Three flagged for EC development; analysts divided on price impact
By MINDY TAN
Four 99-year residential sites, expected to yield 2,070 units, was released for sale under the government land sales programme yesterday.
Three parcels – of which two are for executive condominium (EC) development – were launched for sale under the confirmed list. The third site is flagged for strata landed housing or condominium/flats development. The fourth parcel – available for application under the reserve list – too is flagged for EC development.
While analysts concur that there has been a surge in EC supply, they remain divided over the potential impact on prices.
‘We feel that there will be a mismatch in supply and demand for ECs in 2012. With HDB pushing out more BTO flats for first timers and possibly increasing the percentage allocated to second timers, the HDB resale, DBSS, and EC markets will be affected,’ said Lee Sze Teck, senior manager at DWG Research and Consultancy. ‘Buyers are increasingly spoilt for choice. Unless the EC development offers something unique, they are likely to wait for the next launch. Hence, we expect EC prices to soften by around 5 per cent in 2012.’
Mohamed Ismail, chief executive of PropNex Realty, agreed: ‘It is an unprecedented move to increase the supply of ECs (by so much) within a year, compared to the approximately 15,000 ECs introduced the last 15 years.’
He expects the price of ECs to moderate from the current range of $750 psf to $700 psf ‘in the coming months’.
‘This is definitely lower than current mass market condominiums which average approximately $900 psf,’ he added.
Other analysts point to an increased pool of eligible buyers – the income ceiling for eligible applicants was raised from $10,000 to $12,000 in August last year – as a supporting factor.
Credo Real Estate executive director Ong Teck Hui added: ‘As almost all of last year’s EC sites have been launched for sale, the current tenders are a replenishment of fresh EC sites to provide continuity in supply.’
Two 99-year EC sites were launched under the confirmed list yesterday.
The first, a 142,533 sq ft site at Punggol Central/Edgefield Plains, has a plot ratio of 3.0, which translates to a maximum GFA of 427,600 sq ft. It is expected to yield some 395 units.
The second site, at Fernvale Lane, has a site area of 236,804 sq ft and a plot ratio of 3.5, which translates to a GFA of 828,816 sq ft. It is expected to yield some 770 units.
Analysts expect both sites to attract moderately healthy interest from developers.
‘Notwithstanding ample new housing supply in the north-eastern part of Singapore, it is essentially a well-positioned growth corridor, holding much possibilities and potential in the longer term, especially when all the exciting thematic, lifestyle features are eventually in place,’ noted Ong Kah Seng, director of R’ST Research.
He expects the top bids for the two sites to come in between $250-$290 psf ppr.
Credo’s Mr Ong said: ‘Of the two sites, the one at Fernvale is more attractive as it overlooks the private housing estate in Seletar Hills, and is more accessible to town and nearby amenities.’
He expects seven to 10 bidders for the site, with a top bid in the range of $280-$310 psf ppr.
Nicholas Mak, executive director of SLP International’s research and consultancy arm, said: ‘By the time the two new EC developments are launched for sale in late 2012 to early 2013, the EC primary market can expect increasingly stiff competition . . . This situation of heavy supply will very likely be compounded by the drying up of pent-up demand for ECs from first-time homebuyers.’
Mr Mak expects the site at Punggol to fetch a winning bid of between $280-$320 psf ppr, and the site at Fernvale Land to fetch a bid of between $270-$310 psf ppr.
‘Both sites could attract moderately healthy interest, possibly about four to eight bids each,’ he added.
The tenders for the sites at Punggol Central and Fernvale Lane are expected to close on March 29 and April 3 respectively.
The last site on the confirmed list – located at Elias Road/Pasir Ris Drive 3 – has a site area of 251,036 sq ft and a plot ratio of 1.4. Zoned for strata landed housing or condominium/flats, it is expected to host some 345 units.
‘(This site) is abutting a landed housing estate and near amenities such as Elias Mall and Pasir Ris Park. As Pasir Ris is a popular housing location, we could see eight to 12 bidders for this site, with a top bid coming in between $420-$470 psf ppr,’ said Credo’s Mr Ong.
Added Mr Mak: ‘The site is likely to attract big-name developers, as companies like Far East Organisation and City Developments Limited already have significant investment stakes in the locality. Although strata-landed housing is permitted on this subject site, the future development is likely to consist mostly of non-landed housing units, with a few landed houses to maximise site efficiency.’
‘This site can be expected to fetch a winning bid of about $126 million to $144 million, or $360-$410 psf ppr) in today’s market,’ he added.
The tender for the site will close on April 11.
On the reserve list, a 99-year EC plot at Punggol Way/Punggol Walk, which has a site area of 201,327 sq ft and GPR of 3.0, is expected to yield some 560 units.
Under the reserve list system, the government releases a site for sale only if an interested party submits an application with a minimum price that is deemed acceptable. By contrast, land parcels under the confirmed list are sold according to scheduled dates.
‘The site may not be triggered for tender due to a potential supply glut in the EC market, especially in the north-eastern region of Singapore,’ said Mr Mak.
‘Should this EC site be triggered for tender, it can be expected to fetch approximately $157 million to $181 million, or $260-$300 psf ppr,’ he added.
Credo’s Mr Ong added: ‘The Punggol Central EC site is a typical site within a HDB estate surrounded by public housing. Less interest is expected for this site . . . with a winning bid of between $250 to $280 psf ppr’.
Source: Business Times 16 Feb 2012