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Pasir Ris One is Singapore's newest (and last) DBSS project, and has hogged headlines for its many design flaws and defects.
WHAT IS DBSS?
Launched by the Housing Board (HDB) in 2005, the Design, Build and Sell Scheme (DBSS) was designed to bridge the gap between private and public housing.
This satisfied a class of buyers who wanted a more luxe home than the usual Build-To-Order (BTO), but may not be able to afford (or want to pay) for private housing or HDB’s Executive Condominiums. HDB thus roped in private developers such as Sing Haiyi Group, Kay Lim Holdings and ELD to build and sell these premium flats.
Despite their heftier price tags, the allure of getting a new flat in an established neighbourhood, subsidies from the HDB (up to $50,000 for a family grant plus up to $40,000 in Additional Housing Grant for first-timer families), paying less upfront cash and, of course, bragging rights for living in the swankiest flats in the area drove up demand for DBSS flats. Unfortunately, several DBSS projects have since had bad press.
Here’s the issue: although the DBSS is initiated by the HDB, buyers are actually buying their property from these private developers. Technically, the HDB is not liable for such issues, though angry buyers obviously felt differently.
Make no mistake – DBSS flats are HDB flats after all and buyers are still subject to HDB rules such as a Minimum Occupation Period (MOP) of 5 years before they can sell and cash in on their asset. It’s been 12 years and a total number of 13 DBSS projects since its inception. With more meeting their 5-year MOP and flooding the open market, it begs the questions: Do DBSS flats make good investments? Should you buy a resale DBSS flat? Consider these case studies.
Original buyers of The Premier at Tampines have seen their property prices shoot up over the years, bolstered in part by the high prices of their fellow DBSS neighbour, Centrale 8.
- The Premiere
Singapore’s first DBSS project was launched in Tampines in 2006. Prices for a new five-room flat at The Premiere were between $308,000 and $450,000 – a steal, compared to its new neighbours at Centrale 8, just a street away.
Completed in 2008, The Premiere’s buyers predictably made a good profit. Most recently from Dec 2016 to Feb 2017 period, five-room flats sized between 1,162sqf to 1,227sqf fetched between $670,000 to $758,000 on the open market. If you’re thinking of making your new home at The Premiere, you can enjoy new amenities such as the new Tampines Hub and Tampines Eco Green, and well-loved malls like Century Square and Tampines Mall.
- Centrale 8
Sited right next to The Premiere, Centrale 8’s original price of $880,000 for a five-roomer famously pushed the halt button on the DBSS programme. Prices for its three- to five-roomed flats were eventually lowered to $389,000 to $778,000.
In 2014, residents from the 708-unit project upset over the numerous defects presented an angry petition letter to developer Sim Lian Group and their MP, Finance Minister Heng Swee Keat. They wanted to extend their one-year Defects Liability Period to ensure that the developer fix all issues (including some extreme cases like a burst pipe) or pay compensation for defects "that cannot be reasonably rectified". Minister Heng even had to oversee a special taskforce to handle their concerns of Tampines Centrale 8 residents.
Limited brand new units are still being marketed by the developer on online property sites, starting from $711,000 for a 1,163sqf five-roomer. We also found a rental ad for a fully furnished master bedroom at $1,000 per month.
- City View
Last August, a 1,280sqf five-roomer at City View, Singapore’s second DBSS project, made headlines (and the sales record then) when it sold for $1.1 million. To date, 6 units have already hit the $1m mark in the estate.
Launched in 2008, prices varied from $349,000 to $394,000 for three-room flats; $523,000 to $597,000 for four-room flats; and $536,000 to $727,000 for five-room flats. It is estimated that the happy owners will reap a profit margin ranging from 35% to 59%. Located on the city fringes and near Boon Keng MRT station, some units boast panoramic views of the sea and even of fireworks during the National Day Parade held at Sports Hub. Buoyed by their neighbours’ success, more City View owners have put their units up for sale, including one millionaire hopeful who priced his 36th floor unit at $1.1m on ST Property’s website.
Natural Loft is home to Singapore's most expensive HDB flat — a five-roomer that sold for $1.8 million.
- Natura Loft
A five-room flat at Bishan’s Natura Loft is Singapore’s most expensive HDB flat – for now. One of just 12 penthouse units in the sleek three-block, 480-unit project, the five-year-old flat was sold for a cool $1.18million in January 2017.
Besides its breezy views, the 1,291sqf unit – similar to older HDB flats – is also larger than the typical five-roomers today which are about 1,184sqf. Its coveted location at Bishan is served by Marymount MRT station and Bishan MRT station, Junction 8 mall and prestigious schools like Catholic High and Raffles Institution. Still, it worked out to be over $900psf – even higher than some condominium units in the neighbourhood, which recently sold for as low as $850psf.
