Developers upbeat about EC market

[reporter2]

http://www.businesstimes.com.sg/arch...arket-20130531

Published May 31, 2013

Developers upbeat about EC market

Tender for Sengkang executive condo saw robust competition, healthy participation

By Kalpana Rashiwala


PROVISIONAL results for yesterday's tender for an executive condominium (EC) site in the Sengkang area, like that for a Woodlands EC site which closed earlier this month, led property consultants to conclude that developers remain confident about prospects for this market segment.

This is despite measures introduced in January to rein in some of the exuberance in the sector and more recently, strong hints from the government that its housing subsidy of up to $30,000 for first-time buyers who pick up an EC unit from a developer, is in for a change. ECs are a public-private housing hybrid.

At yesterday's tender closing, a 99-year EC site in Anchorvale Crescent drew a top bid of $330.65 per square foot per plot ratio (psf ppr) from Qingjian Realty (South Pacific) Group. This will be the group's fifth EC project.

Earlier this month, it clinched the Woodlands EC site plot with a winning bid of $341.21 psf ppr. That tender attracted seven bids.

At yesterday's tender, Qingjian's bid was 3.2 per cent higher than the next highest offer of $320.45 psf ppr placed by City Developments unit Bellevue Properties.

Kheng Leong partnered Low Keng Huat to bid at $316.68 psf ppr. Frasers Centrepoint's unit FCL Place and Hytech Builders joined forces, offering $308.30 psf ppr. The two other bids were from EL Development ($275.75 psf ppr) and Teambuild Land unit Ecco Development, which offered $266.59 psf ppr for the site, which can yield an estimated 690 units.

"In this tender, the range of bids was quite tight, with the highest being only 24 per cent above the lowest bid submitted," commented Nicholas Mak, executive director at SLP International Property Consultants. This shows that developers are confident that demand for ECs will remain healthy as they are meant for owner occupiers, he added.

Agreeing, Colliers International director of research and advisory Chia Siew Chuin said: "The healthy participation rate as well as the robust competition among the top bidders signify that developers are still upbeat towards the EC market."

Ong Teck Hui, national director of research and consultancy at Jones Lang LaSalle, noted that the $331 psf ppr top bid surpassed the $296.48 psf ppr for the Sengkang West Way site last November by 11.5 per cent. This suggests that EC land prices in this part of Sengkang are creeping up on the back of stronger demand by developers.

One industry player told BT that some developers could be taking the view that if the housing subsidy for new EC buyers is indeed cut or removed altogether and assuming that there is no retroactive application for earlier sites, this will boost demand for projects on such sites. "Buyers who still want to use a housing subsidy for an EC purchase would have to go for a project on a site sold before the new rules, goes the thinking," he said.

The site tendered yesterday is near Farmway LRT Station and Sengkang Riverside Park.

ECs come with initial buyer eligibility and resale conditions that are completely lifted 10 years after the completion of an EC development.

CBRE executive director Joseph Tan estimates Qingjian's breakeven cost at about $650 psf. Li Jun, general manager of Qingjian Realty (South Pacific) Group, forecast last night that the average selling price for the project could be in the $730-780 psf range, subject to market and economic conditions at the point of launch. "Qingjian assessed that the property market is stable and that the EC market is healthy," he added.

It will be launching its next EC development, the 512-unit Ecopolitan, at Punggol Way next month. E-applications open on June 28. The group has two earlier EC projects - RiverParc Residence and Waterbay - both of which are under construction in Punggol, and fully sold.

[reporter2]

http://www.straitstimes.com/archive/...ender-20130531

Qingjian's $246m bid tops Sengkang EC site tender

Published on May 31, 2013

By Melissa Tan


CHINA-BASED property developer Qingjian Realty has again lodged the highest bid for an executive condominium (EC) site - one property sector that developers are still keen on.

Qingjian's offer of $245.6 million for the 23,000 sq m Anchorvale Crescent plot in Sengkang trumped five other bidders in a close contest yesterday.

Its bid works out to $330.65 per square foot (psf) per plot ratio (ppr), which falls in the middle of the $300 to $350 psf ppr range tipped by analysts.

