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Release of new sites could spark renewed interest by developers

After years of being the poor cousin in the private home sector, the mass market condominium is back with a vengeance.

It has been a long time coming with all the attention of developers seemingly on building pricey high-end homes in prime sites over the past couple of years.

But Thursday’s release of a slew of suburban sites - from Pasir Ris to Woodlands - should spark renewed interest by developers in the mass market sector, where prices are already rising.

The expected flow of new mass market housing should nip any looming supply crunch in the bud, property consultants said.

Colliers International director of investment sales Ho Eng Joo said the release of so much suburban land ‘is to prevent any surge in mass market prices’.

Mr Li Hiaw Ho, executive director of CB Richard Ellis Research, believes buyers will not have it all their own way. ‘Demand for suburban sites will be good because there has been a lack of affordable mass market launches in the past year.’

The strong response to and some relatively high bids for a recent tender for a suburban Dakota Crescent site show there is demand for non-prime plots.

Thursday’s release was part of a huge land sales programme for the second half of the year, with 20 residential sites, including those rolled over from the previous programme, up for grabs.

Some sites are on the confirmed list - that means they will be put up for sale at a scheduled date regardless of whether developers have shown interest.

The Government also sells sites on the market-friendly reserve list, which are put up for sale only after developers indicate interest.

There is a wide range of suburban sites - new hotspots like Tiong Bahru, central areas such as Ang Mo Kio and Bishan and outlying areas such as Woodlands.

Consultants said some of the reserve list sites are far more attractive than those on the confirmed list, and so those are likely to be triggered for sale.

The hottest site on the reserve list is the 0.89ha plot in Tiong Bahru, which can accommodate about 395 mid-tier homes.

Consultants said it was in a coveted location given that units at The Metropolitan next door sold well at an initial average price of $780 per sq ft (psf) with values rising further due to sub-sales.

A new condominium on the site could sell for as high as $1,000 psf, said consultants.

The large condominium sites in Bishan and Toa Payoh - which can accommodate about 535 units each - could probably fetch prices of $700 psf to $800 psf, they said.

A new condominium of about 555 units in Simon Road next to Kovan MRT Station could sell for $600 psf to $700 psf while the Boon Lay plot for about 685 units should attract good demand as well, they said.

‘The Boon Lay site could sell for about $600 psf. It is in between NUS and NTU and may see demand from expatriates working in the high-value industries in the west,’ said Savills Singapore director of marketing and business development Ku Swee Yong, referring to the National University of Singapore and Nanyang Technological University.

He also reckons there could be some demand from expatriates for a new condominium in Woodlands, where the Singapore American School and the Singapore Sports School are also located.

Generally, though, consultants are less enthusiastic about the confirmed list sites in Elias Road, Choa Chu Kang Road and Woodlands. That is good news for home buyers who like those locations because it will mean lower bids and lower end-prices of possibly between $500 psf and $600 psf.

SUPPLY BOOST

The expected flow of new mass market housing should nip any looming supply crunch in the bud, say property consultants.

Source : Straits Times - 16 Jun 2007

Move will replenish supply of units, EC scheme remains a viable option: HDB

EXECUTIVE condominiums (ECs) could make a comeback now that the Government has released a site for this hybrid type of housing for the first time since the last one was sold in 2004.

Property analysts say the move is a response to the widening gap in the prices of public and private housing.

These homes - which come with restrictions but are cheaper than full-fledged condos - were first introduced in the 1990s, when runaway prices put condos beyond the reach of HDB flat owners aspiring to private homes.

But a slide in private home prices caused the Government to hold off putting such sites on the market after 2004.

Now the price gap is growing again. For private property, prices rose 10.2 per cent last year and 4.6 per cent for the first quarter of this year; for resale HDB flats, they rose 1.8 per cent last year and 1.3 per cent for the first quarter.

The new EC site is a 2.27ha plot in Punggol Field that could provide 620 homes. If the site on the reserve list is eventually tendered out, it would be Singapore’s 24th EC. The last, La Casa in Woodlands, was launched by Far East Organization in 2005.

The HDB said, when contacted by The Straits Times yesterday, that the latest move was meant to widen the housing options in Punggol, and ‘replenish the supply of new EC units in the market so that the EC Housing Scheme will continue to remain a viable housing option’.

It said it would assess the response to the Punggol site, before deciding on the release of more EC sites. The site will be put up for tender only if a developer commits to bidding a minimum price acceptable to the Government.

Families buying EC units can earn no more than $10,000 a month, though they can use a government grant to buy the homes. They cannot sell their unit within the first five years, and foreigners cannot buy them until after 10 years.

Mr Lui Seng Fatt, the regional director and head of investments at Jones Lang LaSalle, said: ‘It’s quite timely for them to reactivate the scheme. They have to keep mass-market private homes affordable to first-time home buyers and those upgrading from HDB flats.’

Chesterton International director Colin Tan said: ‘The feedback I get from HDB flat dwellers, especially the professionals, is that they won’t upgrade because private property prices are going up fast.’

