MND pares private housing land supply on H2 confirmed list

Government releases land for 5,050 units in H2 list, 7 per cent less than in H1; annual figure still highest since 2013

Jun 25, 2024

After seven consecutive increases in land supply for private homes under its confirmed list, the government is trimming supply by 7.3 per cent for the next half-year.

The Ministry of National Development (MND) said on Tuesday (Jun 25) that it will release land that can generate about 5,050 private housing units via the confirmed list of the H2 2024 Government Land Sales (GLS) programme, from 5,450 units in H1 2024.

Market watchers said the moderate cutback would be in line with the lacklustre results at recent state land tenders, with developers turning cautious in response to homebuyers becoming increasingly selective.

That said, analysts pointed out that the 5,050-unit private housing supply to be rolled out in H2 represents a substantial private housing quantum. It will result in a total full-year supply of 11,110 private housing units (including 610 units from the Zion Road (Parcel B) that has been triggered for release from the reserve list). The annual figure will be the highest since 2013’s 12,895 units.

Confirmed list sites are launched for sale according to schedule, regardless of demand.

Fresh sites in the latest confirmed list include a plot in Chuan Grove for about 550 private homes and a commercial and residential site in Chencharu – a new housing area in Yishun – that can yield about 875 private homes in addition to 13,000 square metres gross floor area (GFA) of commercial space. Other new plots include a site in Holland Link to yield 240 homes and another in Faber Walk, for about 400 homes.

The H2 schedule also includes supply of 560 units of executive condominiums (ECs), a public-private hybrid, compared to 710 EC units in H1.

On the reserve list – where sites are launched for sale only upon successful application by a developer or when there is sufficient market interest – MND will offer land that can potentially generate about 3,090 private homes (including about 730 EC units) in H2 2024, about 10.7 per cent lower than the 3,460 units (including 855 ECs) in the current half.

New sites on the reserve list include a 400-unit private housing plot in Marina Gardens Lane (next to Gardens by the Bay) and a 435-unit EC plot in Woodlands Drive 17 near Woodlands South MRT station.

MND said: “The private housing market has shown signs of stabilisation, with price momentum easing with the ramp-up in the GLS programme over the last two years.”

Private home prices rose at a more moderate pace of 6.8 per cent in 2023 after increasing 8.6 per cent in 2022. The 1.4 per cent quarter-on-quarter gain in the price index in Q1 2024 is smaller than the quarterly average increase of 2 per cent in 2022 to 2023.

The government increased the supply of private housing on the GLS confirmed list to 9,250 units in 2023, from 6,290 units in 2022 and 3,605 units in 2021.

On the horns of a dilemma

Cushman & Wakefield’s head of research for Singapore and South-east Asia, Wong Xian Yang, said: “On one hand, private housing prices continue to edge higher; while on the other hand, recent land tenders have seen poor participation and cautious top bids from developers amid heightened development risks and weakening sales volumes...

“Against this backdrop, the government has continued to push out substantial new housing supply via the confirmed list, though at a moderate pace.”

Summing up the woes that have beset Singapore’s residential developers, Knight Frank Singapore’s head of research, Leonard Tay said: “Higher-for-longer interest rates, property cooling measures as well as the high costs of development that include punitive measures such as deadlines to sell out, have combined to take a significant toll on the appetite for new development.”

PropNex, which tracks the bids at GLS tenders for residential sites (including mixed-use sites and white sites but excluding EC plots), found that nine site tenders that have closed so far in 2024 attracted a median of two bids. This is down from a median of three bids for nine sites in 2023 and four bids (also nine sites) in 2022.

“The land bid prices have also been more conservative these days, as developers seek to mitigate and manage risks amid market uncertainties,” said PropNex chief executive officer Ismail Gafoor.

Prior to Tuesday’s announcement, the supply of private homes (including ECs) on the confirmed list of the half-yearly GLS programme increased seven times in a row since the trough of 1,370 units in H2 2020, noted CBRE’s head of research for Singapore and South-east Asia, Tricia Song.

“The pause in ramping up supply is wise to prevent an oversupply, considering the lacklustre response at recent state land tenders and developers’ sales of new private homes (excluding EC units) last year plunging (to) a 15-year low of 6,421 units,” she added.

MND said it will continue to release a steady supply of land over the next few years, “with supply calibrated to account for prevailing economic and property market conditions”.

Long-stay serviced apartments missing

Observers noted that there are no new sites stipulated with mandatory long-stay serviced apartments in the H2 GLS programme. “This may be in light of the Upper Thomson Road (Parcel A), which includes a mandatory component of long-stay serviced apartments, not receiving any bids at a state tender last week,” said Huttons Asia senior director of data analytics Lee Sze Teck.

Long-stay serviced apartments, with a minimum stay duration of three months, are a new rental concept unveiled by the government in November last year.

Market watchers noted that River Valley Green (Parcel B), which has been moved from the H1 2024 reserve list to the confirmed list in H2 2024, no longer has a stipulation of long-stay serviced apartments.

Instead, a portion of the plot’s GFA will be allowed for serviced apartment use (about 220 units). Whether these will be mandatory, or will be the regular serviced apartments with seven-day minimum stay or the long-stay version, is expected to be confirmed when the site is launched for tender in October.

Observers also noted that, in response to market feedback, MND has reduced the number of sites for large projects. On the H2 2024 programme, there are just two plots that can generate 600 or more homes each (one on the confirmed list, and the other on the reserve list). For the current half, there are four such plots (three on the confirmed list and one on the reserve list).

However, the government will be pushing out four sites (across both lists) in prime areas or the Core Central Region (CCR) in the next half, up from three plots in H1.

Developers have been eschewing housing sites in the CCR, as projects in such areas tend to have high price points and have traditionally relied on investors and foreigners to boost demand. These buyer profiles have been hit hard by hikes in Additional Buyer’s Stamp Duty rates in April last year.

Commenting on MND’s GLS programme, ERA Singapore chief executive Marcus Chu said that with nine sites currently open for tender, “the bumper crop of GLS sites in H2 2024 will further bolster the existing ample land supply”.

Wong of Cushman said this would impact the private-sector collective sales market. “The residential en bloc market would continue to face competition from still-ample supply and sites from the GLS confirmed list,” he added.

“Assuming sites with similar attributes, developers prefer to acquire from the GLS programme as it is more straightforward.”

https://www.businesstimes.com.sg/pro...confirmed-list