Development 24 announced on 5 March that they have completed the acquisition of several freehold land parcels at 31 to 51 (odd) Lorong 24 in Geylang for a total of $60 million. Development 24 is a joint-venture between Heeton Holdings, Lian Beng Group and KSH Holdings.
The sites purchased by Development 24 has a combined land area of about 2,432 sq m. According to to filings in SGX, Heeton Holdings owns a 10 percent stake in the entity. Lian Beng controls 42 percent, while KSH Holdings holds the remaining 48 percent.
“Development 24 intends to develop a block of 8-storey residential flats (approximately 110 units in total) with sky garden, swimming pool and multi-storey carpark, subject to obtaining all the necessary approvals from the relevant authorities,” Development 24’s statement said. No further development charges are expected to be necessary for the proposed development,” it added.
Urban Redevelopment Authority (URA) in 2016 made some changes in zoning to Geylang which lifted the values of nearby condominiums. Even if traffic and parking continue to be a problem in that area, Geylang is just 10 minutes away from the Central Business District (CBD). Geylang also remains quite accessible via public transport. For those who are willing to take a long-term view and have the capital take risks, Geylang is a worthy investment because of its location.
Although location is the major plus of buying a property in Geylang, prior to the year 2009, banks tended to shy away from Geylang and the choice of banks remained limited, with the market left mostly to Hong Leong Finance and Singapura Finance.
Around 2010 – 2011, more banks came on board to finance properties from Geylang Lorong 30 or 32 onwards to Lorong 40. Now, OCBC and Maybank also finance Lorongs 26 and 28 on a case-by-case basis. Some lenders, however, impose a loading of 0.25 per cent on top of their usual lending rates for Geylang properties at even number lorongs.
Generally though, as long as the property is for owner occupied use, 80% loan is possible, subjected to TDSR and credit profile for properties above Lorong 30.
Recently, many residential development have sprung up in Lorongs 24, 26, and 28. The entire area is starting to look and feel more residential as opposed to being a red light district – which Geylang is well known for. As such, 1 to 2 banks are able to finance properties in Lorongs 26, and 28, subject to it being owner occupied and loan-to-value being around 70%. The borrowers’ credit profile also has to be strong at 80 per cent with good credit profile.
In private conversations with banks, 1 bank (on top of Hong Leong Finance and Singapura Finance) may be able to finance properties in Lorong 6 up to Lorong 24, with loan-to-value capped at around 50 to 60 per cent for clients who have a good profile. However, many people who opt for 70 to 80 per cent loan will still stick to Singapura Finance or Hong Leong Finance which have loyally supported Geylang properties for many years.
Some banks continue to view Geylang as a risk and impose Lorong restrictions. These banks place loan-to-value restrictions as well as a cap on the quota in terms of the amount of loan lent to this area.
Sometimes you will hear comments such as, “normally we can finance this project, but we have no more quota this month”. This is an example of a cap in the quota to limit their concentration risks. Many banks internally will require Level 2 approval for Geylang properties – this means that any such property financing will be escalated to the next higher management level for their decision.
These restrictions also spill over to odd number lorongs that are near to or around those between Lorong 6 to Lorong 24, but are generally not as restrictive as those in even number lorongs.
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