In fact, rising prices have in recent months generated growing interest in resale EC units, said Knight Frank’s head of consultancy and research, Mr Nicholas Mak. The question now is whether such units will attract the same kind of interest as another bridging housing scheme has also been introduced.

Private developers were recently allowed to design, build, price and sell public housing, resulting in a new breed of ‘condo-like’ flats. The first of these flats, The Premiere@Tampines by Sim Lian Land, won an overwhelming response when launched last year. The second site on Boon Keng Road has just been tendered out to a consortium.

Analysts contacted mostly felt there was room for both schemes, but noted that the location of this EC site itself might mute market response.

Mr Lui said Punggol, unlike Woodlands or Tampines, for example, was a new town with no established group of HDB upgraders to draw upon, so the pool of ready buyers for an EC there could be smaller.

If a tender is eventually conducted, he expects the site to fetch $150 to $170 per sq ft per plot ratio (psf ppr), which would work out to a maximum of $124.6 million.

Mr Mak put his estimate at $180 to $200 psf ppr, or up to $146.6 million.

Source : Straits Times - 16 Jun 2007

Ministry doubles confirmed sites to 14 in second half 2007 and offers 27 plots in reserve list

The government yesterday announced its biggest ever land sales programme in what is seen as a clear signal that it is serious about containing the rise in property prices and rents which could cripple Singapore’s competitiveness.

It is offering a total of 41 sites in the second half of this year - 14 through the confirmed list (double the seven in the H1 2007 programme) and 27 in the reserve list. The 14 confirmed sites is also the highest figure since the Ministry of National Development introduced the reserve list system in 2001.

MND has introduced 15 new sites, three of which are in the confirmed list, while the remaining 26 are being carried over from the current H1 2007 slate.

The confirmed sites for the second half include a site at Marina View - adjacent to an earlier plot released recently - and can yield about 900,000 sq ft gross floor area of commercial space.

Related article: Click here for MND’s press release

Agreeing, Knight Frank managing director Tan Tiong Cheng said: ‘Clearly, the message is to tell investors who may be concerned about rising office rents and home rentals in Singapore not to panic.’

A seasoned market watcher indicated there is also a message to developers, especially office landlords. There have been a lot of complaints from businesses about the doubling of office rents in the past 12 months.

Market watchers reckon the MND’s strategy of jacking up the number of sites in the latest confirmed list - despite repeated pleas from developers not to do so - is to ensure greater certainty of supply. Whereas reserve list sites are released only on successful application by a developer, confirmed sites are launched according to a stated schedule.

‘The economy is doing well, demand is there, so they must ensure there is sufficient supply,’ as a market watcher noted.

Real Estate Developers Association of Singapore declined to comment yesterday evening.

Colliers International director (research and consultancy) Tay Huey Ying said: ‘It’s very clear. The government is pretty concerned about the supply crunch and has gone very aggressive on the confirmed list.’

The last time the MND offered 41 sites was the full-year 1997 programme, but it was stopped in its tracks due to the Asian financial crisis. In that year, the MND had planned to release sites for a total of 10,000 homes (7,000 private homes and 3,000 executive condos).

The 41 plots the government is offering for the second half can potentially yield 8,000 private homes, including 620 executive condos or ECs - a hybrid of private and public housing - 3.8 million sq ft gross floor area (GFA) of commercial space and 6,500 hotel rooms.

This compares with 5,475 private homes, 5.3 million sq ft of commercial GFA and 5,285 hotel rooms that could potentially be developed from the 32 reserve and seven confirmed sites in the current H1 2007 programme.

The H1 2007 programme has a higher supply of commercial space, boosted by MND pushing back the release of the former NCO Club site in Beach Road from H2 2006.

In its release yesterday, MND also highlighted additional sources of space the government will make available in H2 2007 - including around 1.4 million sq ft of space from vacant state buildings, small plots for office and other commercial uses and transitional offices, which will include a site at Newton MRT Station.

The MND said 6.9 million sq ft of office space will be completed by 2010, including the first phase of Marina Bay Financial Centre. On top of that about 2.7 million sq ft GFA of business park space mainly from Changi Business Park and Alexandra Distripark is scheduled for completion from H2 2007 to 2010. Such space is suitable for back-room operations and data centres of financial institutions, and SMEs.

For the private housing market, MND said about 42,200 new private homes are slated for completion from the second half to 2010. Of these, nearly 40 per cent of 16,400 units will be in the core central region. Property consultants read this statement as assuaging concerns about housing rents escalating, driving expats out of Singapore.

However, none of the 20 residential sites in the latest Government Land Sales programme, including eight confirmed plots, are in prime district locations.

‘The collective sales market will take care of supply of land for the high-end market,’ as Mr Tan observed. Instead, the GLS residential plots are in attractive suburban and city-fringe locations like Sembawang, Tanah Merah, Boon Lay, Bishan, Toa Payoh and Redhill, many of them very near MRT stations.

‘This will be welcome relief for both home buyers and developers. Right now developers have to turn to the en bloc market even for sites in fringe locations. Now MND is offering a better selection of sites fo them,’ said Mr Tan of Knight Frank. ‘And it will bring relief to those who are looking for homes so they will not go into panic mode fearing a shortage of homes.’

