SINGAPORE – The Government’s decision to allocate a larger proportion of the Keppel Club site to public housing instead of private homes is in keeping with efforts to ensure that the prime seafront area does not become an enclave for the wealthy but is accessible to ordinary Singaporeans.
This especially as more economic value could have been derived had the Keppel Club site been solely allocated to private housing, given the higher values of private homes versus that of public housing.
As such, 3,000 or just one-third of some 9,000 housing units to be built on the site of Keppel Club, as part of the future Greater Southern Waterfront, will be private homes, while 6,000 will be Housing Board flats.
Analysts are expecting strong interest from developers when private housing sites there are released for sale under the government land sale (GLS) programme.
The Urban Redevelopment Authority said the Keppel Club site is zoned residential, and the public and private housing developments will likely be launched in the next three to five years. Land preparation works for the site will commence after Keppel Club moves out later this year.
How developers bid will depend in part on the plot ratio, the specifications and attributes of the site, ERA Realty’s key executive officer Eugene Lim said.
“Higher ground sites tend to fetch higher prices because of the potential for better views. This site offers sea views, city views and views of Mount Faber. The hilly terrain at Keppel Club site will offer developers and architects opportunities to create something quite unique,” he noted.
As there will likely be different plot ratios for various areas, they “provide for staggered building heights, so those living closer to green spaces or the waterfront will have good views,” Ms Catherine He, Colliers’ head of research for Singapore, said.
Mr Ismail Gafoor, chief executive of PropNex Realty, believes there is keen interest among developers who want a stake in the Greater Southern Waterfront and want to help shape it into an iconic live-work-play destination. Homes there will likely be a hit given the waterfront concept and its prime location.
“To conserve the ecology in the area, certain zones could be designated as lower density housing, while other zones could feature more high-rise residential towers. But due to the environmental constraints, developers may have to employ more complex construction methods – which may increase the development costs,” he said.
But Ms He believes that developers can spread out these costs “by bidding for adjacent sites, go in as joint ventures, or tie up with construction players”.
Mr Ong Teck Hui, senior director of research and consultancy at JLL, said these costs could be offset by the price premium some buyers may be prepared to pay for city-fringe homes that are close to the waterfront and surrounded by greenery.
“We may expect strong demand from home buyers so developers will be confident in bidding for sites in this area,” he added.
The units are part of the 9,000 homes that will be built on the Keppel Club site. ST PHOTO: LIM YAOHUI
CBRE believes the GLS sites could be offered as early as in the first half 2023 GLS programme, subject to development plans and given that the lease for the golf course will expire in June 30 this year and the club has until March 31 next year to demolish its clubhouse and reinstate the site.
“Given that new home sales averaged 10,455 units per year over the past five years, 3,000 new private homes is about one-third of a year’s sales. However, spread over five years, it would be palatable,” CBRE head of research for South-east Asia Tricia Song said.
Ms He noted there is an impetus to release more sites within the next two years because of the record low unsold private home inventory.
“But with the current additional buyer’s stamp duty at 40 per cent, with only 5 per cent remissible, developers will be more cautious bidding for large sites. Sites of around 300 to 500 units will appeal to them. Therefore, there could be around five to 10 GLS sites coming from the Keppel Club site,” she said.
Analysts are anticipating future selling prices of private residential projects there to range between $2,300 per square foot (psf) and $2,700 psf or higher, depending on market conditions and costs.
Existing projects such as The Reef at King’s Dock are transacting at an average $2,500 psf at the higher end of the city-fringe submarket, due to its proximity to VivoCity.
“Future new projects on the Keppel Club site could be priced at flat to 10 per cent higher than that of King’s Dock, depending on location, timing of launch and whether they have unblocked views and are close to the MRT,” Ms Song said.
Ms Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, noted that homes in this area will have good rental potential because they are near Sentosa, HarbourFront, Mapletree Business City, VivoCity, as well as Orchard Road and the Central Business District.
“If the new condominiums are built near the seafront, their prices may be quite close to or higher than the current transacted prices at King’s Dock. Median prices there have risen to $2,405 psf in the first quarter of 2022 from $2,259 psf in Q1 2021,” she said.
The area near the Keppel Club site in the Greater Southern Waterfront, where around 6,000 HDB flats will be built. ST PHOTO: LIM YAOHUI
As for public housing on the Keppel Club site, the first Build-To-Order (BTO) project will be launched within three years, but it is not clear at this stage how many of the 6,000 units will be designated as flats under the prime location public housing (PLH) model. Introduced in October 2021, this model is intended to apply to selected projects in prime and central locations that have very high market value and require significant additional subsidies to keep the flats affordable.
The Housing Board said on Tuesday that factors such as the BTO project’s location attributes and market value will factor in its decision on whether to apply the PLH model to the Keppel Club site.
Some analysts say the PLH model should be applied to all future BTO projects in the Greater Southern Waterfront to mitigate the “lottery effect” or curb excessive windfall gains when flats in choice locations are resold.
A case in point is Pinnacle @ Duxton in Cantonment Road, where a five-room unit changed hands in March for about $1.39 million, making it the highest transacted price on record for a resale flat. The number of resale flats that resold for over $1 million at the Tanjong Pagar development in recent years shows just how desirable prime location flats are.
Closer to the Keppel Club site is another HDB development, Telok Blangah Towers, whose three-room flats were launched for sale in 2007 at between $187,000 and $238,000, while its four-room flats were priced at $308,000 to $402,000.
Since 2007, prices have appreciated more than two times that of its launch prices. Huttons Asia’s senior director of research Lee Sze Teck pointed out that those three-room units currently transact at between $558,000 and $680,000 – more than double their launch prices – while four-room flats have resold for between $765,000 and $975,000.
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