Are all Integrated Developments in Singapore Profitable Investments ?

Hmmm… aren’t all integrated developments in Singapore high in demand and snapped up promptly, no matter how much premium is being loaded onto its price ?

Shouldn’t this be a direct indicator of integrated development’s popularity and profitability as an investment property ?

This is exactly what the media, developers and property agents want you to assume. The goal is to Pavlov condition you towards writing cheques and paying a premium whenever they tag the phrase integrated development to any new launches.

Think about it, most media coverage reports the over xx% sold on launch day. There is little to no coverage on how much these buyers actually earn on the resale market after buying.

The point of this article 

This article was written to establish the following points.

• Not all integrated developments are profitable. Some truly did well and some did not
• Factors influencing profitability of integrated development
• Framework towards identifying profitable integrated developments

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We are a team of specialist realtors that specialises in helping our readers research, shortlist and purchase investment properties. 

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Let’s first define what’s a profitable investment 

The annualised capital gain or the average percentage price appreciation of a private property in Singapore, over the last 10 years is 2.21%.

In our case, we will use 3% as a benchmark and classify any integrated development with above 3% annualised gain as a good investment, and anything that is below 3% as a sub optimal investment.

Translating this to something more relatable, here’s what a 2 million dollar property with a 3% and 4% annualised gain will bring you in terms of quantum of profit over a 5 year duration. 

As a side note, if you are struggling to deal with a unprofitable investment that you have made, refer to our seperate write up on : How to Deal with an Unprofitable Condo in Singapore: Hold, Sell ?

Relating annualised capital quantum with quantum of profit. 

Full list of Integrated Development in Singapore – Ranked by Annualised Capital Gain

To start off, we plot out the full list of all notable integrated developments in Singapore. We excluded any development that has yet to achieve its TOP status and yet to have any proven traction in the resale market.

We then ranked them by their annualised capital gain. 

Not all Integrated developments are made equal

Right off the bat, you would realise that the picture isn’t rosy as what it made out to be for every development. There are some that have outperformed and some that have failed to live up to its expectation. 

We classify them into 3 categories, the goal is to identify common attributes towards what constitutes a good integrated development and what constitutes an underperforming one. 

The Strong Performers

The Moderate Performers

The Under Performers

Factors affecting the resale demand and annualised capital gain of an integrated development

Getting straight to the gist of our research. 

Using the list of integrated developments above. We have overlaid it with over 10 factors that we hypothesise to have an impact on an integrated development’s demand on the resale market, and its respective price and capital appreciation. 

We then distil the factors down to the following 4 key ones that have the most significant impact. 

#1 – Residential Heartland over CBD and Orchard

The new launch buyer market consists of a good mix between investors and home stay buyers. The mix changes when it comes to the resale buyer market. Mix of buyers sway towards a higher composition of homestay buyers as compared to investors. 

This is due to the fact that most investors have a preference for new launches, while homestay buyers prefer buying something they could live in immediately. 

Relating this back to the performance of integrated developments, you would realise that all the under performers are located in the CCR region or in the central business district. These are not locations frequented by typical resale homestay buyers. 

On the flipside, the strong performers are all located within residential heartlands and most of these locations are mature districts with a high concentration of HDB, EC upgraders. 

#2 – Absence of a comparable competing development nearby

Factor #2 is an important nuance to look out for when buying into integrated developments.

You will need to consider if there is an equally young, appealing but more affordable condo development across the street from your integrated development. 

If there is, understand that the neighbouring condo development could be in a more advantageous position in the resale market. Resale buyers could see more merit in purchasing a more affordable condo and crossing one street to enjoy the amenities in the integrated development. 

This has impacted the profitability of the following integrated development

• Woodleigh Residence, integrated development vs Park Colonial comparable private condo development one street away. 
• Watertown, integrated development in Punggol vs Treasure Trove, Parc Centro, both private condos one street away from the integrated development. 
• Potentially, Lentor Moderns vs nearby Lentor Hills Residences

#3 – Reasonable premium vs comparable non integrated condo development

This could be one of the most important factors influencing the performance of integrated development in the resale market. 

It is an accepted fact that integrated developments are usually priced with a premium against a comparable non integrated development in the area. But the price gap between the integrated development and its comparable non-integrated alternative plays a huge role in determining its receptiveness in the resale market. 

#4 – Quality of tenant mix for the integrated mall 

So you can potentially classify integrated developments into 3 different tiers and each tier being distinguished by the quality of the mall or its tenant mix. 

In any case, integrated developments tend to perform better when the mall integrated with it has got a strong tenant mix and is centrally managed by a reputable retail mall manager. 

