New Reporter
26-06-23, 10:39
Will latest GLS supply injection cure private home buyers of Fomo?
Jun 25, 2023
SINGAPORE – The beefing up of private-housing land supply announced this past week signals the Government’s intent to ensure a sustainable property market, while assuring Singaporeans that there is adequate supply to meet housing needs. But the latest land injection is not expected to have an impact on current prices, as potential launches will hit the market only in 2025.
“As underlying demand remains resilient and continues to grow, pushing out new housing supply could mitigate a potential sharper increase in prices when market conditions recover,” said Mr Wong Xian Yang, head of research for Singapore and South-east Asia at Cushman & Wakefield.
Nonetheless, some industry observers question if the supply ramp-up will convince buyers to adopt a watch-and-wait approach and temper price growth.
Despite the April 27 round of cooling measures that included a higher additional buyer’s stamp duty (ABSD) rate of 20 per cent for Singaporeans buying their second residential property, higher interest rates and macroeconomic uncertainty, new home sales in April and May remained robust.
Strong take-up at two launches sent May’s sales jumping past the 1,000-unit mark for the first time since May 2022, when 1,355 new homes were transacted. Developers sold 1,038 private homes in May, 17 per cent higher than April’s take-up.
Last Wednesday, the Government announced a sixth consecutive increase in the supply of private homes on the confirmed list of the half-yearly Government Land Sales (GLS) programme – bringing the confirmed-list supply for 2023 to 9,250 units – its highest in a decade.
A day later, a white 6.5ha site in the Jurong Lake District was released for sale to kick-start development of the largest mixed-use business district outside Singapore’s city centre. It is expected to yield about 1,700 residential units, 146,000 sq m of office space and another 73,000 sq m of space for retail, food and beverage, and entertainment.
For the upcoming GLS supply, four of the eight confirmed-list sites are newly introduced ones – Orchard Boulevard, two plots in Upper Thomson Road and a land parcel in Zion Road (parcel A). Another four of the nine reserved-list sites are new – Holland Drive, De Souza Avenue, Tampines Street 95 (for executive condominiums) and Zion Road (parcel B). Reserved-list sites can be triggered for sale by developers if they deem there is market demand.
With a number of these plots in prime locations near MRT stations and/or good schools, future land bids are not expected to be low. Hence, launch prices for homes at these sites may remain elevated, observers say.
But in the light of higher interest rates and a slower economic outlook, developers would likely exercise caution in bidding. Land prices may therefore rise at a more moderate pace.
Potentially dampening bids too is developers’ caution about large GLS sites. They could incur hefty ABSD on the land price if they are unable to complete the project and sell all the units within five years, Cushman & Wakefield’s Mr Wong said.
“Developers have to invest more capital for larger sites, as they have to pay a non-remittable 5 per cent ABSD upfront, which can be a hurdle for some,” he added.
Hence, the tender closing on Tuesday of three GLS sites will be closely watched for how developers bid, and the strength of their interest.
Two of the three sites are sizeable – Marina Gardens Lane (790 residential units) and a mega mixed-use site in Tampines Avenue 11 (1,190 residential units) – with a potential price quantum of over $1 billion each. The third site is an exec condo site in Plantation Close in Tengah (495 units).
With Marina Gardens Lane – the first site in the Marina South precinct – slated to become a 10-minute neighbourhood, there could be considerable interest from developers, especially those looking to gain a first-mover advantage in this area, said Mr Lam Chern Woon, head of research and consulting at Edmund Tie.
A 10-minute neighbourhood refers to one that provides basic amenities such as retail, F&B, parks, among other things, within a radius of 10 minutes.
OrangeTee & Tie deputy chief executive Justin Quek sees more joint ventures formed for the Marina Gardens Lane tender exercise because of the sizeable bid quantum.
Similarly, the mega site in Tampines Avenue 11 is likely to draw interest, Mr Lam said, given potential strong Housing Board upgrader demand and the site’s proximity to the future Tampines North MRT station, a hawker centre, bus interchange and community club.
But bids could be restrained for the Plantation Close exec condo site, as there is a neighbouring exec condo GLS parcel that will be launched for tender in November, while two exec condo projects in neighbouring Bukit Batok West Avenues 8 and 5 will likely be launched over the next few months, Mr Lam said.
Mr Quek sees four to seven bidders for this exec condo site, as new unsold supply is tight and exec condos remain popular amid rising new-condo launch prices and the significant price gap between new suburban homes and new exec condos.
PropNex Realty head of research and content Wong Siew Ying also expects the Plantation Close exec condo site to garner more interest than the Marina Gardens Lane and Tampines Avenue 11 sites.
While the market is optimistic about the long-term potential of the Jurong Lake District, which has garnered substantial interest from local and foreign developers, bidding is expected to be cautious for this mega site, said Ms Tay Huey Ying, JLL head of research and consultancy, Singapore.
“In the short term, prior to the attainment of critical mass, and the completion of infrastructural works, particularly those affecting connectivity such as the Jurong Region Line and Cross Island Line stations, there will be challenges in attracting office occupiers to the location.”
Coupled with a host of planning requirements such as the lower carparking provisions, stringent central courtyard and green building conditions, this could moderate bid prices, Ms Tay added. The economic climate at the time of the tender closing in March 2024 will also affect developers’ sentiment and their bids, she said.
https://i.imgur.com/oYeTVKI.jpg
https://i.imgur.com/AWFy8MQ.jpg
https://www.straitstimes.com/business/will-latest-gls-supply-injection-cure-private-home-buyers-of-fomo
Jun 25, 2023
SINGAPORE – The beefing up of private-housing land supply announced this past week signals the Government’s intent to ensure a sustainable property market, while assuring Singaporeans that there is adequate supply to meet housing needs. But the latest land injection is not expected to have an impact on current prices, as potential launches will hit the market only in 2025.
