It is almost common knowledge among discerning homebuyers that proximity to MRT stations significantly boosts a property’s appeal, increasing both buyer demand and rental interest. This, in turn, plays a crucial role in driving more consistent and substantial capital appreciation. But just how much does being near an MRT station enhance a property’s demand and value?
In Singapore’s vibrant and fast-paced society where efficiency is paramount, living near transportation hubs—especially MRT stations—is highly sought after. This convenience greatly reduces commuting time to workplaces or businesses, allowing residents to reduce significant wasted time and instead use this precious time on things that truly matter. The importance of a property’s proximity to an MRT station is so significant that we’ve developed a specific metric for it in our proprietary MOAT Analysis, called the MRT Effect. In this article, we will use our MOAT Analysis and the MRT Effect metric to evaluate and compare the values of a few handpicked properties, to illustrate the benefits of being close to MRT stations.
The MRT Effect: How Station Announcements Spike Property Prices
Numerous online articles have analysed the impact of MRT stations on nearby property values, often comparing home prices before and after MRT station construction announcements. The most significant price appreciation typically occurs when the upcoming MRT stations are first announced. Following the announcement when construction of the MRT station commences, prices may plateau or even dip slightly. Generally, property values within a close proximity to an announced MRT station, particularly within a 500-metre radius, have been shown to appreciate in value shortly after the announcement. This trend is consistent across all districts and regions of Singapore.
However, once the construction of the MRT station begins, property values nearby often experience a slight decline. This drop is usually due to the noise, environmental pollution, and the disorganised environment created by the construction, which can be off-putting to potential homebuyers.
Assessing the capital appreciation of properties near these MRT stations upon completion is more challenging, as pricing trends tend to vary. For example, in neighbourhoods where it was less accessible via public transportation before the completion of a MRT station, property values—especially those within a 500-metre radius—often exhibit capital appreciation post completion. Conversely, in central areas or neighbourhoods that were already well-served by public transportation before the MRT station’s completion, the new station tends to have a less significant impact on property values.
The MRT Effect: A Deep Dive into Property Values with Our MOAT Analysis
While analysing the before-and-after effects of an MRT construction announcement and its completion can provide some insight into the impact on housing values, it may not fully capture the specific effect of being close to MRT stations. The initial price surge following the announcement could be influenced by various other factors during the lengthy construction period, making it difficult to isolate the true impact of proximity to a MRT station on property values. In this section, we will select a few private residential properties from each region and conduct an in-depth analysis focused specifically on how proximity to MRT stations influences property values.
We will assess one private residence in each region with a high MRT score and compare its price to another development in the same region with a lower MRT score. This will allow us to accurately gauge the positive impact of proximity to an MRT station. To ensure the most accurate comparison, we will analyse developments of similar ages and tenure (whether freehold or leasehold).
North Region
Canberra Residences is a 99-year leasehold development completed in 2015, with 326 units, while Eight Courtyards, also a 99-year leasehold, was completed a year earlier in 2014 and houses 656 units. Most importantly, both developments scored a strong 4 out of 5 on the Volume Score—a key metric we use to gauge capital appreciation potential. In addition, they achieved similar ratings on other crucial metrics, including 4 out of 5 on Bala’s Curve Effect and a perfect 5 out of 5 on the Exit Audience Score. The key difference lies in the MRT Score, where Canberra Residences earned a modest 2 out of 5, while Eight Courtyards received a slightly better score of 3 out of 5. Overall, both these developments scored a commendable 70% in our MOAT Analysis.
As shown in the graph above, Eight Courtyards is averaging $1,255 per square foot (PSF) as of 2024, while Canberra Residences is averaging $1,118 PSF, reflecting a 12.25% premium for Eight Courtyards. This premium exists despite Canberra Residences scoring higher in the District & Region Disparity scores and both developments achieving identical overall MOAT Analysis scores, and even though Eight Courtyards was completed a year earlier. The higher average PSF for Eight Courtyards may be an indication that discerning homebuyers are often willing to pay a premium for closer proximity to MRT stations. However, it’s important to note that each development has unique qualities that influence its perceived value, with the MRT Effect being just one of many factors.
North-East Region
For our analysis of the North-East region, we will examine two 99-year leasehold developments: The Florence Residences and Stars of Kovan. The Florence Residences, completed in 2023, is a mega project with 1,410 units, while Stars of Kovan, a mid-sized development with 395 units, was completed in 2020. The Florence Residences slightly outperformed Stars of Kovan in our MOAT Analysis, scoring 66% compared to Stars of Kovan’s 60%. The Florence Residences achieved higher scores in several key metrics, including District & Region Disparity, Volume, and Bala’s Curve Effect. However, in terms of the MRT score, The Florence Residences scored a modest 2 out of 5, while Stars of Kovan earned a 4 out of 5.
