People who are familiar with the condo new launch market in Singapore would have heard of AMO Residence and how it almost sold out on its launch day. This is considered a phenomenal performance for a new launch and has baffled some market commentators. Some were even wondering if this signals a need for more cooling measures.
AMO Residence sold 98% of its units on the launch weekend. Interestingly, a large number of buyers were Singaporeans (over 91% of buyers). This was despite growing recessionary fears, interest rate hikes, and AMO being priced competitively (comparable to Piccadilly Grand’s RCR psf). Both AMO Residence and Piccadilly Grand sold on average at around $2,1xx psf.
This article will uncover 5 simple reasons why AMO Residence’s launch did so well. What should we look out for in future launches? Read on more to find out.
#1 High Nett Demand for Mature Estates in the OCR
Let’s start with the most simple reason. There’s a high nett demand for private residences in mature estates. Especially those in the OCR, which are not only more affordable (most of the time), but also have a higher potential for appreciation. A higher nett demand means that there are more buyers interested in the area than there are available new units for them.
Having close family members staying in these mature OCR estates could potentially drive that demand up. Although there aren’t any grants for private residences, the convenience of staying near close family members could make visiting each other a lot more convenient. For younger families whose parents live nearby, it is easier for them to take care of their children. Or on the flip side, for the younger families to take care of their elderly parents more easily.
Mature estates are also known to have more amenities to offer. Sports complexes, large parks, and authentic hawkers sprawled out across the neighbourhood. Compared to newer estates, mature estates feel more lively in the business sense. It might not feel as overcrowded due to the amenities and mom-and-pop stores.
Another reason could be that OCR GLS supply shrank dramatically since the late 2010s. The demand build-up from 2018 to present might not be sufficiently satisfied by the current supply. Leading to the overwhelming demand we saw for AMO Residence.
In other words, AMO Residence may not be an anomaly. If there really is a demand-supply imbalance in the OCR, it might mean that we might see more of this sort of “crazy” demand for OCR new launches in the future. Of course, HDB is ramping up its efforts in increasing the supply of flats in Singapore. Even then, the new flats will take at least 3-5 years to really hit the market. Until then, new launches or resale condos in these supply-starved OCR districts might continue to do well.
#2 OCR Location Closer to Central Region
The second key reason why AMO Residence did so well might be that the OCR location for AMO is closer to the city than other OCR districts. The OCR is a rather broad category for districts located outside of the city or central region.
Thus, there is variation within the OCR districts in the sense that some districts are a lot more convenient than others (in terms of the distance to the city centre). This might be enough of a reason for some districts to do way better than others. District 20 (Ang Mo Kio) and District 21 (Upper Bukit Timah) are examples of districts that are nearer to town and border RCR districts.
Naturally, these districts are in demand especially if there are spillover buyers from the RCR and CCR districts that get priced out in today’s hot property market. The location that AMO Residence has allows it to benefit from such effects, which may be part of the reason why the launch did so well.
AMO Residence is also located along the North-South Corridor, near Upper Thomson. It benefits from the Thomson-East Coast Line, and the URA’s Long-Term Plan of improving connectivity along the corridor. This means more walking and cycling routes throughout the area in the future.
From a long-term fundamentals perspective, Ang Mo Kio as a mature estate still has a lot of potential to continue to grow and improve from URA’s and LTA’s future and current developments. This gives buyers of AMO Residence added confidence that it will continue to do well into the future.
#3 Multiple Options for Schooling Children
As mentioned in our article on AMO Residence, one of the main target audiences of the development is the young family demographic. This might also coincide with the HDB upgrader demographic. There are plenty of noteworthy primary and secondary schools within the vicinity of AMO Residence.
But more importantly, the underlying reason why these multiple schooling options matter in the first place is because it caters to a large population of millennials moving out to start their own families. This key target demographic is driving property demand for both public and private properties.