Earlier this month, Qingjian topped a tender for an EC site in Woodlands Avenue 5 with a bid of $216 million or $341.2 psf ppr.

Its offer for the Anchorvale Crescent land was just 3.2 per cent above the $238 million bid by a City Developments unit and 4.4 per cent ahead of the Kheng Leong and Low Keng Huat consortium, which lodged $235.2 million.

A Frasers Centrepoint and Hytech Builders consortium, EL Development and Ecco Development, which made the lowest bid of $198 million or $266.6 psf ppr, also lodged offers.

"The healthy participation rate, as well as the robust competition among the top bids, signifies that developers are still upbeat towards the EC market," said Colliers International research and advisory head Chia Siew Chuin.

She said Housing Board owners who have held their flats for five years may be tempted to buy an EC unit at the site as strong HDB resale prices in the area would allow them to upgrade.

The median price for HDB five-room resale flats in Sengkang was $535,000 in the first quarter while executive apartments were at $628,900. Executive apartments refer to HDB flats that have three bedrooms and are usually about 1,400 sq ft, larger than HDB five-room flats.

In nearby Punggol, the first- quarter median resale price of five-room flats was $565,5000.

The Anchorvale Crescent site, with a maximum gross floor area of 69,000 sq m, is estimated to yield about 680 to 700 homes.

Analysts reckoned the break-even price would be between $630 and $690 psf, and the selling price could range from $750 to $780 psf.

Qingjian general manager Li Jun told The Straits Times that it expected to launch the EC at $730 to $780 psf.

The developer will launch an EC at Punggol Way called Ecopolitan on June 28, Mr Li added.

Jones Lang LaSalle Singapore research director Ong Teck Hui said the Anchorvale Crescent tender results indicated EC land prices in that part of Sengkang were "creeping up on the back of stronger demand by developers".

Qingjian's top bid was 11.5 per cent higher than the $296 psf ppr achieved for a Sengkang West Way EC site last November.

All five subsequent EC tenders after the Sengkang West Way site have drawn bids higher than $320 psf ppr.

SLP International research head Nicholas Mak said this "could indicate a new floor price for EC land, which could lead to higher prices for future EC launches".

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Qinjian tends to be very aggressive in bidding for land to build ECs and appears to want to be the EC King in the Singapore market. Chinese business people can tend to be very aggressive but frankly the fact that they bid higher is not relevant to me as a buyer. For instance, SPL agents marketing Ecopolitan EC for Qinjian, saying the developer bid ~ $50 psf higher for the land, but that is really the developer's problem that they overbid. Given their being a late entrant into the Singapore property development business, their track record is yet to be established.

What is relevant is what value the Ecopolitan has for a buyer, and comparing both the pros and cons of Ecopolitan vs. other projects nearby or those coming up. For instance, even though next to Twin Waterfalls, Ecopolitan is at least 3 - 5 minutes further away as it will not have a short cut to Punggol MRT station that Twin Waterfalls has. I walked from Punggol MRT to the site and it is 12 minutes walk average speed, not the 8 minutes they claimed. Also, I went up to the HDB block next to it and could hear the heavy traffic from the TPE which is not a problem Twin Waterfalls has. The agent told me that the block is set back from the edge of the land near to the TPE, but still the noise is very loud. There are lots of planes flying into and out of Seletar Airport, so the noise was loud for any projects in Punggol. Also, while all these eco-friendly features sounds good (mangroves in fresh water???), it could mean expensive maintenance expenses (or plants that don't adapt well) down the road that owners have to bear (by then, Qinjian is long gone and not responsible for their choices of plants for Ecopolitan landscape) has their profits secure in the bank. Think organic food being more expensive that ordinary food, and one can't easily verify if the food is organic.

Given that it is next to TPE, further away from MRT (12 minute in hot weather that is unsheltered is not pleasant in Singapore) , I think Ecopolitan is over-priced if their base price (for the lower floor units) is $660 or higher per sq foot. One has to be careful, especially in this climate when the government is pushing out more ECs to stop prices from increasing. Already it has been reported that private condos market has been weaker. So what if at the first weekend, the launch for some condos sell say 200 units, but what about the 300 units after that weekend - they can drag out over many months.