SINGAPORE – The Government has cut the supply of private residential housing from confirmed sites under the government land sales (GLS) programme for the second half of 2019, due to a drop in demand after property cooling measures and a large supply in the pipeline.
Five confirmed list sites and eight reserve list sites that can yield about 6,430 private homes, 92,000 sq m gross floor area (GFA) of commercial space and 1,100 hotel rooms were released, the Ministry of National Development (MND) said in an announcement on Thursday morning (June 6).
The private home supply of 1,715 units from the confirmed list sites is 310 units or 15 per cent less than the 2,025 units from confirmed list sites under the first half of 2019 GLS programme.
Demand has continued to fall since the introduction of the property market cooling measures in July last year, while transaction volume has declined for the third straight quarter in the first quarter this year, and developers’ demand for land also moderated, MND said.
Furthermore, there is a large supply of around 44,000 private housing units in the pipeline. This comprises around 39,000 unsold units from GLS and collective sale sites with planning approval, and an additional 5,000 units from sites that are pending planning approval.
In addition, there are around 24,000 existing private housing units that remain vacant.
The five confirmed list sites are private residential sites, including one executive condominium (EC) site, which can yield about 1,715 private residential units including 480 EC units.
Mr Ong Teck Hui, JLL senior director for research & consultancy, said the reduction in new home supply in the confirmed list “reflects concerns over the substantial supply of unsold units in the pipeline that resulted from the robust collective sales in 2017 and the first half of 2018 and… appropriate given the increasingly bearish economic and business outlook”.
“The confirmed list supply of 2,875 private residential units for the whole of 2019, is the lowest annual quantum since 2014, after the total debt servicing ratio (TDSR) was imposed,” he noted. The annual supply of private homes under the confirmed list ranged from 3,095 units to 4,355 units in the preceding five years, he said.
The five confirmed list sites are private residential sites, including one EC site, which can yield about 1,715 private residential units including 480 EC units.
The reserve list comprises four private residential sites including one EC site, three white sites and one hotel site. These sites can yield about 4,715 private residential units (including 595 EC units and an estimated 1,000 units from the first phase of the Kampong Bugis site), 92,000 sq m GFA of commercial space and 1,100 hotel rooms.
The white site at Kampong Bugis, which will be released for sale under the reserve list to a master developer, is at the mouth of the Kallang River and has 1.1km of water frontage. The Urban Redevelopment Authority said the intention is to have a single developer to come up with a master plan for an attractive waterfront residential precinct that is car-lite, community-centric and sustainable.
The site is expected to yield 4,000 private homes and an additional 50,000 sq m for retail, offices, community uses, serviced apartments, sports and recreational facilities, and is expected to be completed over nine to 11 years.
Another white site under the reserve list at Woodlands Avenue 2 is slated for a mixed-use development.
A new hotel site at River Valley Road comes under the reserve list. This hotel development will be integrated with Fort Canning MRT station, and is within walking distance of Clarke Quay and Fort Canning Park. Together with a white site at Marina View, which has been carried over from the first half 2019 GLS programme, the two sites will help add to hotel room supply.
Analysts say the Irwell Bank Road residential site under the confirmed list stands out as an attractive site being in the prime district and near numerous upmarket developments including New Futura.
Still, being a sizeable development that could generate 445 units, the absolute land price is likely to be high and developers are expected to be cautious in bidding for the site, given the oversupply in the prime sub-market, Mr Ong said.
Mr Leong Boon Hoe, chief operating officer of List Sotheby’s International Realty, Singapore, believes the Irwell Bank road site may attract bids in the range of $1,500 to $1,800 per sq ft per plot ratio (psf ppr), based on the bid price of $1,733 psf ppr for the site of nearby Riviere in Jiak Kim Street.
“Based on recent sales at Boulevard 88, 3 Cuscaden and Riviere, it seems that investors are mindful of the price levels and leaning more towards freehold residential projects. We expect bidders of Irwell Bank Road will be more circumspect in their bids,” Mr Leong said.
One notable change in the GLS programme involved a site on Canberra Drive offered in the first half of 2019 which has been split into two lots, namely Canberra Drive Parcel A and Parcel B, said Mr Desmond Sim, CBRE head of research, South-east Asia.
He called it “a positive move from the state planners, on the back of the growing unsold inventory”.
“The site dissection has made the sites (Parcel A and B) more palatable for developers to consider,” Mr Sim said.
Cushman & Wakefield senior manager of research Wong Xian Yang believes the Kampong Bugis site on the reserve list will be keenly watched due to the size and relative novelty of the project.
“There are only a few master developer projects in Singapore, such as Marina Bay Financial Centre and Suntec City. Nonetheless, given the current market headwinds and large cost of the development, there may be limited interest for this site for now. The total land cost for the entire site could exceed $5 billion and would be prohibitive even for the big boys,” he said.
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