Singapore's MRT network is constantly expanding. When it first opened for passenger service in November of 1987, there were only five stations. Today, there are 141 stations spread across the island with more to come.

The MRT not only improves connectivity within the city but also makes surrounding homes more attractive due to the added convenience. Thus, with each new station, comes a spike in nearby property prices. Actually, two spikes: first when the station is announced, and then again when it's finally operational. So how does the MRT affect your property investment(s) and what can you expect with upcoming developments?

Property Prices

As I've mentioned, property prices tend to spike twice with MRT developments. The first occurs when MRT plans are announced. Take the Downtown Line, which was announced in April 2007, as an example. Now let's compare property prices from the year before to the year after. You can see that there are significant gains, which signifies the impact of MRT development news on nearby property values. Of course, we also have to take into account that these prices are also partially influenced by the subprime mortgage crisis at the time.

Source: PropNex Investment Suite

The second spike occurs when the MRT is open for passenger service. Let's take a look at the Circle Line, which started operations with 5 stations back in May 2009.

Source: PropNex Investment Suite

To be clear, the announcement or completion of an MRT development are not the only factors that affect property values. For example, the year after the Downtown Line was announced, the average private housing price also saw a 29% increase. This overlap would explain why the gains were quite sharp. Meanwhile, the Circle Line started operating shortly after the great recession in 2008, which explains why the gains were more modest.

Additionally, the closer your property is to the MRT station, the greater the price. A study by NUS states that properties within 400m of the Circle Line stations are 13.2% more expensive than those beyond 400m because people are willing to pay more for the proximity. Of course, there might be some exceptions to this. For example, lower level properties (3rd to 5th floor) near ground tracks or stations might have higher noise levels, which can counter the proximity advantage.

On top of that, MRT developments don't affect all regions equally. Some areas see a more drastic impact than others. Areas that were previously not very accessible tend to appreciate more. On the other hand, if an area was already well connected to begin with, the new station doesn't add that much more value. So, the impact on housing prices in that area might be minimal.

For instance, condos in the Springleaf, Lentor, Mayflower and Bright Hill areas, which were previously less accessible, saw an average of 18.5% rise in unit prices after the addition of MRT stations for the Thompson-East Coast Line (TEL). Meanwhile, areas like Orchard, Maxwell, and Outram Park, which were already well connected, were relatively unaffected by the introduction of the TEL with only a 5.8% increase in unit prices.

Rental Yield

MRT developments also affect rental yield because people prefer to rent a place near MRT stations for convenience. Think about it, when you're travelling, finding accommodation near reliable transport options would be one of your top priorities right? Now, put yourself in the shoes of an expat living in a foreign country without a car. Accessibility becomes a non-negotiable factor when it affects your daily life.

On average, rentals within 500 metres of an MRT station are higher than those outside of that scope, and this has been a consistent pattern for a very long time.

Source: PropNex Investment Suite

In the coming years, Singapore's MRT system will continue to develop. According to the LTA, we can expect to see brand new MRT lines, the 5th stage of the Thomson-East Coast Line (TEL), the Jurong Region Line (JRL) and the Cross Island Line (CRL) in 10 years. We will also have more MRT stations like the Brickland and Sungei Kadut stations on the North-South Line (NSL), Hume station on the Downtown Line (DTL), and Founders' Memorial, Mount Pleasant and Marina South stations on the TEL. On top of that, we'll also see the 6th stage of the Circle Line (CCL6), the North East Line extension (NELe) and the Downtown Line 3 extension (DTLe) in the future.

Source: SGTrains

Overall, consumers typically prioritise accessibility and will pay a premium to be closer to an MRT station. So, it's only natural that accessibility improvements lead to higher property prices, especially within a 500-metre radius of new stations. But this may not always be the case for areas that are already well-connected to begin with.

Regardless, it's safe to say that proximity to an MRT station is one factor that could help you make better investments, though you should still consider other things that play a role in determining the value of a property.

If you're interested in learning more about the key drivers of property value, join us at our upcoming seminar for expert insights and guidance tailored to Singapore's evolving market. You should also know that our agents are equipped with our proprietary PropTech. This advanced tool helps us do property search with granular-level filtering to sift out the best options for your needs. So, do connect with us if you need guidance with your property investments.

Views expressed in this article belong to the writer(s) and do not reflect PropNex's position.

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