GEYLANG may not be the first place that comes to mind for home buyers looking to settle down in a quiet area.
But its infamous reputation has ironically helped to make some properties there a good investment: Rental yields there can be almost double those in surrounding areas.
These yields, an indication of the value owners get out of renting out their properties, are calculated as a ratio of the annual rents earned over what the buyers paid for the properties.
The relatively low prices for properties in Geylang, coupled with the attractive rents they get, mean good yields.
The fact that Geylang is just a stone's throw away from the downtown area is a big selling point to many looking to rent, said property experts.
'The demand comes from foreigners and working singles who like the proximity to their offices in Suntec City,' said Mr Mark Teo, group division director of property agency ERA Singapore.
He added that 'properties in Geylang still command a good rental price'.
Rents in Geylang are comparable to nearby Katong and East Coast - about $1,800 to $2,000 for a two-bedroom flat and $2,000 to $2,200 for a three-bedder.
Because home prices in Geylang are lower, annual rental yields, which are between 3 and 4 per cent for Katong and East Coast properties on average, can go up to 7 per cent in Geylang, property agents said.
For example, Mr Tan, an investor who declined to give his full name, enjoys a 7 per cent rental yield on his unit at Wing Fong Mansions in Geylang Lorong 14, which he bought for $350,000.
'The apartments here are cheap and the rental price is good,' he said, adding: 'Apartments in other areas cost more than $400,000.'
A check of seven properties situated between Lorong 28 and Lorong 40 in Geylang found that the average price per sq ft (psf) is $441, compared with an average of $520 psf in nearby The Legenda in Joo Chiat, Dunman View and Haig Court.
That translates into rental yields of 5.2 per cent for Geylang properties, at least 1 percentage point higher than Katong and East Coast homes, which can cost up to $700,000, according to Mr Eric Cheng, senior division director of PropNex.
However, investors hoping to get financing for their home purchases should bear in mind that some banks may be reluctant to give loans for certain areas in Geylang for fear that they may face difficulty selling these properties in the event of a default and repossession.
But that does not bother some investors like Mr Tan.
'I'm not worried about not being able to sell the apartment because the rental return is good,' he said.
'For properties, as long as the price is good, location doesn't matter.'
