What is new at Novena?

Knight Frank Research

Contents.

1.0 Growing Demand for Healthcare

1.1 Singapore’s Medical Tourism

1.2 Growing Need for Healthcare

2.0 HealthCity Novena

3.0Why is Novena the Location of Choice for Residents?

4.0 Potential Growth in Property Prices

5.0 Limited Supply Within Novena

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6.0 ConclusionPg 10

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Novena, A Growing Medical Hub in Singapore.

Growing Demand for Healthcare

The Novena Planning Area comprises oneof the prime districts in Singapore and hasbeen a top location of choice amongprospective buyers due to various vitalattributes: central location, plethora ofamenities, established schools, as well asthe exclusivity of its high-end privateresidential estate among many. WhileNovena has already established itself as aprime location to live in, the prices of privateresidential properties in Novena have muchroom for capital appreciation as plans forHealthCity Novena come into fruition. Thedemand to own and rent a private residentialproperty is likely to increase, backed by agrowing population of medical professionals,increased interest in Singapore as aninvestment destination, as well as the risingneed for long-term rehabilitation and state-of-the-art medical care by Singaporeans andmedical tourists.

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Source : HealthCity Novena

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1.2 Growing Need for Healthcare

Besides the blossoming of medical tourismin Singapore, the healthcare sector will seesignificant growth due to the ageing babyboomer population. According to Singstat,the proportion of elderly amongst theresidential population in Singapore hasincreased from 13.0% in 2017 to 13.7% in2018. In tandem with this growth, theMinistry of Health (MOH) has reported thatthe number of hospital admissions in acutehospitals increased by 2.9% to 584,819 in2018.

Correspondingly, the operating surpluses ofhospitals and western clinics have increasedsteadily from 2015 to 2018. The operatingsurplus of hospitals went up to S$621.6million in 2018 from S$166.1 million whilethat of western clinics rose from S$903.5million to S$1.1 billion over the same period.In conjunction with plans to expand theavailability of healthcare infrastructures inSingapore, additional healthcareprofessionals will be needed to cater to theprojected growth in the number of hospitaladmissions.

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1.1 Singapore’s Medical Tourism

The ageing population is an importantdemographic trend across the world today.According to PwC’s Health Research Institute,about 11.6% of the world’s population is made upof more than 668 million people over the age of65. This age group is projected to make up a thirdof the world’s population by 2025. Some of themost rapidly ageing countries can be found inSoutheast Asia.

The rise of the middle- and upper-incomepopulation in the emerging economies inSoutheast Asia will encourage them to come toSingapore for medical treatment. Whilehealthcare in Singapore is relatively more costlycompared to neighbouring nations, the city holdsa reputation as a high-quality medical touristdestination. Based on the Bloomberg Health-Efficiency Index, Singapore ranked second,making it one of the top healthcare systemsworldwide, providing medical care of good valuethrough efficient use of resources.

The number of doctors and registered nurses inSingapore has increased by 2.8% and 2.9% to13,766 and 33,614 in 2018, respectively. Theincrease in healthcare professionals will lead to arise in demand for homes near the medical clusters,of which the Orchard and Novena/Thomson medicalprecincts will be among the coveted.

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HealthCityNovena.

The Novena medical hub is expected to expandwith upcoming developments slated for thearea. The healthcare component of the regionwill be enhanced with the completion of theIntegrated Care Hub (ICH) and National SkinCentre (NSC). Residents and visitors will alsobenefit from the presence of other amenitiesand communal spaces within the medicalcluster. These attractions include a CentralPark, where the community can be physicallyactive and close to nature, and a Central Plazawith Food and Beverage terraces. The CentralPlaza and Central Park will not only accentuatethe vibrancy of the area, but these facilities willalso add value to the surrounding residentialproperties.

Additionally, to create a highly connected andpedestrian-friendly network, pedestrianwalkways and interconnected basementcarparks will be constructed. The enhancednetwork will allow residents convenient accessto shopping, health, and lifestyle amenitieseasily and safely.

The ICH, a 500-bed rehabilitation complex, willopen in 2022 and cater to the needs of theageing population. The highest level ofrehabilitation provided at the ICH will servepatients with complex needs, such as patientswith traumatic brain or spinal cord injuries,complex stroke, and catastrophic limb loss.

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Aside from healthcare facilities, the NanyangTechnological University’s (NTU) Lee KongChian School of Medicine (LKCMedicine) setsitself as a cornerstone of the HealthCity,creating a symbiosis of education, research,and healthcare in Novena.

