The government has marginally raised residential supply under the confirmed list of its Government Land Sales (GLS) programme in what is seen as a delicate balancing act of meeting improved buying demand, while managing the downside risks if the economy worsens.

The lack of commercial sites on the confirmed list – a list where sites are put up for tender according to schedule – is also providing the much-needed breathing space amid demand weakness for office and retail space, market watchers say.

Under the H1 2017 GLS programme announced on Friday, there are five residential sites on the confirmed list that could yield 2,330 units, higher than the supply of 2,170 units from four sites on the H2 2016 confirmed list. Describing this as being measured and balanced, an analyst said that the GLS programme factors in improving demand from buyers, the declining unsold inventory of developers as well as risks from the economic slowdown.

All the five sites in the H1 2017 programme are attractive and expected to generate keen interest among developers especially when new development opportunities are limited. In particular, consultants are expecting the Woodleigh Lane site, which can house some 735 units, and the site at Lorong 1 Realty Park – big enough for 50 landed homes – to be hotly contested.

Two new residential sites in the prime or Core Central Region (CCR) in the reserve list also caught the eye of Citi Research analysts, who expect these sites at Jiak Kim Street (the former Zouk) and Fourth Avenue to draw interest from developers given the reduced availability of CCR landbank in recent years and strong sales in high-end offerings this year.

There are 10 sites in the reserve list, which can collectively yield 5,135 private residential units (similar to the 5,375 units from the H2 2016 Reserve List) and 158,080 square metre gross floor area (GFA) of commercial space. Sites on the reserve list are triggered for tender only when a developer commits to a minimum bid price acceptable to the government.

Of the reserve-list sites for H1 2017, nine are carried over from the H2 2016 reserve list, after a “white” site at Central Boulevard and a residential site at Margaret Drive were triggered for tender and sold.

The H1 2017 reserve list includes two sites at Beach Road and Woodlands Square for mixed-use developments comprising mainly office space.

Going by the hunger for land at recent land tenders, it is probable that developers would either trigger some sites on the reserve list or look to other sources for land such as collective sales. The Bartley Road plot that can yield 115 residential units and the Jiak Kim Street site that can house 515 residential units are among the potential ones to be triggered for sale.

For the second time in a row under the half-yearly GLS programme, there is no executive condominium (EC) site on the confirmed list. There is one, at Sumang Walk, on the reserve list.

This could be due to concerns over the EC vacancy rate, which stayed elevated at 10.8 per cent as at end-Q3.

Three EC projects yielding about 1,600 units are expected to be launched by developers next year, in addition to the remaining unsold stock of about 3,000 units. Going by the strong demand for ECs in 2016, it is possible that all EC units will be sold in 2017.

For now, the government is leaving it to the market to decide if a commercial site is needed in H1 2017 by having commercial land supply only under the reserve list. It had – under the H2 2016 GLS programme – offered one site of 15,500 sq m in commercial GFA under the confirmed list and three sites yielding 261,580 sq m in commercial GFA under the reserve list.

This gives enough breathing room to resolve demand and supply imbalance where there is still ample space to be absorbed, as overall occupier demand has been weak across both office and retail space.

Adapted from: The Business Times, 17 December 2016

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