Natura Loft flats were originally priced at $465,000 to $586,000 for its 1,022sqf four-room flats, and $590,000 to $739,000 for five-room flats. Some 30 flats have already been resold since last September, ranging from $700,000 to $818,000 for the four-roomers, and $830,000 to $1.18m for the five-roomers.
- Park Central
Park Central’s coveted location at Ang Mo Kio attracted 3,000 people on its first day of launch back in 2008. The mature estate offers amenities like MRT stations, established primary schools and shopping malls like AMK Hub, Jubilee Square and Djitsun Mall. Completed in 2011, Singapore’s 3rd DBSS project sold four-roomers at $400,000 to $500,000 and five-roomers at $600,000 to $700,000.
Developed by United Engineers, the 578-unit project hit its 5-year MOP in July 2016. To date, 18 flats have changed hands, ranging from $688,000 for a 968sqf four-roomer, to $980,000 for a 1,291sqf five-roomer. Industry watchers expect that future units may cross the million-dollar mark, though the highest asking price we’ve seen so far is a recent five-roomer’s ad for $990,000.
- Pasir Ris One
Singapore’s last DBSS project offered before the scheme’s suspension, Pasir Ris One is a 447-unit collaboration between property developers SingHaiyi Group and Kay Lim Holdings. The flats cost between $390,000 for a 3-roomer and $770,000 for a five-roomer.
The project’s awkward design flaws drew ire from homeowners, who received their keys in 2015. Complaints poured in fast and furious about the corridors that measured just 1.2m wide, workmanship defects like popping tiles, and cracks on window panes. On Propertyguru.com.sg, several four-roomed units sold directly by the developer are still available. The 926sqf flats ranged from $565,000 to $619,200. One owner also put up a master room and a common room for rent at $2,488.
WEIGHING OUT THE FACTORS
DBSS flats have certainly made several lucky home owners instant millionaires, but bear in mind that not every DBSS flat is created equal. Only super premium ones – on a very high floor, with amazing views, nice renovation, great location and facing etc – have hit the jackpot so far.
If you’d bought your DBSS flat brand new at a subsidised price and with HDB grants, you can definitely enjoy a tidy profit when you resell it – as with any brand new HDB flat. But you also paid more for it, compared to a regular BTO flat. Whether your investment will net you a higher capital gain than a cheaper BTO flat, will depend on your unit’s own merits and market sentiments. For example, the most expensive ad we’ve seen in Ang Mo Kio recently was surprisingly not for Park Central; it was for a 1,302sqf five-roomer at Blk 310B Ang Mo Kio Ave 1. The unit offers a gorgeous panoramic view from a high floor and is just opposite Bishan-Ang Mo Kio Park. The price tag? A prosperous-sounding $1,088,000. This is a good example of how a flat’s appeal extends beyond just exterior aesthetics.
If you’re planning to buy a resale DBSS flat, you must accept the fact that you will be paying top dollar. Do consider if you can ever resell it at a profit – or will you possibly incur a loss? (Seriously, how many people will be willing to splurge $1m on an ageing HDB flat?)
If you’re thinking of making some of that dough back through rental income, do note that your DBSS flat is subject to HDB’s restrictions and you can’t lease out the whole unit until the flat fulfils its 5-year MOP and you’ve obtained permission from HDB to do so, though individual room rentals are fine provided you continue to live in your home. Most tenants, unlike buyers, pay less attention to the flat’s exterior. They are likely to be more concerned about the convenience of the location, cost of the rent, furnishings and even having a nice landlord. Your DBSS flat will not likely command any, or much, higher rental compared to another equally good HDB flat just because it has a fancier name and you paid more. For the same amount that you’re shelling out, you may fetch the same rental yield – and get instant rental income – if you buy an older private property instead.
Finally, also consider changing trends and expectations. SLP International Property Consultants head of research Nicholas Mak shared this apt observation with The Straits Times: “Right now, DBSS flats look good, look different. But over time, as more HDB flats come with private condo-like facades, DBSS flats are not going to stand out anymore.” We couldn’t agree more. By the way, did you know that Singapore’s most iconic HDB estate, The Pinnacle@Duxton, is not a DBSS project? (It was built before the scheme was rolled out.) That didn’t stop 10 units (to date) from selling past the $1m mark, with the highest priced at $1.12m.
At the end of the day, whether you are buying a regular BTO, resale, or DBSS flat, you are buying a home, not just a house. There’s nothing wrong about paying more for a flat you really like since it’s a personal choice. As long as you can afford it and are willing to splurge on a nicer flat, that’s all that matters, really.