City Gate new launch worth buying or investing?

City Gate

City Gate, a joint venture by World Class Land and Fragrance Group was launched (at Jalan Sultan / Beach Road) during the weekend of 19/20 July 2014. City Gate is a 99 year leasehold project consisting of a 3-storey shopping and dining podium (188 retail units) and a 25-storey residential tower (311 units) with sky terrace on the 6th and 24th storey. City Gate is located at the current Keypoint building with construction work expected to commence around the end of this year.

A fellow real estate agent’s son was particularly interested to invest in a residential unit in City Gate after he had done some homework. The son asked the mummy (real estate agent) to assess for him and I was asked to go along to give a second opinion. We visited City Gate’s showflat just after the weekend launch and was briefed about the basics of the project and taken on a tour of the showflat and the views of the neighbourhood on the 25th floor. As the talk went on, the merits of City Gate started to glow.

City Gate - showflat

1) Location of City Gate

City Gate is conveniently located just outside the CBD with easy access to Nicoll Highway and the ECP. It is located in a sweet spot between two major URA master planned growth areas: Kallang Riverside and City Centre. City Gate’s location will benefit from the transformation of Kallang Riverside. See Master Plan 2014 for details. It also has access to two MRT stations: Nicoll Highway MRT station (CC5) and Lavender MRT station (EW11). Depending on the stacks, units in City Gate enjoy views of Kampong Glam (conservation status), Kallang River, the city centre and the sea. This is a view of the Kampong Glam conservation area from 25th floor.

City Gate - view

2) Tenant catchment

City Gate is only about 2 to 3 minutes walk to Nicoll Highway MRT station (CC5). There is a direct sheltered linkway connecting City Gate and Nicoll Highway MRT station. Nicoll Highway MRT station is only one station away from Promenade MRT Station which is where Suntec City is located. Suntec City is also only about two bus stops away from City Gate. It is also worth noting that Grade A office space will be coming up in DUO and South Beach, both of which are only two bus stops away from City Gate. This tenant catchment pool is very good and is an important factor for rental properties. And this is not even taking into consideration the Shenton/Marina Bay catchment which is just slightly further away.

3) Conservative rental estimate

In the Beach Road vicinity, there are only three prominent residential projects (already TOP) right now. They are Citylights, Southbank and Concourse Skyline. At this moment, the lowest one-bedroom rental goes for around $3,300, with the majority of the average units in the $3,500 to $3,600 range. The beautifully designed or furnished units go for another $200 to $300 more. Units in Concourse Skyline fetch a higher rate because it is the newest among the three and the one-bedroom units are very spacious – almost 800sqft in size. When City Gate goes TOP, it would be the newest in the area and my very conservative estimate is $3,200 for a one-bedroom unit.

4) Size and pricing

There are two one-bedroom stacks in City Gate – stack 1 and stack 8. I personally feel stack 8 is very interesting. It faces the Kampong Glam conservation area which means the view will not be affected in time to come (DUO will come up behind Kampong Glam). The floor area is 431sqft but every unit comes with a furniture deck that is about 120sqft in size. This furniture deck is where the bed will be. When these two figures are added up, the size effectively becomes 551sqft. For reference, the unit on #07 was going for $798k while the unit on #22 was going for $910k. If you use the conservative rental estimate of $3,200 for the #07 unit and $3,400 for the #22 unit, the gross rental yield works out to 4.81% and 4.48% respectively. This yield is quite decent and there is good chance of price appreciation to come.

The investment figures for the two-bedroom dual key units in City Gate are very attractive and compelling too. The project fundamentals look good and is worth a serious look if you are in the market looking for something right now. What do you think? Call me for a chat.

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Jack Sheo
jack.sheo@gmail.com

Jack has been guiding real estate clients since 2010 to make sound decisions pertaining to Singapore real estate based on data, stats and trends. Well-liked by both his local and international clients for his friendly yet professional approach to helping them, he welcomes the opportunity to have a chit chat session to see how he may be of assistance.

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