The Urban Development Authority (URA) has divided Singapore into three main regions – Core Central Region (CCR), Rest of Central Region (RCR), and Outside Core Region.
As the name suggests, the regions are based on their proximity to the centre of the city-state.
The CCR is the heart of Singapore and comprises districts 9, 10, 11, and the Downtown Core Planning Area and Sentosa.
It is also where the Central Business District is located. This is where the most high-end, luxurious residential properties are located.
Singapore’s most famous shopping belt, Orchard Road is also within the CCR as well as five-star hotels, high-end restaurants, and major shopping malls.
The Rest of Central Region, also known as the RCR, is sandwiched between the CCR and the Outside Central Region (OCR).
The RCR consist of districts that are in the central part of Singapore outside of those in the CCR. The properties in the RCR are considered just slightly below those in the CCR but above those mass-market properties in the OCR.
The trend in property prices between the CCR and RCR has been closing steadily in the last few years.
Besides pricing, the main difference between the two regions is their distance to the CBD, Marina Bay Financial Centre (MBFC), and Orchard Road.
Decentralising the CBD
For those working in the CBD, MBFC, and Orchard, it is very convenient to commute to and from work if you live in the CCR.
For those living in the other regions and working in the CCR, commuting would be a big problem with peak hour traffic, Electronic Road Pricing (ERP), and congested MRT trains.
Therefore, the Singapore government has come with the idea of decentralizing the CBD.
This will greatly reduce the number of people commuting to the CCR and put less strain on the roads and transport services.
There are already many new commercial developments in Paya Lebar, Bishan, One-North, and the Jurong Lake District with many Multi-National Corporations (MNCs) taking up office space there.
With the ongoing COVID-19 pandemic and many employees working from home, demand for office space in the CCR is slowly diminishing.
As more commercial properties available outside the CBD, it makes sense for companies to look out for the CCR for office space.
That will lead to a better distribution of the workforce using the transport system and for more efficient use of the limited land.
By creating more office spaces outside of CBD, the state aims to drive down rental in these areas to increase the difference between CBD office spaces and RCR, OCR office spaces.
With the lower rental, companies would relocate to these regional spaces since it makes better economical sense. This in turn could drive down the pressure on public transportation and redistribute the population, for more efficient land usage.
Retail & the Arts
Popular major retail brands like Uniqlo, H&M, Adidas, Nike and many more can be found in malls outside the CCR. These retailers would enjoy lower rentals than the malls along Orchard Road and Shenton Way.
The RCR is also part of the URA’s Master Plan to transform into an area where citizens can enjoy and appreciate the Arts, Culture and our Heritage.
The Master Plan for the RCR also aims to enhance the historical past of places such as Fort Canning Park which witnessed many of Singapore’s historical milestones such as the surrender of Singapore to the Japanese on 15 February 1942.
Today, Fort Canning Park features nine historical gardens - the Pancur Larangan, Artisan’s Garden, Sang Nila Utama Garden, Jubilee Park, Raffles Garden, First Botanic Garden, Farquhar Garden, Spice Garden and Armenian Street Park.
Pricing and Rentals
As for private residential properties, prices in the CCR is still higher than that of those in the RCR.
According to URA data, in March this year, the average price of private condominiums in District 9 was at $2,554 PSF compared with $2,019 for those in the RCR.
However, most CCR condos have a rental yield of just 2.5% to 3.5% as compared to RCR condos, which have slightly higher yields of 2.6% to 3.6%.
That is because properties in the CCR cost more and that naturally result in lower rental yields.
Even though rental yields in the CCR is a shade below that of the RCR, the CCR has better potential to withstand economic downturns better as properties in the CCR is still very much sought after by renters.
According to URA data, rental income in the CCR fell by about 3.8% in 2020 whereas rental income in the RCR fell by more than 5%.
What's next?
Properties in the CCR is still considered the crème de la crème of the real estate market in Singapore due to its prime location.
The popularity of properties in the CCR will always be in strong demand despite new launches in the other regions.
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