Giving his perspective, a market watcher said: ‘We have enough supply of high-end homes catering to well-heeled local and international investors. So the focus of the GLS programme must be to ensure sufficient supply of affordable private housing and ECs for younger Singaporeans and professionals.’

MND is offering a reserve site at Punggol Field for about 620 ECs after a three-year break, to ‘ensure that ECs remain a viable housing option for those who aspire to private housing’, it said.

The government has also added four new hotel sites - in Jalan Bukit Merah, Jalan Besar, Race Course Road and Tanjong Pagar - to provide a good variety of hotel accommodation for visitors.

Source : Business Times - 15 Jun 2007

Sites include landed housing in small parcels, executive condominium, transitional offices

The latest Government Land Sales (GLS) programme could turn out to be the most interesting in years.

Barring a reserve list hotel site at the junction of Jalan Bukit Merah and Alexandra Road - which is slated for a 560-room hotel - the sites on the GLS are widely considered ‘attractive’ by property analysts.

Savills Singapore director of marketing and business development Ku Swee Yong says he is ‘pleased’ with the residential sites because he expects demand for new condominiums to be high.

The sites, located in areas like Alexandra Road and Tanah Merah Kechil, look destined for the upgrader and mid-tier market. And this is exactly where Mr Ku reckons the demand will be.

‘The bulk of the job creation in the future will be mid-to-low level, with many jobs filled by expatriates,’ he said. ‘They will need private housing in these mass market areas.’

Offering something for everyone, the government has also put a landed housing site on the confirmed list. What is unusual about this site is that it is expected to be sold in small parcels - something not seen since 2001. ‘This adds spice and excitement to the market and allows for creative developments,’ Mr Ku said.

If there is another anomaly in the GLS list, it has to be the executive condominium (EC) site on Punggol Road. Many in the industry had thought ECs were slowly being phased out.

CBRE Research executive director Li Hiaw Ho said: ‘It is likely that the government is offering an EC site in light of the escalating prices of private homes, to cater to the needs of the sandwich class.’ The last EC site was offered in 2004, Mr Li pointed out.

The most interesting sites could be those that will be made available for the development of transitional offices.

Details of these sites are not available yet, but the Ministry of National Development says it is working closely with other agencies to coordinate the offerings.

So far, it has identified one suitable site near Newton MRT station. The development is expected to be about three to four storeys, and built in about a year at relatively low cost.

This may be an untested market, but Knight Frank director and head of research and consultancy Nicholas Mak believes even these sites will be popular.

‘I have spoken to agents on the ground and they have said that companies are willing to consider such transitional office space,’ he said.

‘It will need to be cheap - and fast to build. It will also depend on the location. I think developers will be interested but it will have to come down to dollars and cents.’

One exclusion from the GLS list is prime residential sites, which could perhaps have helped cool the high-end market. But as with the prime commercial office sector, a delicate balance needs to be maintained.

‘There will be quite a lot of supply in the high-end market with all the collective sales done. So why would the government want to add to that supply?’ said Mr Mak.

Source : Business Times - 15 Jun 2007

A trophy site just off Shenton Way will be put on the Government Land Sales (GLS) programme for second-half 2007.

Marina View

The Marina View site will be the second on the GLS programme that defines a new corridor in the New Downtown, with an adjoining site launched in May.

Marina View, to be launched in July, could provide more than 900,000 square feet of commercial space. And the government wants it developed fast.

In a statement yesterday, the Ministry of National Development said: ‘The release of the Marina View site via the confirmed list will maintain the momentum of building up Marina Bay and facilitate the seamless growth of the Central Business District into the Marina Bay area.’

While recognising the need to maintain momentum, it is interesting to note that more prime commercial sites are not on the list.

One reason could be that future demand is close to being met.

Jones Lang LaSalle regional director and head of investments Lui Seng Fatt believes that if and when all the key available commercial sites on the GLS programme are developed - about six sites including Marina View and another new site called Tampines Concourse - up to 2.5 million sq ft of office space could be in the pipeline in about three years.

‘I think this supply is just right,’ he said.

There is, of course, undersupply at the moment, but Mr Lui believes this can only be ‘alleviated’ by interim measures such as releasing unused state-owned buildings.

Savills Singapore director of marketing and business development Ku Swee Yong also believes the number of new prime sites being released is just right, saying: ‘If you have too much construction in the Marina Bay and CBD area, it could be a strain on the infrastructure.’

With no fear of a flood of sites in the Marina Bay area, the Marina View site will be even more attractive to developers. Mr Ku believes amalgamating it with the adjoining site released earlier could prove to be even more profitable, as some common services could be shared. ‘This type of prime site needs to be huge,’ he said, adding that bids could be around $1,500 per sq ft per plot ratio.

Colliers International director for research and consultancy Tay Huey Ying also feels the current office space crunch cannot be alleviated by more land sales.

According to her, the situation is so severe that special measures may be needed to maintain Singapore’s competitiveness. These could include temporary but more aggressive tax incentives or concessions to help businesses defray the rising cost of renting.

Source : Business Times - 15 Jun 2007