Dated 12 Jan 2021

When looking for property investment, you will want to look for the potential rental yield or capital gains in the next 3-10 years. Clavon [Fun fact: Clavon is a name made up of the first letters of ‘Clementi Avenue One.’] was launched on 12 Dec 2020, and about 70% of Clavon had been taken up on the first weekend of launch.

Units were sold at an average price of $1,640 psf, according to UOL. For those who have been following the property market, a development would attract a pool of buyers whenever it is a good location launch, resulting in “oversubscription.” During the preview phase, more than 1,330 cheques were collected. Yes, this means even you have the money to invest, you need luck in balloting to get your desired unit. 

Not a surprise, the one- and two-bedroom units sold out on the first day of launch due to the affordability

The 640-unit condo is located along Clementi Avenue 1 and is expected to be completed by 2025. As one- and two-bedroom units were sold out, so in this post, let’s discuss the potential growth on the bigger units with some supporting data. 

***Rental Yield and Potential Growth in Property Value are at the end of the article, please read through the full article so you understand the development.

1. Developer UOL is Passing the Saving to Buyers

Developer UOL Group made the winning bid for the 99-year leasehold Clavon site in July 2019’s Government Land Sales (GLS) exercise for $491.3 million. Comparing the per square foot per plot ratio (psf ppr) price of UOL’s bid with that of the recently-completed The Clement Canopy (TCC) next door, the developer appears interested to pass on the savings it got onto buyers. 

Land Sale for The Clement Canopy Condo – Est. Breakeven $1,068 (psf ppr)

Land Sale for Clavon Condo – Est. Breakeven $1,334 (psf ppr)

Clavon has higher land sales at $783.3psf vs. TCC $618psf. In comparison, for Clavon to breakeven, the developer has to be sold at $266 psf ($1,334 – $1,068) more compared to TCC.

TCC was selling an average of $1,487 – $1,515 psf. Yet for Clavon, with a price starting from $1,475 psf and an estimated average price of $1,600 psf, indeed the developer is passing on the savings to the buyers!

 

2. Best Private Condo Architectural Design Award

Clavon was awarded for the Best Private Condo Architectural Design 2020.

As its location is close to the Ayer Rajah Expressway (AYE), Clavon’s architect came up with the concept of tiered landscaping decks to achieve greater separation between the expressway and the condo’s amenities and residential blocks. The development has combined greenery and a cascading waterfall feature. The well-thought design makes both low floors and high floors getting the best views, having pool view for low floors or sea view at the high flow for south-facing, Bukit Timah Hills for the north-facing.

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3. Great for Families with Children

There is a childcare centre as part of the development that will cater to enrolment from condo residents and non-residents alike.

Clavon’s vicinity is known for good schools with next door is Nan Hua High School and the NUS High School of Mathematics and Science, and the number of tertiary institutions (Singapore Polytechnic, Yale-NUS College, NUS) and international schools in the area.

 

4. High Tenant Pool

Clavon will appeal to expatriate families for its accessibility to international schools. Because of its superb location and proximity to Education Hub, One-North, and the Jurong Precinct – including International Business Park – which has a large job pool. This means it attracts dual-income/single-income earners in the expatriate community.

In short, with the connectivity to the city centre, the tenancy demand will remain high. This is definitely a plus point for investors to rent out for rental yield while waiting for property appreciation.

 

Connectivity

Walking distance to Clementi MRT

Linking the neighbourhood is Clementi Road. The road which is close to Clavon condominium connects the Clementi to the West Coast and Bukit Timah. It passes through Ngee Ann Polytechnic, NUS, and Maju Camp.

The West Coast Highway is the second major road that links Clementi to Tanjong Pagar and Jurong. Ayer Rajah Expressway connecting to essential parts of Singapore is also accessible through the West Coast Highway.

Connectivity is set to improve in Clementi with the completion of the upcoming Cross Island Line that will connect the residents to Changi Airport, Pasir Ris, Ang Mo Kio, and Jurong through Bukit Timah.

