SINGAPORE – Keen bids for two state tenders that closed on Tuesday (March 8) indicated that developers are replenishing their land bank amid the latest round of property curbs in December 2021, and with the inventory of unsold private residential units at a record low.
Records were smashed when a leasehold executive condominium (EC) site at Bukit Batok West Avenue 8 drew nine bids, with the top bid of $266 million, or $661.67 psf ppr, coming from a joint venture between Qingjian Realty and Santarli Construction.
With this bid, the same joint venture beat their previous record bid of $659 psf ppr for the Tampines Street 62 EC site in July 2021.
Ms Tricia Song, head of research for South-east Asia at CBRE, noted that Qingjian is also the developer of Le Quest, a nearby mixed use development, and “may have confidence in the location”.
She added that ECs are generally not as affected by property cooling measures and wealth property taxes, as they are for owner-occupiers and first-time buyers.
Property tax rates for non-owner-occupied residential properties – which include investment properties – will be increased to between 12 per cent and 36 per cent. This compares with the current 10 per cent to 20 per cent tax levied on such properties.
Owner-occupied homes with an annual value of $30,000 or less, such as Housing Board flats or condominiums and landed property in suburban areas, will not be affected by the increase in property tax rates.
JLL senior director of research and consultancy Ong Teck Hui attributed the robust tender participation to limited new EC supply, with only three projects in the launch pipeline.
“The EC market thrives on a positive private residential market. So far this year, 80 new ECs were sold at prices averaging $1,224 psf,” he said.
The Bukit Batok parcel is expected to yield 375 residential units. It has a site area of 12,449.3 square metres (sq m) and a maximum gross floor area of 37,348 sq m.
In the second tender, a 99-year leasehold private housing site in Dairy Farm Walk in the Upper Bukit Timah area drew seven bids, with the highest at $347 million, or $980 per sq ft per plot ratio (psf ppr), coming from a partnership between Sim Lian Land and Sim Lian Development.
“The site was hotly contested with the top three bids within 3 per cent of each other. Developers remain confident in the suburban residential market which is likely to see sustained demand from first-time buyers and home upgraders,” said Mr Lam Chern Woon, head of researching and consulting at Edmund Tie.
JLL’s Mr Ong noted that the site’s palatable size and price “pose lower risks compared to larger land parcels”.
Spanning 15,663.2 sq m, the parcel has a maximum gross floor area of 32,893 sq m and an expected yield of about 385 units.
Also helping is the encouraging take-up of nearby 460-unit Dairy Farm Residences. This project is 95 per cent sold, with 81 units going for an average price of 1,680 psf after the new curbs were introduced, Mr Ong said.
Ms Wong Siew Ying, head of research and content, PropNex Realty, said: “It is not surprising that the tenders for the two plots, both located in the suburbs, or outside central region (OCR) saw keen bidding.”
The unsold stock in the suburbs was at a record low of 3,972 units, as at the end of 2021. This means the balance inventory of unsold mass market homes could potentially be snapped up in less than a year, based on the annual average sales of about 4,900 new OCR units between 2017 and 2021, she noted.
“For ECs, the unsold inventory stood at 1,985 units at the end of fourth quarter 2021. Last year, developers sold 2,119 new EC units,” she said.
“Source: [Record bid lodged for Bukit Batok West EC plot, Dairy Farm Walk plot hotly contested] © Singapore Press Holdings Limited. Permission required for reproduction”