As shown in the graph above, the latest data reveals that Stars of Kovan commands a 7.2% premium in average PSF price over The Florence Residences, with prices at $1,897 PSF compared to $1,770 PSF, respectively. This premium persists despite The Florence Residences being three years newer, a much larger development with more units, and having higher overall and individual MOAT Analysis scores. The higher average PSF price for Stars of Kovan could be a strong indication that homebuyers are willing to pay more for closer proximity to an MRT station, assuming other factors remain constant.
East Region
The two developments we’ll be analysing in the East region are both Executive Condominiums, completed two years apart. Arc at Tampines, the newer development, was completed in 2016 and consists of 574 units, while Citylife@Tampines, completed in 2014, has 514 units. Overall, Citylife@Tampines scored higher in our MOAT Analysis with 68% compared to Arc at Tampines’ 60%. Both developments achieved similar scores in key metrics like Bala’s Curve Effect, District & Region Disparity, Exit Audience, and Volume scores. However, in terms of the MRT score, Citylife@Tampines earned a 3 out of 5, while Arc at Tampines scored just 1 out of 5.
As of the latest data this year, Citylife@Tampines is averaging $1,407 PSF, while Arc at Tampines is averaging $1,318 PSF, reflecting a 6.8% premium for Citylife@Tampines. While this premium aligns with Citylife@Tampines’ higher overall MOAT Analysis score, it is likely driven by its much closer proximity to an MRT station. This is particularly notable given that both developments received identical scores in key metrics like Bala’s Curve Effect, District & Region Disparity, Exit Audience, and Volume scores, and despite Citylife@Tampines being slightly older.
West Region
The two developments analysed in the West region are both Executive Condominiums, completed in 2017. Lake Life is slightly larger, with 546 units, while Westwood Residences has 480 units. Both developments scored equally in the District & Region Disparity and Volume metrics. However, Westwood Residences outperformed Lake Life in the MRT Effect, scoring 3 out of 5 compared to Lake Life’s modest 1 out of 5. Overall, Westwood Residences achieved a significantly higher MOAT Analysis score of 66%, compared to Lake Life’s 56%.
Interestingly, Lake Life has a higher average PSF price than Westwood Residences, at $1,420 PSF compared to $1,308 PSF, according to the latest 2024 data. However, when examining the average PSF price growth from 2020 to the most recent transactions in 2024, a stark difference emerges. Lake Life saw a 26.8% growth, while Westwood Residences achieved an impressive 45.8% growth. This contrast is particularly notable given that both developments scored equally in the Volume metric. This could strongly indicate that discerning homebuyers are willing to pay more for properties closer to an MRT station, which likely contributed to the more substantial growth at Westwood Residences.
Central Region
In the Central region, we will analyse two small-sized developments in the Newton and Novena neighbourhoods. Trilight, completed in 2012, is slightly older and larger, with 205 units, while 368 Thomson, completed in 2014, has 157 units. In key metrics, 368 Thomson scored higher in District & Region Disparity and Volume, while both developments achieved the same Exit Audience score. The most significant difference lies in the MRT score: Trilight earned a perfect 5 out of 5, while 368 Thomson only scored 1 out of 5. Despite scoring lower in some key metrics, Trilight slightly outperformed 368 Thomson in the overall MOAT Analysis score, with 56% compared to 368 Thomson’s 54%.
As of this year’s latest data, Trilight has an average transacted PSF price of $2,218, while 368 Thomson averages $1,852 PSF. This results in a 19.8% premium for Trilight over 368 Thomson. However, when comparing average PSF price growth from 2019 to 2024, the difference is minimal: Trilight grew by 18.9%, and 368 Thomson by 18.7%. Despite Trilight achieving only a slightly higher overall MOAT Analysis score, and 368 Thomson scoring better in the Volume and District & Region Disparity metrics, Trilight still commands a higher average PSF price. This could strongly suggest that developments closer to MRT stations generally command higher prices.
In Conclusion
While there is strong evidence suggesting that proximity to MRT stations positively impacts property values, it’s important to remember that this is not always the case. The MRT effect is a significant factor when searching for your dream home or investment, but many other factors also influence property prices and investment potential. The examples in this article do support the idea that being near MRT stations can boost property values. However, proximity to MRT stations is just one of many factors that determine a property’s value and capital appreciation. Navigating the complex real estate market can feel overwhelming. Whether you’re choosing your dream home or aligning your investment with long-term financial goals, expert guidance is crucial. Consulting a dedicated real estate consultant ensures you make informed decisions and develop a successful exit strategy.
Thank you for reading! Stay tuned for more real estate content to keep you informed. Are you searching for the perfect property near an MRT station? Contact our expert real estate consultants. At PropertyLimBrothers, we are dedicated to ensuring your real estate goals and aspirations are met with precision and care.
