocks sell off on hawkish Fed
    Dollar at 3-week high, bonds and stocks sell off on hawkish Fed Reuters - 4 hours ago

    The dollar rose to a three-week high against the yen on Monday, while bond yields surged to their highest since June and stocks sold off after senior Federal Reserve officials indicated a U.S. interest rate increase was on the cards in the near … More »

  • GIC Said to Pay Less Than $400 Million for Vietcombank Holding Bloomberg - 5 hours ago

    The Singapore sovereign fund will buy Vietcombank stock at a discount to the current market price, the people said, asking not to be identified because the information is private. GIC, which manages Singapore’s foreign reserves, said in July that … More »

  • Malaysia's closing tin prices for Aug 29 Reuters - 5 hours ago

    KUALA LUMPUR, Aug 29 (Reuters) - Following is a table of Kuala Lumpur tin market prices provided by a Malaysian trader. (Prices in $/tonne, and volumes in tonnes unless stated) Date KL Premium/ Spot Bid ... … More »

  • Suicide attack kills 18 in Iraq oasis town
    Suicide attack kills 18 in Iraq oasis town AFP News - 5 hours ago

    Attackers armed with suicide vests, rifles and grenades killed 18 people in the Iraqi oasis town of Ain al-Tamer, many of them guests at a wedding party, local officials said Monday. One of them blew himself up and the others were killed by the … More »

  • A sneak-peek into an upcoming billion dollar fund to bridge SEA and China
    A sneak-peek into an upcoming billion dollar fund to bridge SEA and China e27 - 5 hours ago

    As Chinese companies invest more in Southeast Asia, CC Zhuang’s fund is likely to be an important building block in constructing the bridge We now have an idea of what CC Zhuang is up to after leaving Qunar, the largest online travel booking company … More »

  • Singapore's GIC to take 7.7 percent stake in Vietnam's Vietcombank
    Singapore's GIC to take 7.7 percent stake in Vietnam's Vietcombank Reuters - 5 hours ago

    Singapore sovereign wealth GIC Pte Ltd said on Monday it will acquire a 7.73 percent stake in Vietcombank (VCB.HM), Vietnam's biggest lender by market capitalisation. GIC will purchase 305,810,895 new shares in Vietcombank as part of the deal, it … More »

  • Prada Shares Surge as Chairman Forecasts Improvement in 2017 (1) Bloomberg - 5 hours ago

    This year “is a turning point and we are now firmly on the path to sustainable growth in revenues and earnings from as early as 2017,” Mazzi said on an Aug. 26 conference call after the Hong Kong market closed. First-half earnings before interest, … More »

 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    0.124-0.005-3.88%
    N21.SI
    0.735-0.020-2.65%
    G13.SI
    0.128+0.014+12.28%
    RE4.SI
    0.3550.0000.00%
    E5H.SI
    4.12-0.10-2.37%
    Z74.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    0.355+0.115+47.92%
    BAZ.SI
    0.151+0.024+18.90%
    D79.SI
    0.23+0.03+15.00%
    AWI.SI
    0.475+0.060+14.46%
    588.SI
    0.128+0.014+12.28%
    RE4.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    0.205-0.105-33.87%
    BCZ.SI
    0.25-0.10-28.57%
    BKX.SI
    0.13-0.05-27.78%
    AYL.SI
    0.165-0.055-25.00%
    BKZ.SI
    0.745-0.130-14.86%
    564.SI

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    1.3616+0.0034+0.25%
    USDSGD=X
    1.5201+0.0005+0.03%
    EURSGD=X
    1.7803-0.0006-0.03%
    GBPSGD=X
    75.0400+0.358+0.48%
    SGDJPY=X
    5.6949-0.0098-0.17%
    SGDHKD=X
    2.9707+0.0044+0.15%
    SGDMYR=X
    9,743.6680-4.5205-0.05%
    SGDIDR=X
    4.9051-0.0011-0.02%
    SGDCNY=X
    1.0296+0.0033+0.32%
    AUDSGD=X
  • Commodities
    Commodities
    NamePriceChange% Chg
    1,324.90-1.00-0.08%
    GCZ16.CMX
    18.61-0.04-0.19%
    SIU16.CMX
    96.39+0.59+0.62%
    ^XAU
    2.080.00+0.05%
    HGU16.CMX
    46.93-0.71-1.49%
    CLV16.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.21-0.03
    ^FVX
    1.60-0.04
    ^TNX
    2.25-0.05
    ^TYX