Market News

28 Nov 2019

URA launches two adjacent Canberra Drive residential sites for tender

SINGAPORE - The Urban Redevelopment Authority (URA) has launched two residential sites (Parcels A and B) at Canberra Drive for sale by public tender under the confirmed list of the government land sales (GLS) programme for the second half  of 2019. The adjacent land parcels, both with 99-year leases, can potentially yield about a total of 675 residential units, the URA said on Thursday (Nov 28). Parcel A spans an area of 13,315.3 square metres (sq m) with a maximum gross floor area (GFA) of 18,642 sq m. It can yield about 220 housing units, with a maximum building height of 35 to 40 metres or five storeys, whichever is lower. The larger Parcel B has an area of 27,566 sq m and a GFA of 38,593 sq m. It can yield about 455 units, with a maximum building height of 35 to 50 metres or five storeys, whichever is lower.  The sites are connected to Sembawang Road and Seletar Expressway, and are within walking distance from the recently opened Canberra MRT station on the North South Line. Nearby amenities include Sembawang Shopping Centre and Sun Plaza, while Sembawang Primary School is also in the vicinity. The two sites were previously put on the GLS reserve list for the first half of this year as a single 4.09-hectare plot, which has now been split into two parcels for sale on the confirmed list. Splitting the large plot into two smaller sites would make them more palatable and attractive to a wider range of developers, noted Tricia Song, Colliers International head of research for Singapore. “However, it would be interesting to see how the two tenders pan out seeing that both sites are launched for sale at the same time,” she said. “Typically, developers would prefer to have more control and less competition – would this then see them bid for both Parcels A and B so that they can better defend prices when the units are put on the market in the future?” Units in nearby comparable private condominium projects such as Eight Courtyards (launched in 2014), The Nautical (2015) and Canberra Residences (2013) sold for $900-$1,000 psf in the year to date, said Ms Song.  The most recent land tender recently was an executive condo site at Canberra Link, awarded in October for $233.89 million or $566.1 psf per plot ratio to MCC Land, who beat seven other bidders. “With the Canberra MRT operational since Nov 2, we expect Parcel A and B to fetch top bids of $135 million and $280 million respectively, which works out to a land rate of $670 psf ppr. Developers could look to sell at an average price of $1,250 psf, she added. Nicholas Mak, head of research and consultancy at ERA Realty, expects both sites to attract a moderate level of interest from developers, given Canberra Drive's distance from the city centre and the limited retail and food and beverage amenities in the vicinity currently. He sees Parcel A attracting a top bid of $126 million to 133.4 million, while Parcel B could fetch as much as $249 million to $266 million. The tender for both sites will close at 12pm on March 3, 2020. The tender closing will be batched with an executive condominium site at Fernvale Lane, which will be launched for sale next month. Source from The Straits Times 28 Nov 2019

17 Nov 2019

New private home launches taking off as resales slow

While new private home sales appear to be on the rebound, underpinned by higher prices of new launches and resilient demand amid an uncertain economic climate, the outlook may not be as good for resale condos. According to a report by OrangeTee & Tie, resale transactions have slowed and some owners in the suburbs and city fringe areas may have lowered asking prices in the face of competition from new launches. The result is a widening gap between average prices of new and resale condos - a trend that tracks back to 2015 but has accelerated more significantly in the first three quarters this year, the report said. This is happening because new projects are being launched at higher prices in recent months, causing new home prices to surge ahead of resale prices. Some new launches are priced higher because developers paid higher land prices towards the end of the land-buying cycle that ended in early July last year. Freehold projects or those located near an MRT station are also able to command a price premium. Illustrating this trend, the average prices of non-landed new private homes were 28.2 per cent higher than those of resales in the first three quarters of this year, compared with a 23.8 per cent gap last year, and a 15.1 per cent gap in 2017, the report said. Ms Christine Sun, head of research and consultancy at OrangeTee & Tie, said: "Resale condo sellers don't have as much firepower to overcome the cooling measures, but developers can stimulate sales through talks, roadshows and other incentives (for new homes). "Even if resale condo sellers want to tag their prices higher, their unit sizes are much bigger than new homes, so they can't increase the per square foot price too much or they will risk hurting buyer affordability." Furthermore, the number of new sales surpassed that of resales in the first three quarters this year, a reversal of the situation in the past two years, she noted. For instance, in the first three quarters this year, 53.1 per cent of total sales, or 7,469, were new sales, while 46.9 per cent or 6,607 were resales. But, in 2018, 40.3 per cent or 8,795 were new sales, while 59.7 per cent or 13,009 were resales. The shift is likely due to more new projects being launched this year, and more new homes being transacted, she said. But overall condo sales are still resilient because the price-to-income ratio has come down to 4.6 this year, from 5.1 in 2016, which means housing prices are more affordable as median household incomes continue to rise, noted Ms Christine Li, Cushman & Wakefield's head of research for Singapore and South-east Asia. Ms Sun said the widest gap between the average prices of new and resale non-landed homes for the third quarter is in the city fringe or the rest of central region (RCR) (43.4 per cent), where a number of new projects were launched. This is followed by the suburbs or outside the central region (OCR) (41 per cent) and prime districts or the core central region (CCR) (37.6 per cent), she added. Taking into account upcoming launches this year, 2019 will see 57 new launches in total with 22 in CCR, 21 in RCR and 14 in OCR, according to Huttons Asia. Prices of new homes jumped 9.8 per cent on a year-on-year basis across all three market segments in third-quarter 2019, with the largest rise in RCR (16.5 per cent), followed by OCR (8.1 per cent) and CCR (1.9 per cent), according to OrangeTee. In the RCR, a number of new projects including Amber Park and Sky Everton have sold above an average price of $2,000 psf, which helped fuel the faster price growth, Ms Sun said. In comparison, overall resale prices rose a mere 1.6 per cent year on year in third-quarter 2019. CCR prices rose 1.1 per cent, but OCR prices dropped 1.5 per cent and RCR fell 2.1 per cent, due to competition intensifying from new launches in recent months, she added. Still, the current average price gap is not as wide as in 2010 when new home prices were 41.2 per cent higher than resale non-landed homes, she noted. JLL's senior director of research and consultancy Ong Teck Hui noted that the gap widened more significantly from around 2010 due to the reduction of new unit sizes so that the overall price would remain affordable. "With more smaller homes including shoebox units being incorporated in new projects (starting around 2010), the psf pricing could be raised as long as the absolute sale price stays affordable," he said. On whether the gap will continue to widen, Mr Ong said: "Since measures have been put in place to limit the downsizing of units, this may have less of a bearing on the price gap. But, given time, the stock of older homes will grow and more 99-year leasehold developments will see their leaseholds running down, which could result in slower capital appreciation for such properties," he added. Source from The Straits Times 17 Nov 2019