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07-09-23, 13:51
ANALYSIS: Cautious response to Jalan Tembusu GLS amid new regulations
By Elizabeth Choong
September 7, 2023
https://i.imgur.com/5PahuVs.jpg
The Jalan Tembusu GLS site was awarded to Sim Lian Group last month. (Image: EdgeProp LandLens)
A land parcel at Jalan Tembusu was awarded to Sim Lian Group for $828.8 million ($1,069 psf ppr) in August. The site was on the confirmed list for the government land sale (GLS) program for 1H2023. Only two bids were received when the tender for the site closed.
In this article, we examine possible reasons for the lukewarm response in interest level for the recent Jalan Tembusu GLS. We will also use the bid for the Tembusu Grand site for comparison purposes and analysis.
https://i.imgur.com/Mdn5g7F.jpg
Source: EdgeProp LandLens (as at 29 August 2023)
The attributes of the site are one of the key factors
The Jalan Tembusu GLS site has a site area of 221,438 sq ft and a maximum GFA of 775,040 sq ft, while Tembusu Grand has a site area of 210,623 sq ft with a maximum GFA of 589,749 sq ft. The Jalan Tembusu GLS site is larger and has a higher maximum GFA, which translates to higher capital outlay and development risk for the developer.
The Jalan Tembusu GLS site is located beside a future nursing home, which could be viewed negatively by some buyers. In contrast, a road separates Tembusu Grand from the nursing home.
The tender documents for the Jalan Tembusu GLS site also state that the successful tenderer must create a 0.52-ha public park beside the subject site and retain nine rain trees in the park. The park must comply with the requirements of NParks and URA. The creation of the public park would add to the development cost for the site. In contrast, the developer for Tembusu Grand does not have to create a nearby public park.
https://i.imgur.com/ipEHl1W.jpg
Demand dampened by higher ABSD rates
The government introduced a slew of regulations between the tender closure dates for both sites, which had a significant impact on demand from buyers.
In February, the government increased Buyer’s Stamp Duty rates for higher-value properties. Two months later, rates for Additional Buyer’s Stamp Duty (ABSD) were increased. The higher ABSD was particularly impactful on foreign buyers because the rate for this group of buyers doubled from 30% to 60%. ABSD rates were also increased for Singaporeans and Singaporean permanent residents (PRs) who purchase more than one residential property. There was significantly weaker demand from foreign buyers after the introduction of the higher ABSD rates.
From January to April, foreign buyers accounted for 5.9% to 8.7% of the total number of condo units transacted in Singapore during the respective months. However, the proportion dropped to a mere 1.5% to 3.2% from May to August.
The proportion for PRs remained largely unchanged. They accounted for 14.4% to 21.4% of total condo sales for the first four months of this year and 14.7% to 20.0% from May to August. Singaporean buyers made up a higher percentage of total sales after the increase in ABSD, increasing from 71.4% to 79.3% between January and April to 77.8% to 83.7% from May to August.
https://i.imgur.com/DmVH2xR.jpg
If we delve into condo sale transactions for only District 15, April and May each saw 10 foreign buyers per month, which marked the highest monthly number for this year. Thereafter, the number of condo units in District 15 purchased by foreign buyers plummeted to only one unit in June and eight units in July. Foreign buyers did not buy any condo units in District 15 last month.
More at: https://www.edgeprop.sg/property-news/analysis-cautious-response-jalan-tembusu-gls-amid-new-regulations
By Elizabeth Choong
September 7, 2023
https://i.imgur.com/5PahuVs.jpg
The Jalan Tembusu GLS site was awarded to Sim Lian Group last month. (Image: EdgeProp LandLens)
A land parcel at Jalan Tembusu was awarded to Sim Lian Group for $828.8 million ($1,069 psf ppr) in August. The site was on the confirmed list for the government land sale (GLS) program for 1H2023. Only two bids were received when the tender for the site closed.
In this article, we examine possible reasons for the lukewarm response in interest level for the recent Jalan Tembusu GLS. We will also use the bid for the Tembusu Grand site for comparison purposes and analysis.
https://i.imgur.com/Mdn5g7F.jpg
Source: EdgeProp LandLens (as at 29 August 2023)
The attributes of the site are one of the key factors
The Jalan Tembusu GLS site has a site area of 221,438 sq ft and a maximum GFA of 775,040 sq ft, while Tembusu Grand has a site area of 210,623 sq ft with a maximum GFA of 589,749 sq ft. The Jalan Tembusu GLS site is larger and has a higher maximum GFA, which translates to higher capital outlay and development risk for the developer.
The Jalan Tembusu GLS site is located beside a future nursing home, which could be viewed negatively by some buyers. In contrast, a road separates Tembusu Grand from the nursing home.
The tender documents for the Jalan Tembusu GLS site also state that the successful tenderer must create a 0.52-ha public park beside the subject site and retain nine rain trees in the park. The park must comply with the requirements of NParks and URA. The creation of the public park would add to the development cost for the site. In contrast, the developer for Tembusu Grand does not have to create a nearby public park.
https://i.imgur.com/ipEHl1W.jpg
Demand dampened by higher ABSD rates
The government introduced a slew of regulations between the tender closure dates for both sites, which had a significant impact on demand from buyers.
In February, the government increased Buyer’s Stamp Duty rates for higher-value properties. Two months later, rates for Additional Buyer’s Stamp Duty (ABSD) were increased. The higher ABSD was particularly impactful on foreign buyers because the rate for this group of buyers doubled from 30% to 60%. ABSD rates were also increased for Singaporeans and Singaporean permanent residents (PRs) who purchase more than one residential property. There was significantly weaker demand from foreign buyers after the introduction of the higher ABSD rates.
From January to April, foreign buyers accounted for 5.9% to 8.7% of the total number of condo units transacted in Singapore during the respective months. However, the proportion dropped to a mere 1.5% to 3.2% from May to August.
The proportion for PRs remained largely unchanged. They accounted for 14.4% to 21.4% of total condo sales for the first four months of this year and 14.7% to 20.0% from May to August. Singaporean buyers made up a higher percentage of total sales after the increase in ABSD, increasing from 71.4% to 79.3% between January and April to 77.8% to 83.7% from May to August.
https://i.imgur.com/DmVH2xR.jpg
If we delve into condo sale transactions for only District 15, April and May each saw 10 foreign buyers per month, which marked the highest monthly number for this year. Thereafter, the number of condo units in District 15 purchased by foreign buyers plummeted to only one unit in June and eight units in July. Foreign buyers did not buy any condo units in District 15 last month.
More at: https://www.edgeprop.sg/property-news/analysis-cautious-response-jalan-tembusu-gls-amid-new-regulations