As Singapore sets itself apart as one of the topmedical tourism destinations, HealthCityNovena will appeal to foreign homebuyers.Medical services in Singapore are relativelymore costly compared to Malaysia andThailand. Given the higher cost, Knight FrankResearch believes this will, in turn, shift thesource of foreign demand for medical servicestowards a niche market, the high-net-worthindividuals (HNWI). According to Knight Frank2019 Wealth Report, HNWIs have continuallychosen Singapore as one of the top cities dueto the burgeoning nature of the economy aswell as the nation’s reputation for providingquality services. Hence, the development ofmedical infrastructure within HealthCity Novenawill lead to a potential increase in the demandderiving from foreigners interested inpurchasing or renting a home.

Source : HealthCity Novena

Knight Frank Singapore

Why is Novena the Location of Choice for Residents?

Novena stands as one of the mostattractive residential locations inSingapore. The availability of amenities aswell as transportation networks ensuresconvenient access to the region and otherparts of Singapore. As part of thegovernment initiatives within the NovenaMaster Plan, the central region has beenearmarked as one of the healthcare hubswith HealthCity Novena slated forcompletion by 2030. This is in line with thegovernment’s vision to ensure healthyliving is easily accessible and within reachfor all residents by 2020. As the healthlandscape of the city continues to evolveover the years, Novena is expected toexperience dynamic changes in thedemand for residential properties in theregion as need for medical services arises.With this, the area could see potentialgrowth in prices of homes as newamenities boost the appeal of the region toforeign investors and locals alike.

Today, Novena is moving towardsbecoming Singapore’s largest healthcarecluster. It is currently one of the most well-established medical hubs in Singaporeand is home to numerous reputablemedical centres such as the NovenaMedical Centre, Mount Elizabeth NovenaHospital, Tan Tock Seng Hospital, and theNational Neuroscience Institute (NNI).

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Being an established medical cluster,Novena appeals to many medicalprofessionals as they would prefer to staynear their workplaces. Working hours ofthe professionals are typically a criticalfactor in deciding the location of theirresidences. In the case of a medicalresearcher, working hours tend to beirregular due to the unpredictable timelineof the studies conducted. Similarly, doctorswould prefer to stay near the medicalcluster due to the nature of their jobswhere reaction times in emergencies arecritical. Locating near their workplaceswould reduce travel time. Given the easeof connectivity of Novena to other medicalclusters, the region would present as anattractive location for these professionals,especially doctors and specialists whomust travel to the different medical clusterson a daily basis.

Separately, the Novena area also attractsforeign buyers and tenants who havefamily members receiving medical care inthe facilities. This demand is expected togrow further with the development ofHealthCity Novena. To meet the risingdemand, more healthcare professionalswill be needed to cater to the varyingmedical needs. Under the 2020 HealthcareManpower Plan, a total of approximately30,000 new healthcare jobs are forecastedto be created with the erection of themedical facilities.

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Developments located within the region could also serve as an attractive rental catchmentfor those looking to stay for a shorter time. As the availability of medical and educationalfacilities increase, a potential pool of demand could come from doctors, nurses, andstudents looking for short-term accommodation due to the nature of their work wheretravelling time is key.

Additionally, prospective homebuyers in Novena will be spoiled for choices as various foodcentres such as the Pek Kio Market & Food Centre and shopping malls in the likes ofVelocity @ Novena Square and United Square are located within close proximity.Residents do not have to worry about the accessibility to other parts of Singapore as theNovena MRT station and major roads and expressways like the Central Expressway(CTE) and Pan-Island Expressway (PIE) are seamlessly connected within HealthCityNovena.

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Exhibit 3.1: Estimated Travel Time from Novena to Other Key Destinations in Singapore

Raffles Place

Orchard Road

Jurong East

Woodlands

Changi Airport

11

Mins By Car* Mins By Train

11

48

2727

3622

4127

Source: OneMap, SMRT, Knight Frank Research*Note: MRT stations of the respective destinations are used as a proxy to estimate the travel time by car.

Approx. Approx.

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Potential Growth in Property Prices.

Since Q1 2018, the median rent of non-landed private residential homes in theNovena Planning Area has generallyincreased. In the recent quarter, therewas a slight increase of 4.6% year-on-year (y-o-y) to S$3.83 per square foot permonth (psf pm) in Q3 2019.

Non-landed private residential propertiesin the region are highly in demand, withprices of new developments steadilyincreasing over the years. As of Q3 2019,the median unit price of new sale non-landed private residential units in theNovena Planning Area rose by 76.4%over the last decade.

