Market News

04 Dec 2019

Two plum sites in latest land sales; Bt Timah plot to revive Jln Anak Bukit vicinity

TWO plum sites - Jalan Anak Bukit for mixed development and Tanah Merah Kechil Link residential site - have been offered in the latest Government Land Sales (GLS) programme for 1H 2020. The sites are well located near MRT stations, with the Jalan Anak Buikit site having an integrated bus interchange which will provide amenities for commuters and residents in the area. "We would expect both sites to receive a healthy number of bidders," said Christine Sun, OrangeTee & Tie, head of research & consultancy. The predominantly residential Jalan Anak Bukit site comprises 22,000 square metres of commercial space, with a retail cap of 7,500 sq m of gross floor area and 865 residential units. In line with the 2019 Master Plan to transform the Beauty World area, the government has decided to push out an integrated transport hub site on the 1H 2020 GLS programme, said Lee Sze Teck, director (research), at Huttons Asia. "This is definitely the choicest site of all and will be on the radar of a lot of developers," said Mr Lee. "The development will help to spruce up the Beauty World precinct where there is a lack of office space, and retail stock is predominantly aged," said Desmond Sim, CBRE head of research, South-east Asia. Furthermore, the injection of 865 residential units will rejuvenate the mature precinct, said Mr Sim. He expects more land parcels to be released in the area as reflected in the URA Master Plan 2019. "The 7,500 sq m designated for retail will support the residential catchment, and is in line with URA's plan to enhance street-level activities and add vibrancy to the area. A stipulated tender condition for this site is the inclusion of a bus interchange which will create a transport hub in the Beauty World area," said Mr Sim. But smaller developers may not be able to tender given the scale and complexity of the Jalan Anak Bukit site, which could dampen the developers' appetite, said Christine Li, Cushman & Wakefield's head of research, Singapore and South-east Asia. Building an integrated bus interchange is not the core expertise of developers, she noted. The Tanah Merah Kechil Link site is expected to garner the most interest as it is directly adjacent to Tanah Merah MRT station, said Ms Li. This is because demand has been well-tested in the area, as the nearby Grandeur Park Residences is 98 per cent sold, with the latest median price at approximately S$1,550 per square foot (psf) per plot ratio (ppr). Accordingly, the site is expected to fetch bids in the range of S$850 to S$900 psf ppr, which depending on sentiment at the time of launch could fetch between S$1,700 to S$1,900 psf, said Ms Li. Tricia Song, Colliers International head of research for Singapore, agrees that the Tanah Merah Kechil Link site is "probably the most attractive among the new sites as it is next to the above-ground Tanah Merah MRT station in the eastern part of Singapore, and is of a palatable size of 310 units. Ms Song also said the residential and commercial plot in Jalan Anak Bukit is the most interesting site in the latest land sales programme. It is perhaps timely to offer such sites seeing the good response to recently launched residential and commercial developments such as One Holland Village and Sengkang Grand Residences, she said. The site is also near Beauty World MRT station along the Downtown line. "However, there are more conditions attached to such sites, such as the requirement to build an integrated bus interchange (estimated 5,000 sq m GFA) and up to 7,500 sq m GFA for retail. The site is also relatively sizeable (865 residential units) which entails a relatively large land price quantum of over S$1 billion." Source from The Business Times 4 Dec 2019

03 Dec 2019

Government keeps steady supply of private housing for first half of 2020 land sales programme

SINGAPORE - The Government has kept largely unchanged the amount of private residential housing under the government land sales (GLS) programme for the first half of 2020, in view of the supply overhang and as developers' bids for land moderated after property cooling measures. "The Government will continue to monitor the property market closely and adjust the supply for future GLS programmes, as necessary," the Ministry of National Development (MND) said in an announcement on Tuesday morning (Dec 3). The new supply consists of three confirmed list sites and eight reserve list sites that can yield about 6,490 private homes, 114,000 sq m gross floor area (GFA) of commercial space and 1,070 hotel rooms. Of the 6,490 proposed units, 1,775 units are in the confirmed list and 4,715 units on the reserve list, which may not be triggered for sale. The 1,775 units from the confirmed list sites is 60 units or 3.5 per cent more than the 1,715 units under the second half of 2019 GLS programme. The three confirmed list comprises two private residential sites - including one executive condominium (EC) site in Yishun - and one commercial and residential site in Jalan Anak Bukit in Bukit Timah which can yield about 1,775 private homes (including 600 EC units) and 22,000 sqm GFA of commercial space. Ms Christine Li, head of research, Singapore and Southeast Asia, Cushman & Wakefield, noted that the Government was prudent by “pushing out a limited number of sites in the confirmed list while leaving the bulk of supply in the reserve list.” The three sites on the confirmed list is the lowest over the last 5 years, she said. Furthermore, the bulk of units are from the site at Jalan Anak Bukit which will supply 865 units and 20,000 sqm of commercial space. Excluding EC units, there will only be around 1,175 private residential units released in the confirmed list, the lowest since first half 2016 when only 925 private residential units were released. "While the demand for private housing units has increased in the past two quarters, the overall transaction volume has remained modest relative to the period leading up to the introduction of the property market cooling measures," MND said.  Meanwhile, developers’ demand for residential land remains moderate and there continues to be bidding interest for GLS tenders, it added. Furthermore, the supply of private housing units in the pipeline remains high, at around 39,000 units currently, even though it has declined progressively over the past few quarters, MND noted. This pipeline supply comprises around 34,000 unsold units from GLS and collective sale sites with planning approval, and an additional 5,000 units from sites that are pending planning approval. it added. Therefore, the Government has decided to keep the supply of private residential units on the confirmed list for the 1H2020 GLS programme broadly similar to that for the 2H2019 GLS programme, MND said.  Ms Tay Huey Ying, JLL's head of research and consultancy in Singapore, expects the residential site at Tanah Merah Kechil Link to garner the most interest because of its proximity to Tanah Merah MRT Station and its “palatable housing size” of 310 residential units.  While the Jalan Anak Bukit site is near the Beauty World MRT station, she believes this parcel is the most risky of the three confirmed list sites because of its size. Coupled with the expected high investment outlay, we see this parcel attracting moderate competition from developers with deeper pockets,” she added. The reserve list comprises four private residential sites (including one EC site), three white sites and one hotel site. These sites can yield about 4,715 private residential units (including 595 EC units), 92,000 sq m GFA of commercial space and 1,070 hotel rooms. The total amount of commercial space available from both confirmed and reserve sites at 114,000 sq m is 24 per cent higher than the 92,000 sq m for the GLS programme in the second half of 2019. The bulk of new commercial space comes from the 78,000 sq m from a reserve list, multi-use white site in Woodlands Regional Centre. It is one of four residential sites, three white sites and one hotel site that have been carried over to the first-half 2020 GLS programme from the previous half-year. Source from The Straits Times 3 Dec 2019

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