The First-Mover Advantage: What It Means for Singapore Homebuyers

Being first doesn’t always guarantee success, but it can help.

Take for instance, the long-running rivalry between Coca-Cola and Pepsi. While both cola drinks were invented in the 19th century, Coca-Cola’s success in capturing market share with nostalgia can be partly attributed to its earlier history which precedes Pepsi’s by a whole 7 years.

More relevantly, however, this example illustrates first-mover advantage. In the broader context of business, this concept refers to the advantages – be it greater brand recognition or higher sales – that a company accrues by being the first to enter a market

But how does being numero uno benefit property buyers in Singapore? Below, we break down what the first-mover advantage means for them, and also, examine its importance in making a homebuying decision.

What is the first-mover advantage in respect to Singapore’s property market?

Generally, the first-mover advantage theory applies similarly for business and real estate in that the fastest market participants will stand to benefit more than later entrants.

However, when looking at specifics, the idea comes into play differently for property as it commonly brought up in two different contexts.

One way that first-mover advantage enters the picture is when early buyers take the initiative to purchase a property during its launch period, which then nets them a home at a more attractive price from the developer(s).

On the other hand, the second (and more commonly discussed) way, involves consumers reaping the benefits of capital appreciation by being the first to purchase properties in younger, non-mature towns.

For clarity, this piece will be centred on the latter application of the first-mover advantage which has more relevance to an analysis of capital gains on property assets over time.

Where in Singapore might we see the first-mover advantage at work?

Over the years, Singapore has undergone urban transformation, with many going from sleepy suburbs to lively town centres in the last few decades thanks to plans put in place by the Urban Redevelopment Authority (URA).

Examples in recent memory include Canberra, Tampines, and Punggol, and in the foreseeable future, locations like the Greater Southern Waterfront, as well as the vicinity of Airport Road where Paya Lebar Air Base will be sited until the 2030s – it’s also at some of these locations where the first-mover advantage can be observed.

In 2019, Canberra saw the opening of its namesake MRT station that gives residents improved accessibility to the rest of Singapore via the North-South line. A year later, Canberra Plaza, a ‘New Generation Neighbourhood Centre’, was completed, serving as a “one-stop destination for all generations” with its entertainment, retail, and dining offerings.

Predating both of these developments by seven to eight years is 1 Canberra, the town’s first Executive Condominium (EC). During its launch year, 1 Canberra had a median price of $717 per square foot (PSF) before appreciating by 49% across a decade to hit $1,068 PSF.

Source: URA Realis

Though they aren’t the first mover property, both The Brownstone as well as The Visionaire (which are ECs too) were similarly completed before Canberra’s new amenities, and have exhibited healthy price appreciation as well. Both properties had a median PSF price of $816 during their respective launches in 2015 and 2016, which respectively increased to $1,288 PSF (+57.8%) for The Brownstone and $1,086 PSF (+33.1%) for The Visionaire.

While a case can be made about the first-mover advantage being present in Canberra as 1 Canberra has a greater rate of PSF price appreciation than The Visionaire, its percentage growth is outpaced by The Brownstone’s – which points to the possibility of other factors being at play (more on that later).

Source: URA Realis

Alternatively, if one were to take a look at the median PSF price trends for Canberra’s 99-year leasehold condominiums, there’s a stronger argument to be made about the first-mover advantage in the area.

Yishun Emerald, which was launched in 2000, along with Yishun Sapphire in the same year can be said to be the first movers of Canberra – and homes in both developments have appreciated more than their counterparts that came after.

In particular, the median PSF price of Yishun Emerald has seen an (impressive) uptick of 84.7% since its launch in 2000, rising from $469 to $867.

However, it’s also worth pointing out that present-day median PSF prices for later developments – namely, Eight Courtyards, Canberra Residences, and The Nautical – have closed the gap and even exceeded the median PSF prices of both first movers.

One possible explanation for this is lease decay. Considering that both Yishun Emerald and Yishun Sapphire were launched 10 years before their successors, it stands to reason that there could be a slowdown in their resale price growth in terms of absolute value.

Source: URA Realis

A similar situation is present in Punggol where the first mover Prive has experienced significantly higher growth in its median PSF price (+70.5%) since its launch in 2011, but is now closely matched in terms of absolute PSF price by 99-year lease private condos that debuted in later years.

So, should homebuyers pay attention?  

Based on the examples shown above, it’s reasonable to say that the first-mover advantage has a perceptible effect on a property’s performance, however, it’s also possible for newer developments to narrow or even close the gap in PSF price given other factors that influence appreciation rate.

These can range from the overall supply of housing in the area to a development’s distance to upcoming amenities, such as new MRT stations and shopping centres.

Or in other words, it’s possible that being the first matters, but only insofar as percentage gains are concerned.

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