Landed homes: a dying breed with well supported values

Apr 12, 2022



Singapore may be a young nation, but there are families here who have passed down huge fortunes through the generations.

Recently, the descendants of property magnate and hotelier Wee Thiam Siew, who passed away in 1972, sold freehold land plots that housed 5 bungalows and 10 pairs of semi-detached houses along Thiam Siew Avenue in the Katong area for S$815 million. An estimated development charge of S$284 million is payable for the 2.45 hectare site, which has a plot ratio of 2.8.

The buyer of the houses, which is a joint venture between Hoi Hup Realty and Sunway Developments, plans to build high rise condominiums with more than 800 units.

This sale represents the monetising of long-held assets as well as the replacing of landed homes with condominium units.

Up to the late 1990s, among resident households living in private property, more lived in landed homes than in condominiums and apartments. By 2010, the number of resident households living in condominiums and apartments was 132,000 or double the 64,900 living in landed homes.

In 2021, among resident households, 229,100 lived in condominiums and apartments, which is over 3.3 times that of the 68,500 who resided in landed homes.

Between Q1 2010 and Q4 2021, the stock of private non-landed homes excluding executive condominiums grew by 71 per cent from 180,882 to 308,933 versus a 5 per cent rise in private landed homes from 69,569 to 73,262.

Over this period, the share of landed homes in the stock of private homes excluding executive condominiums fell from 28 per cent to 19 per cent.

Might the absolute number of landed homes in Singapore soon decline? In the Thiam Siew Avenue example, the zoning allows for building high-rise condominiums. Because the homes sit on land that is zoned for building high rises, the vendors could fetch a higher price than if the homes sat within land zoned for landed homes.

In the above case, entities held by descendants of Wee Thiam Siew owned a large number of houses. If the homes are held by disparate unrelated owners, it can be hard to get the owners to agree to sell their homes in order that the aggregated site sold is large enough to make a condominium project feasible.

Meeting housing demand

As it is, there are areas where only landed housing is permitted. Could more locales that currently house landed homes be zoned for condominiums?

Singapore appears to need more private homes. Going forward, such demand is likely to largely be met by condominiums.

Landed homes are not on either the Confirmed or Reserve List of Sites in the Government Land Sales Programme for H1 2022, which offers sites that can yield 6,500 new private homes and executive condominium units.

Building high rises uses land efficiently. With good planning and design, high rise developments can offer conducive living environments. Singapore aims to be a city in nature with lush urban greenery. Replacing landed homes with condominiums can add to the amount of greenery and enhance livability if the new condominium developments offer generous amounts of green spaces.

Between 2010 and 2021, the number of resident households grew by 21 per cent to 1.391 million. Over this period, the share of resident households living in HDB homes fell from 82.4 per cent to 78.3 per cent as the number of resident households living in condominiums and apartments rose by 74 per cent.

Average household size of resident households fell from 3.5 in 2010 to 3.15 in 2021. Between 2010 and 2021, the number of 1- and 2-person households grew by 55 per cent while that of households with 5 persons or more shrunk by 10 per cent.

Amid shrinking household sizes, smaller condominium units may work fine for many people. As households get smaller, might demand for landed homes drop? After all, there may be more to clean and maintain with a landed home versus a condominium unit.

Appeal of landed homes

While landed homes are a dying breed, they may not become extinct any time soon. Some landed housing enclaves will be preserved to give diversity to the cityscape.

Also, some owners of landed homes in areas that are zoned for condominium development may be in no hurry to sell or may be unable to get agreement from owners of adjoining land plots to sell.

Even as a smaller percentage of people live in landed homes, these can remain highly desired as status symbols.

Often, a landed home offers more space than a condominium unit - this is useful for people who spend more time at home. Also, an owner of a landed home generally has greater flexibility to do up his abode in unique ways versus an owner of a condominium unit.

Prices of private landed homes rose 13.3 per cent in 2021 compared with a 9.8 per cent increase for private non-landed homes, according to the Urban Redevelopment Authority (URA). For Q1 2022, URA's flash estimate of private property prices shows prices of landed homes rose 4 per cent from the previous quarter versus the 0.6 per cent decline for non-landed homes.

Landed homes are often bought by Singapore citizens for owner occupation. Demand for landed homes, unlike condominiums, may not be affected by a drop in buyers looking to buy homes for investment or foreigners looking to buy homes post the property cooling measures introduced late last year that among others raised transaction costs for home buyers except citizens and permanent residents buying their first homes.

Based on URA's data on private homes sold by developers for February, strata landed housing project Belgravia Ace in District 28, which launched units for sale early this year, has sold 74 out of 85 launched units.

The scarcity of new supply of landed homes coupled with their prized status will support landed home prices. As for those owning a landed home in an area that is zoned for condominium development, be patient and hope owners of the adjoining houses can come together amicably to sell out to a developer to realise your pot of gold.

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