It continues to trim supply for home units, thus offering relief to developers

The latest government land sales (GLS) programme should bring some relief to developers in these grim Covid-19 times as it continues to trim supply for home units while offering two plum sites in mature estates. 

THE latest government land sales (GLS) programme should bring some relief to developers in these grim Covid-19 times as it continues to trim supply for home units while offering two plum sites in mature estates.

The confirmed list released on Wednesday comprises three private residential sites – including one executive condominium (EC) site – which can yield about 1,370 private residential units (including 615 EC units) and 1,500 square metres (sq m) gross floor area (GFA) of commercial space.

Healthy bidding is expected from developers for these three sites given the strong demand for affordable housing, say consultants.

All three sites on the confirmed list are new sites, with an EC site at Tengah Garden Walk. The two residential sites at Northumberland Road and Ang Mo Kio Avenue 1 – in mature housing estates – will yield 385 and 370 private home units respectively.

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According to Desmond Sim, CBRE head of research, South-east Asia, the total of 1,370 residential units proposed for the confirmed list of GLS in the second half of 2020 is the lowest since the first half of 2016 when 1,560 units were offered.

He said that with a build-up of unsold units from launched projects (4,506 units in the first quarter of 2020 from 4,389 units in the previous quarter), the number of residential units introduced on the confirmed list has been on the decline since H1 2019 in the aftermath of the en bloc frenzy.

The land supply from the H2 2020 GLS programme has been calibrated to take into account the global Covid-19 situation, said the Ministry of National Development (MND).

“Given the economic contraction and uncertain business outlook, the government has decided to reduce the supply of private residential units on the confirmed list and will not introduce any new sites for predominantly commercial or hotel use in the H2 2020 GLS programme,” said MND.

“However, we have to calibrate the reduction carefully to avoid potential supply shortfalls over the medium to longer term. Hence, we have maintained a good selection of sites with additional supply in the reserve list that developers can initiate for development if they assess that there is demand.”

The reserve list comprises five private residential sites (including one EC site), three white sites and one hotel site. These sites can yield about 5,300 private residential units (including 590 EC units), 100,000 sq m GFA of commercial space and 1,070 hotel rooms.

MND noted the progressive decline in the unsold inventory of private housing units over the past year. The number of unsold private housing units with planning approval has declined by a cumulative 20 per cent between Q1 2019 and Q1 2020, it said.

The government has provided a moderate supply via the confirmed list in the H2 2020 GLS programme, it pointed out. “Together with the supply of units already in the pipeline, this will cater to the housing needs of the population when completed in about four to five years’ time.”

The confirmed list sites will be launched in the last quarter of 2020, each with a longer tender period of about six months to give developers more time to make their assessment in view of the ongoing Covid-19 situation, it said.

Of the three confirmed list sites, Northumberland Road and Ang Mo Kio Avenue 1 – located in mature areas – appear more attractive, said Wong Siew Ying, PropNex head of research and content.

Tengah Garden Walk (EC) is nestled in the new estate in Tengah and could offer a first-mover advantage to the successful bidder, according to Ms Wong.

Ang Mo Kio Avenue 1 is the most attractive site for Ms Wong. The site is about 500m from the new Mayflower MRT Station which is estimated to be ready later this year, she said. Its relatively regular shape and palatable offering of 370 residential units should appeal to developers.

The Ang Mo Kio Avenue 1 plot is the latest GLS site to be offered in that area since Lorong Puntong was awarded in October 2014 for S$173.6 million (S$731 per sq ft per plot ratio or psf ppr), and the Ang Mo Kio Avenue 2/Ang Mo Kio Street 13 site that was awarded for S$550 million (S$790 psf ppr) in January 2013.

The developments built on the two sites were well-received: the 288-unit Thomson Impressions (Lorong Puntong) is 99.7 per cent sold to date with a median launch price of S$1,399 psf; while the 698-unit The Panorama (Ang Mo Kio Avenue 2/Ang Mo Kio Street 13) moved 95 per cent of the units with a median launch price of S$1,306 psf.

Tricia Song, Colliers International head of research, Singapore said that the Ang Mo Kio Avenue 1 site could be expected to attract three to five bidders with a top bid price of S$700-750 psf ppr.

For Ms Song, the Northumberland Road site is more attractive. This site is located at the junction of Racecourse Road and Gloucester Road, diagonally across from the Farrer Park MRT station and the Farrer Park Hospital, said Ms Song.

It comes with a corner frontage to a main road, and can be built up to 385 units. It also has a retail cap of 1,500 sqm GFA and a minimum 500 sqm GFA for childcare centre.

The nearest comparable will be Uptown@Farrer which is currently under construction, and has sold 31 units (of a total 116 units) at an average price of S$1,872 psf since its launch in September 2019. It was also a GLS site, sold in January 2017 for S$1,001 per sq ft per plot ratio (psf ppr) after drawing a healthy 11 bids, explained Ms Song.

“For the Northumberland Road site, given the current cautious sentiment and uncertainties around construction costs, we expect it to draw five to seven bidders, with a top bid of S$900-1,000 psf ppr, and developers can look to potentially launch at S$1,900-2,000 psf,” she said.

Tengah is the latest HDB new town after Punggol and is set to be the most futuristic town, said Ms Song.

HDB has envisioned Tengah as a “Forest Town”, to be designed with green, sustainable and smart features, and it will also feature the country’s first car-free town centre (a feature of its car-lite town scheme).

“This will be the first EC in the new town. We note that this site is not very near any planned station along the Jurong Region Line – that will ply Tengah and expected to be completed in phases starting 2026,” said Ms Song, adding: “However, as a hybrid of private and public housing, ECs have an appeal – being more affordable than private condos and have private facilities. Hence, we expect it to be popular at the right price.”

A reference price for a new EC in a yet-to-be-tested new location like Tengah could be around S$700-800psf, similar to the price point of the first few Punggol ECs back in 2011-2013, according to Ms Song. “We should still see robust bidding for this EC site, though bid prices will likely be cautious,” she added. “We expect five to seven bidders at a top bid price of S$300-400 psf ppr.”


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