Tier 1 – Full service mall

The tier 1 integrated developments comprises a full scale mall that is run professionally by your big name retail mall managers like Capitaland, Fraser or lendlease. This mall tends to have cinema, supermarket, reputable food outlet chain and reputable brand name retail outlets like Uniqlo within its integrated mall’s tenant mix. 

Example of Tier 1 integrated developments are like Watertown, Bedok Residences and North Park Residences

Tier 2 – Mid scale mall with supermarket

Tier 2 integrated developments consist of an integrated mall with a decent and reputable tenant mix, usually anchored by a supermarket But its scale is not as large as a tier 1 development’s mall. There are usually no cinemas and have less food outlets. 

Examples of Tier 2 integrated developments are Sengkang Grand Residences, Woodleigh Mall and The Poiz.

Tier 3 – Strata titled mall without centralised management

A tier 3 integrated development would have a less organised and comprehensive tenant mix for its integrated mall. The mall could be strata titled with each unit individually owned by different owners or run by less established mall managers. 

These tend to be integrated malls filled with non chained food outlets, tuition centres, individual owned spa and beauty salons. 

Examples of Tier 3 integrated developments are The Wisteria, Midtown Mall and Stars of Kovan. Strictly speaking, without direct integration with a MRT station, these Tier 3 developments are termed as mixed developments instead of integrated developments. 

The case in point is that Integrated developments with Tier 1 malls tend to be the most desirable. 

But from our research, we have seen integrated development with Tier 2 malls like The Poiz and Sengkang Grand Residences performed well when there are no other larger retail malls serving the district.

Taking Potong Pasir for example, there are no major heartland malls serving the area. The Poiz centre remains the main mall serving the area and Poiz as an integrated development have performed well thus far. 

Overlaying list of integrated developments with attributes that matters

In the sections that follow, let’s put the factors that we discussed above into action and overlay these factors over the 3 categories of integrated developments that we established earlier. 

The Strong Performers 

One of the key commonality amongst strong performers is the lack of a strong competing condo development within walking distance.

This negates the threat of having a more affordable condo alternative across the street, stealing resale buyer demand from the integrated development.

Considering the case of North Park Residences it is the only condo within walking distance from Yishun mrt. The next closest condo development is some distance away. 

Another commonality is the narrow price gap between the Integrated development and its closest comparable non integrated counterpart.

Considering The Poiz Residences it is only priced at a 7% premium over its comparable The Venue Residences and only 10% premium over neighbouring Sennett Residences.

The Moderate Performers

From the moderate performer list, Watertown has all the right traits of being a strong Tier 1 integrated development but its annualised capital appreciation can have been better if there weren’t that many more affordable comparable alternatives located nearby.

Similarly Woodleigh Mall faces direct Competition from the more affordable Park Colonial.

While the Wisteria losses out to Tier 1 integrated development Northpark Residences in Yishun due to its retail mix and absence of MRT station.

The Under Performers

Most of the underperforming integrated developments are mostly located in the CCR region where there is little resale market demand from homestay buyers.

Aside from that, the integrated malls within the developments does not really serve as a unique proposition for resale buyers as amenities tend to be in abundance in the CBD or Orchard area.

How should you approach Integrated Developments as an Investment ? 

Fundamentally, integrated developments due to the convenience and lifestyle upgrade that it offers, possess very strong fundamentals as an investment property. 

But due to the premium that is often tagged with it, a longer holding duration would be necessary for you to truly realise its capital appreciation. 

With that in mind, you could consider approaching the investment in the following ways. 

Approach it with a dual purpose of homestay and investment

You could be living in the integrated development, enjoying the convenience and lifestyle upgrade that comes with it, while holding out for capital appreciation. This gives you the holding power while enjoying benefits that come with paying a premium for the property. 

Positioning it as a rental property

Integrated developments have very rental demand and high rental yield. If living in integrated development is not an option. Another way to approach the investment, is to purchase a smaller 1 to 2 bedroom unit type, minimise the amount of loan being used and seek to generate some positive cash flow from the property, while holding out for price appreciation. 

The difference between Integrated development vs Mixed Development 

A condo development is only termed an Integrated development when it is directly connected with a MRT station, while having a retail mall component attached to it. 

Mixed developments are simply developments with retail components but are not truly integrated with a transport hub or MRT station. 

Rental yield for Integrated developments in Singapore

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More Relevant Read Regarding Investing in Integrated Developments

• Pinery Residences vs Parktown Residences – Can Pinery Residences Win ?