 

Nearby Amenities

One-North Research Cluster (Business/Innovation)

  • Biopolis
  • Fusionpolis
  • Mediapolis
  • JTC Launch Pad

Jurong Lake District (The 2nd CBD)

  • Jurong Lake District
  • Jurong Gateway Precinct
  • Jurong Innovation District
  • Jurong Lake Gardens
  • Holland Village
  • Clementi Market and Food Centre
  • Ghim Moh Food Centre
  • Clementi Mall
  • West Coast Plaza
  • Grantral Mall
  • 321 Clementi
  • City Vibe Mall
  • Clementi Woods Park
  • West Coast Park
  • Ulu Pandan Park Connector

Educations

In the vicinity of Clementi & Kent Ridge Education Belt

  • Nan Hua High School
  • NUS High School of Math and Science
  • Yale-NUS College
  • University Town 
  • United World College (Dover Campus)
  • Singapore Polytechnic
  • Anglo-Chinese School (Independent)
  • National University of Singapore
  • Fairfield Methodist School (Secondary)
  • Angelo-Chinese Junior College
  • Nexus International School
  • Singapore Institute of Management
  • Ngee Ann Polytechnic
  • Nan Hua Primary School

As the completion for TCC is 2019, we can see that on the chart, the rental for 2-4 bedroom (there is no 1-bedroom for this development) starting only Jul 2019.

TCC is able to fetch: –

  • 2-Bedroom: on average $2,800

  • 3-bedroom: on average $3,800 – $4,000. It could hit almost $4,500 as you can see for the month of Nov20

  • 4-bedroom: on average $4,600. It could go above $5,000 (refer to Jul 2019).

 

This translates that with such rental yield, the mortgage loan for the house is more or less covered. While enjoying the rental income or channel to service the mortgage loan, it allows the property to appreciate its value with time. 

 

5. High Potential Growth in Property Value

Resale prices for HDB flats are already fetching $1 million within the same proximity. This sets excellent pricing for the developments within the same compound, in this case, TCC and Clavon.

Let’s us take a look on the TCC profitable transactions. We can see that profits for big units are above $300K in just three years!

 

We shall now work on the return on the cash investment (Return of Equity) for TCC. 

Let’s take unit #04-08 for illustration. The profit is $358,000 so this means the selling price at launch was $1,980,000 – $358,000 = $1,622,000.

The cash outlay for this property (both cash i.e. $81,100 + CPF i.e. $454,980) is $454,980. 

ROE = ($358,000/$454,980) x 100% = 78%

 

 

With an ROE of 78%, this means the property is very efficient at generating income and growth from its equity financing. This is why it is important to understand how leverage works, and using CPF for property may still give you more options

Of course, all investments come with risks. It is important to have holding power as we can see the monthly mortgage is $4,406 based on 1.85% interest of 30 years loan. And this can easily be covered by the rental but investors need to understand, if there is no rental due to an economic downturn or any unforeseen circumstances, the mortgage will still be payable by the investors. 

Most will probably ask it is hard to own two properties due to ABSD to even come out with such initial capital for property investment; this is true. That is why a couple needs to work out their budget plan and look for professional realtor to help assess your financial health and advise how to avoid ABSD.

 

What’s Next?

Clavon may have fully sold out the small units of one- and two- bedrooms; however, bigger units are very attractive, be it for your own stay, rental income, or capital appreciation. End of the day, it is all about affordability and knowing how to manipulate the capital you have

Contact Us Directly For More Information Or Leave Your Contact Below And We'll Get Back To You ASAP

Email: info@realestateaffair.com


Disclaimer: This article is not a recommendation of buy or sell. No salesperson shall be held responsible for any errors or omissions, or for the results obtained from their use or the reliance placed on them. All information is provided “as is”, with no guarantee of completeness, and accuracy. In no event any salesperson thereof be liable in contract or in tort, to any party for any decision made or action taken in reliance on the information in this presentation/document or for any direct, indirect, consequential, special or similar damages.

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