PROPERTY consultants have mixed views on the likely outcome for a state land tender for an executive condo (EC) housing site in Yishun launched on Thursday.
The Housing & Development Board’s (HDB) launch of the site, which is on the confirmed list of the first-half 2020 Government Land Sales Programme, has gone on as scheduled – but the tender period will be longer than usual, at six months.
This is “to provide developers with additional time to make their assessment in view of the current Covid-19 situation”, HDB said on Thursday.
The 2.15ha plot along Yishun Avenue 9 has a 99-year leasehold tenure and can yield about 600 residential units. ECs are a public-private housing hybrid with initial buyer eligibility and resale conditions, which are completely lifted 10 years after the project has been completed.
The tender will close on Oct 29.
The most recent EC land tender closing, in March this year for a plot in Fernvale Lane, had a tender period of about nine weeks. Prior to that, the tender for an EC plot in Canberra Link closed in July last year, nearly seven weeks after its launch.
For the Yishun site, Huttons Asia research director Lee Sze Teck predicts “healthy participation” of between six and eight bidders with a top bid between S$520 per square foot per plot ratio (psf ppr) and S$550 psf ppr.
“The response for this EC plot is unlikely to be affected by Covid-19 as the launch of the new project on this site will be 15 months after the site has been awarded, in 2022. The uncertainty over the economy would have been cleared by then,” he added. He also points to potential pent-up demand for an EC project in Yishun.
In similar vein, ERA Realty’s head of research and consultancy, Nicholas Mak, said it is very likely that the site’s developer would be able to launch the project when the market sentiment is better than what it is today. “As a result, the more bullish developers would still submit bids that are close to the levels before the Covid-19 outbreak.”
Mr Mak said he expects the Yishun plot to garner about seven to 10 bids, with the top bid coming in at S$500-540 psf ppr.
Ong Teck Hui, JLL’s senior director of research and consultancy, gave a more conservative forecast, citing not just the Covid-19 outbreak but also the likelihood that Singapore will still be experiencing a recession in the second half of 2020 when the tender closes.
He said the plot could draw two to five bids, with the highest coming in between S$470 psf ppr and S$520 psf ppr. This assumes a scenario where there is a “chance that market conditions would have improved” by the time the project is launched in 2022.
“However, if Covid-19 is still not contained by tender closing and with the economy deteriorating sharply, we can expect a minimal number of bidders and tender bids are likely to be below expectations.”
Mr Ong’s forecast range for the top bid is lower than the S$555 psf ppr winning bid for the Fernvale Lane plot in March. That drew seven bids.
His forecast of the top bid price range for the Yishun land parcel would translate to a breakeven cost of S$850-900 psf.
The most recent EC project launch was that of Ola along Anchorvale Crescent in March. The project’s developer has sold 177 units at a median price of S$1,130 psf, based on URA Realis data on Thursday.
The plot launched on Thursday is about 1.5km from Yishun MRT station. The last time the government sold EC land in Yishun was in 2014, when two adjoining sites in Yishun Street 51 were sold; they have been developed into The Criterion and Signature at Yishun.
JLL’s Mr Ong said it made sense for HDB to have a longer tender closing period for the latest plot. “If HDB had given a shorter tender period of, say, two months and if Covid-19 is not contained by then, the response to the tender could be poor, with minimal participation and the possibility of very low bids which could result in the site not being awarded.
“By allowing a long lag time of six months for the tender closing, there is a fair chance the outbreak will be contained by then, resulting in a more favourable market response.”