Developers in Singapore still on the prowl for land

Jan 29, 2018

But plots with digestible quantum and in prime locations will likely be more attractive

Lynette Khoo

Listed developer Oxley Holdings is holding the largest residential land bank in the Republic, in terms of number of dwelling units, after successfully bidding for several collective sale sites last year, estimates by The Business Times show.

After acquiring the huge former HUDC sites Rio Casa and Serangoon Ville as part of a consortium last year, Oxley went on to snap up two other sizeable collective sale sites - Mayfair Gardens and Vista Park - as well as smaller plots Toho Green and Apartment 8.

Oxley chief executive Ching Chiat Kwong said the company's average land cost is relatively cheaper than its peers' as the sites are in good locations. "Hence, we remain optimistic for the next two years," he added. "Furthermore, with so many en bloc deals going on, residents will need to buy homes."

Estimates by BT show that close to 4,000 units could be generated from Oxley's land bank, of which more than 2,300 homes are based on its equity stakes in the sites acquired.

In terms of value of land bank, however, some analysts believe City Developments (CDL) could be top. DBS Group Research estimates that CDL's inventory has the highest gross development value of $4 billion by virtue of the number of luxury projects it has on its books. CDL is estimated to have 1,770 units.

After Oxley, in terms of the potential number of homes that can be built from its land bank, is new market entrant Logan Property Holdings, a Hong Kong-listed Chinese developer. Its share in two large land parcels acquired last year - one from a government land sale and the other from a collective sale - puts it in second place with more than 2,000 units.

Other China developers that rank high in residential land bank after ramping up their exposure last year include Kingsford Development, Qingjian Realty and SingHaiyi Group. SingHaiyi's majority shareholders Gordon Tang and his wife have exposure to a substantial residential land bank (above 1,800 units) via the firms they control, namely SingHaiyi, Haiyi Wealth and Huajiang International Corporation.

MCL Land, Allgreen and Frasers Centrepoint - which have been operating in Singapore for a long time but are deemed foreign by virtue of their controlling shareholding - also bumped up their residential land bank significantly last year. Allgreen, run by property tycoon Robert Kuok, scooped up three sites last month for a total $1.2 billion after a six-year hiatus.

But with the overall land bank of developers believed to be at its lowest since 2007, market watchers expect them to continue replenishing their inventory, albeit more selectively in view of the more than 22,000 new units that could hit the market in 2018-2019 across more than 40 sites.

Savills Singapore senior director of investment sales Suzie Mok noted that developers are still scouring for sites, but are not aggressively accumulating due to the five-year timeline to finish building and selling their units under the additional buyer's stamp duty regime, and potential competition from the upcoming supply of new units from recently sold sites.

Ms Mok said land plots with digestible quantum and in prime locations are more attractive because of the narrowing price gap between suburban and prime projects.

There are also developers that have not managed to acquire any sites and are still on the lookout. These include CapitaLand, Far East Organization, Ho Bee Land and Wheelock Properties.

As the residential upcycle enters its nascent phase, listed developers are "faced with a conundrum", JPMorgan property analyst Brandon Lee observed. "While they acknowledge their declining land banks and are cognisant of a price recovery, most are unwilling to be too aggressive on pure residential sites in view of subdued single-digit margins, their inability to differentiate the end-product unlike integrated or mixed-use projects, and higher internal hurdle rates," he added.