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Exhibit 4.1: Median Rent of Non-Landed Private Residential Units in Novena Planning Area

3.50

3.60

3.70

3.80

3.90

Q1 Q2 Q3 Q4 Q1 Q2 Q3

2018 2019

Med

iant

Ren

t (S

$ ps

f pm

)

With the completion of the numerouscomponents of HealthCity Novena,Knight Frank Research anticipates rentsof private condominium units to increasefurther while prices correspondinglyappreciate. Given that the Novena MRTstation is the nearest train network to themedical cluster, developments locatedwithin close vicinity to the station areexpected to see greater growth in pricesas compared to other regions.

However, existing literature on the impactof MRT stations on surroundingdevelopments has shown that there is atime lag in the effect of futuredevelopment plans slated for the area onthe prices of existing developments.Consequently, the potential priceincrease of residential properties in theNovena Planning Area is likely to takeplace when the infrastructures andamenities earmarked for HealthCityNovena have been fully constructed by2030. Hence, the prospectivehomebuyers would be well-positioned togain from the potential price appreciationif they purchased a home in the regionsooner than later.

Exhibit 4.2: Median Unit Price of New Sale Non-Landed Private Residential Units in Novena Planning Area

1,600

1,800

2,000

2,200

2,400

2,600

Q1 Q2 Q3 Q4 Q1 Q2 Q3

2018 2019

Med

ian

Uni

t Pric

e (S

$ ps

f)

Source: REALIS, Knight Frank Research

Source: REALIS, Knight Frank Research

Knight Frank Singapore

Additionally, the residential properties in the Novena Planning Area also provide a hedgeagainst economic uncertainties. While the downside risks may weigh down the capitalappreciation of residential properties islandwide, the prices of residential properties in areaswith potential for further growth are likely to remain resilient.

For instance, J Gateway serves as a case study on how projects within upcoming businesshubs can withstand downward pressure from the general market. J Gateway, launched inJune 2013, is located in the heart of the Jurong Business District, with amenities such as theJurong East MRT Interchange and shopping malls like Westgate, Jem as well as JCubelocated within walking distances from the condominium. After the project was launched, thegovernment introduced the Total Debt Servicing Ratio (TDSR) in 2015. Despite the slowermarket in 2015 due to the TDSR, prices of units in J Gateway remained resilient andappreciated rapidly to more than S$1,800 psf when the market recovered in H1 2018.

From the case study of J Gateway, prices of residential developments in Novena can beexpected to gradually increase in anticipation of the completion of HealthCity Novena. Theeffect of the medical hub is expected to be fully capitalised into home prices only with thecompletion of the health cluster. Hence, it would be beneficial for interested parties topurchase a home in Novena now rather than later in order to fully experience the potentialgrowth in prices.

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Exhibit 4.3: Minimal Impact of TDSR on J Gateway Due to Plans Slated for Jurong Business District

Launch ofJ Gateway

$1,400

$1,500

$1,600

$1,700

$1,800

$1,900

Q2 Q3 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2013 2015 2017 2018 2019

Med

ian

Uni

t Pric

e (S

$ ps

f)

Source: REALIS, Knight Frank Research

Knight Frank Singapore

Limited Supply within Novena Medical Hub.

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Despite the uncertain external environment, there arestill pockets of opportunities in Singapore privateresidential market for investors and buyers. Freeholdresidential properties in prime precincts that areearmarked for further development will be an excellentasset to hedge against the risk and yield higher capitalappreciation in future.

The stock of non-landed private residential units withinthe Novena medical cluster is limited. The lastlaunched project in the region was Soleil @ Sinaran in2007. Since then, there have been no new launchesover the past 12 years within the area. There is a lackof supply pipeline of freehold developments locatedclose to HealthCity Novena. The nearest project toHealthCity Novena in the pipeline is NEU at Novena, afreehold development with 87 residential units andwithin 2 minutes’ walk to the Novena MRT station

Additionally, there are no land parcels within theNovena Planning Area in the H2 2019 GovernmentLand Sales (GLS) Programme. Barring any en blocsales, the supply of new freehold residentialdevelopments within the medical hub is expected to becapped as the area within the medical cluster is fullybuilt-up or reserved for the expansion of the amenitiesand medical facilities under the master plan ofHealthCity Novena.

With demand expected to grow and supply beinglimited, the price of freehold developments within themedical cluster has strong potential upside for futurecapital appreciation.

Conclusion.06