Mega-Projects Versus Boutique Developments: Which are Better?

by | J Apr 2020 | investment concepts | 0 comments

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There have been a number of mega-projects of late; by this I loosely refer to projects with over 1,000 units, such as Treasure at Tampines (2,203 units), Parc Esta (1,399 units); and even a luxury development like Marina One Residences (1,204 units).

On the flip side, we have also seen condo developments that have a deliberately small number of exclusive units. The upcoming Meyer Mansion near East Coast beach has only 200 units, while Van Holland has only around 70 units.

When choosing a condo, one common question is whether you should go for a bigger development (more units), or a boutique development with a small number of homes.

To be blunt, neither is inherently “better” than the other. There are pros and cons to both sides to consider:

A quick “cheat sheet” on the main differences

*Please note that these are generalisations. They may not hold true for every single development, as each project is subject to different developer considerations in terms of facilities, pricing, etc.

Some key considerations before picking your unit:

  • Are you intending to rent out the unit?
  • How are the blocks spaced out?
  • What are your en-bloc expectations?
  • Is it an integrated development?
Facilities
Maintenance fees
Lifestyle factors
Pricing
Rental
Resale value

Big developments / Mega Projects

Usually more facilities, as the land plot is often bigger, and developers plan to accommodate the higher number of residents.
Tend to be lower, as the cost is divided among a bigger number of units.
Can be a bit noisier, involve more waiting for the lift, and might be less communal (you’re less likely to know everyone). You have much less say in general meetings, on how the condo is run (unless you own many units in the condo)
Tend to have more compact units or two-bedders that are priced at a lower quantum (but price per square foot may be higher).If it is not a luxury property aimed at exclusivity, prices are generally lower.
There are more likely to be other units being rented out, so you may have some competition (that might mean lower rental income).
Higher chance that there will be other units up for sale at the same time as yours, providing competition.

Small, boutique style developments

In theory the land plots tend to be smaller, so there should be fewer facilities. But developers these days are quite ingenious, fitting extra facilities in between floors, on the roof, etc.
Tend to be higher; not just because there are fewer units, but because smaller developments tend to be more exclusive / luxury-oriented with concierge services, etc.
Tends to be quieter; communities can be tighter knit; you at least recognise most residents’ faces. Your voice matters more in general meetings, as there are fewer voters overall.
Tends to be higher. This is partly because the developer needs to meet their bottom line with fewer units to sell, and partly because many smaller developments are on the exclusive / luxury market anyway.
Smaller number of units makes it less likely that you’ll face competition, as a landlord.
Lower chance that there will be other units up for sale at the same times as yours; that means less competition.

1. Are you intending to rent out the unit?

For landlords, the number of units in the development is a bigger concern. The main fear is that, if there are many other people buying for investment, this could result in a competition for tenants.

Competition between landlords can mean lower rental income: there’s less differentiation besides price, among units in the same development (or even worse, in the same block). As such, with all other factors being equal (i.e. equally good location, facilities, quality, and so forth), many landlords prefer to go for a development that is somewhere in the middle, such as 500 to 600 units.

Most home owners can ignore this, as they usually don’t intend to rent out. For them, the size of the development should only matter if it impinges for lifestyle reasons; such as in terms of noise, or if you feel facilities are overcrowded.

    2. How are the blocks spread out?

    It’s not really the number of units, but how the homes are spaced out, that makes the bigger difference.

    For example, Treasure at Tampines is actually very well-spaced out, and feels like an open estate; if I don’t tell people there are over 2,200 units in it, they often don’t even realise they’re in Singapore’s biggest condo to date.

    Likewise, even small developments can offer a surprising amount of room. Meyer Mansion, for instance, commits 80 per cent of its space to communal facilities – there are two swimming pools despite there being only 200 units.

    So while the total number of units does matter, I suggest you walk around and get a sense of the layout and spacing. It’s possible for a poor layout to make even a small number of units feel cramped, and for a good layout to make even big unit numbers appear amply spaced. Do drop me a message, and I guide you around some of Singapore’s leading projects.

    3. What are your en-bloc expectations?

    If you have certain en-bloc expectations, such as if you’re buying freehold and waiting long term for it, then you should aim for smaller developments. There are two reasons for this.

    First, developers currently pay an Additional Buyers Stamp Duty (ABSD) of 30 per cent of the land price, if they cannot complete and sell every unit within five years. This is regardless of the size of the land plot – they have as much time to sell 200 units as they have to sell 1,000 units.

    As such, developers today are more recalcitrant to bid aggressively for very large land plots, which are typical of big developments. This may change if the government relaxes the cooling measures.

    Second, an en-bloc effort requires 80 per cent approval* among owners to proceed. Unless your development consists of many units held by a small handful of owners – and you are one of them – larger developments will find it tougher to go en-bloc.

    *This means approval from owners of 80 per cent of the total share value, and 80 per cent of total strata area. It is not 80 per cent of the literal number of owners. Owners of larger or more units thus have more say in the process.

    4. Is it an integrated development?

    Maintenance fees for smaller condo projects do tend to be higher. However, take note of whether the project is an integrated development with offices, retails, and so forth. This is because sometimes, the commercial portion of the project will offset the maintenance fees for the residential segment.

    A good example of this is Guoco Midtown – the residential portion of this project (Midtown Bay) has a large chunk of its maintenance costs borne away by the offices, restaurants, and others commercial amenities in the same development.

    Ultimately, let the above considerations be secondary to bigger issues

    When picking a property, I would always advise you to look at it holistically, and don’t focus too much on just one aspect of it. That’s certainly true here. While the development size is a factor, other considerations such as location, amenities, and convenience should always come first.

    In addition, there are always condos that prove an exception to the guidelines above. Contact me for any property you’re interested in, and I can provide expert advise on whether it suits your goals – be it a comfortable home, or reaching a financial milestone.

    Justin Kong has successfully help numerous property owners embark on wealth creation through property investment since 2003. He is passionate about sharing the knowledge of property wealth planning through writing and discussion with people from all walks of life. Feel free to contact him if you have questions about embarking on property wealth planning. 

    Any enquiries you have about property wealth planning? Contact Justin Kong today!

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