“As underlying demand remains resilient and continues to grow, pushing out new housing supply could mitigate a potential sharper increase in prices when market conditions recover,” said Mr Wong Xian Yang, head of research for Singapore and South-east Asia at Cushman & Wakefield.
Nonetheless, some industry observers question if the supply ramp-up will convince buyers to adopt a watch-and-wait approach and temper price growth.
Despite the April 27 round of cooling measures that included a higher additional buyer’s stamp duty (ABSD) rate of 20 per cent for Singaporeans buying their second residential property, higher interest rates and macroeconomic uncertainty, new home sales in April and May remained robust.
Strong take-up at two launches sent May’s sales jumping past the 1,000-unit mark for the first time since May 2022, when 1,355 new homes were transacted. Developers sold 1,038 private homes in May, 17 per cent higher than April’s take-up.
Last Wednesday, the Government announced a sixth consecutive increase in the supply of private homes on the confirmed list of the half-yearly Government Land Sales (GLS) programme – bringing the confirmed-list supply for 2023 to 9,250 units – its highest in a decade.
A day later, a white 6.5ha site in the Jurong Lake District was released for sale to kick-start development of the largest mixed-use business district outside Singapore’s city centre. It is expected to yield about 1,700 residential units, 146,000 sq m of office space and another 73,000 sq m of space for retail, food and beverage, and entertainment.
For the upcoming GLS supply, four of the eight confirmed-list sites are newly introduced ones – Orchard Boulevard, two plots in Upper Thomson Road and a land parcel in Zion Road (parcel A). Another four of the nine reserved-list sites are new – Holland Drive, De Souza Avenue, Tampines Street 95 (for executive condominiums) and Zion Road (parcel B). Reserved-list sites can be triggered for sale by developers if they deem there is market demand.
With a number of these plots in prime locations near MRT stations and/or good schools, future land bids are not expected to be low. Hence, launch prices for homes at these sites may remain elevated, observers say.
But in the light of higher interest rates and a slower economic outlook, developers would likely exercise caution in bidding. Land prices may therefore rise at a more moderate pace.
Potentially dampening bids too is developers’ caution about large GLS sites. They could incur hefty ABSD on the land price if they are unable to complete the project and sell all the units within five years, Cushman & Wakefield’s Mr Wong said.
“Developers have to invest more capital for larger sites, as they have to pay a non-remittable 5 per cent ABSD upfront, which can be a hurdle for some,” he added.
Hence, the tender closing on Tuesday of three GLS sites will be closely watched for how developers bid, and the strength of their interest.
Two of the three sites are sizeable – Marina Gardens Lane (790 residential units) and a mega mixed-use site in Tampines Avenue 11 (1,190 residential units) – with a potential price quantum of over $1 billion each. The third site is an exec condo site in Plantation Close in Tengah (495 units).
With Marina Gardens Lane – the first site in the Marina South precinct – slated to become a 10-minute neighbourhood, there could be considerable interest from developers, especially those looking to gain a first-mover advantage in this area, said Mr Lam Chern Woon, head of research and consulting at Edmund Tie.
A 10-minute neighbourhood refers to one that provides basic amenities such as retail, F&B, parks, among other things, within a radius of 10 minutes.
OrangeTee & Tie deputy chief executive Justin Quek sees more joint ventures formed for the Marina Gardens Lane tender exercise because of the sizeable bid quantum.
Similarly, the mega site in Tampines Avenue 11 is likely to draw interest, Mr Lam said, given potential strong Housing Board upgrader demand and the site’s proximity to the future Tampines North MRT station, a hawker centre, bus interchange and community club.
But bids could be restrained for the Plantation Close exec condo site, as there is a neighbouring exec condo GLS parcel that will be launched for tender in November, while two exec condo projects in neighbouring Bukit Batok West Avenues 8 and 5 will likely be launched over the next few months, Mr Lam said.
Mr Quek sees four to seven bidders for this exec condo site, as new unsold supply is tight and exec condos remain popular amid rising new-condo launch prices and the significant price gap between new suburban homes and new exec condos.
PropNex Realty head of research and content Wong Siew Ying also expects the Plantation Close exec condo site to garner more interest than the Marina Gardens Lane and Tampines Avenue 11 sites.
While the market is optimistic about the long-term potential of the Jurong Lake District, which has garnered substantial interest from local and foreign developers, bidding is expected to be cautious for this mega site, said Ms Tay Huey Ying, JLL head of research and consultancy, Singapore.
“In the short term, prior to the attainment of critical mass, and the completion of infrastructural works, particularly those affecting connectivity such as the Jurong Region Line and Cross Island Line stations, there will be challenges in attracting office occupiers to the location.”
Coupled with a host of planning requirements such as the lower carparking provisions, stringent central courtyard and green building conditions, this could moderate bid prices, Ms Tay added. The economic climate at the time of the tender closing in March 2024 will also affect developers’ sentiment and their bids, she said.
https://i.imgur.com/oYeTVKI.jpg
https://i.imgur.com/AWFy8MQ.jpg
https://www.straitstimes.com/business/will-latest-gls-supply-injection-cure-private-home-buyers-of-fomo