In a way, this demographic is the last large population segment that Singapore will experience in a long while. The property market is likely experiencing a strong bull market because of the demand generated by the Millennial and Late Millennial population in Singapore.
This demographic theory is popular among some equity analysts and economists, and could also be the theoretical reason why real estate continues to boom in Singapore. However, when we are applying a macro concept such as this to AMO Residence as a specific project, it is more speculative as we do not know the exact demographics of the buyers.
Paying attention to the three orange bars from age 25-39 in the age pyramid above, this is the last large segment representing the Millennial generation. This data was taken from the population census in 2020. Although it’s been two years since, there won’t be more people being added to previous cohorts. With this in mind, we can see that the population under 24 is steadily decreasing with each passing cohort. This is a topic of concern for another time.
For new launches to do as well as AMO Residence, it needs to understand the key needs and wants of the Millennial demographic (unless of course, it’s targeting a much older investor segment). We have seen, however, that strong pent-up demand can follow when developers can meet the requirements of this Millennial demographic.
#4 Strategic Unit Distribution & Launch Context
Interestingly, AMO Residence went with a very strategic unit distribution, with no studio or single-bedroom units. Close to a half of the units are 2-bedroom units and close to a third of them are 3-bedroom units. This choice of unit distribution tells us again which demographic the developers were going to target.
It could also be a matter of offering units at a palatable quantum, while still having decent living space. With the unit distribution that AMO Residence has, it is able to offer close to half of its units (approximately 184, 2-bedder units) roughly around $1.2M to $1.8M. And around a third of its units (approximately 118, 3-bedder units) roughly around $1.8M to $2.6M. The more palatable quantum is attractive to younger families exiting their HDBs and perhaps private properties.
Another key reason is that the unit distribution mirrors other nearby condos and is the first condo in the neighbourhood in 8 years. This is a highly marketed point of the condo but it does signal how supply-starved the area has been for a long time. Injecting the district with much needed supply in the right unit sizes has shown to be a success in AMO Residence’s case.
If you’re looking for future launches that would have this much success, perhaps look at where there is less competition coming from recent or future launches in the vicinity. With less competition about, it is more likely to see the new launch perform well. Of course, given that the location is a desirable one for buyers.
#5 More Greenery, Less Concrete
Are Singaporeans getting tired of the concrete jungle? Upon first glance, this might not seem like a primary reason for buyers to go for a specific property, but it is of growing importance to Singaporeans. Even the URA Long-Term Plan prioritises green and blue spaces throughout Singapore.
The CBD and newer housing estates are filled with concrete. Many residents often complain about the rising temperatures with each passing year. As a refreshing place to recharge and rest, homes should have more greenery and less concrete. With much more green spaces nearby, AMO Residence will probably be less hot compared to estates which are mostly in a built-up area (cue urban heat island effect to whoever took Geography in school).
As our residents move towards healthier lifestyles, the space to exercise and enjoy the outdoors will grow in their premium. Over time, there may be increasing interest in homes nearer to such large green spaces (Bishan Park, Railway Corridor, etc).
Large green spaces might also be increasingly sparse in the future. Based on the current plans, many of the future green spaces will be integrated into existing estates. There will be smaller pockets of green space and greenery littered throughout the neighbourhood.
On the contrary, the large green spaces we see today are unlikely to be a common place around a land-scarce Singapore. Some can hope, perhaps, that future developments such as the one in Paya Lebar Air Base will be an outstanding exception.
Why was AMO Residence so successful that it almost sold out at launch? We hope that this article is a step towards uncovering some of the reasons that you may or may not have thought about. From demand and supply to finding the target market and its needs, these reasons all aligned to produce the success that was AMO Residence.
Will we see new launches in the future as well as AMO Residence did? The best answer to this, is (of course) it depends. The bottom line is that location, cliche as it may be, is a key factor to an outstanding new launch performance. Again, it’s highly situational. Despite piling concerns from macro headwinds, the market had a voracious appetite for AMO Residence.