Supply of land kept moderate amid economic uncertainty

The land supply was carefully calibrated to take into account the Covid-19 and macroeconomic situation.PHOTO: ST FILE

The Government has moderately increased the supply of land for private homes but has kept the commercial and hotel sites unchanged for the first half of next year, as unsold home stocks fell and some developers are starting to buy land via collective sales.

The uptick in residential supply from confirmed sites under the Government Land Sales (GLS) programme for the first half of next year follows sharp cuts in the second half of this year owing to the coronavirus pandemic.

The private home supply of 1,605 units from four confirmed list sites rose by 235 units or about 17 per cent from a five-year low of 1,370 units in the second half of the 2020 GLS programme, according to data released yesterday by the Ministry of National Development.

The land supply was “carefully calibrated to take into account the Covid-19 and macroeconomic situation. Given the continued uncertainties in economic and labour market conditions, the Government has decided to maintain a moderate supply of private residential units on the confirmed list”, the ministry said.

The confirmed list includes one executive condominium (EC) site that can yield about 590 units. The other three sites also offer 9,200 sq m gross floor area (GFA) of commercial space.

On the reserve list are five private residential sites (including one EC site), three white sites – where a range of uses is allowed – and one hotel site.

These reserve list sites can yield about 5,440 private homes (including 700 EC units), 92,000 sq m GFA of commercial space and 1,070 hotel rooms.

Mr Leonard Tay, head of research at Knight Frank Singapore, said that if the economic recovery gains traction next year and borders around the world reopen, investment interest could see one or more of these white sites being triggered.

A total of 7,045 private homes can thus be potentially developed on the confirmed and reserve list sites. This is 5.6 per cent more than the 6,670 units under the GLS programme for the second half of this year.

Despite the calibrated supply, there are still choice sites on offer in both the confirmed and reserve lists to prevent the market from overheating, noted Mr Desmond Sim, head of research for South-east Asia at CBRE.

The confirmed list for the first half of next year comprises three private residential sites in Lentor Central and Slim Barracks Rise as well as one EC site in Tampines Street 62.

“The increase in residential units introduced will help to provide a much-needed boost for developers to shore up their land inventory, given that supply from previous GLS sites has been relatively limited,” Mr Sim said.

“With healthy demand from new and resale markets, coupled with declining unsold units, these sites are likely to attract healthy bidding activity, as evidenced by the tenders of the previous two GLS sites (Tanah Merah Kechil Link and Yishun Avenue 9).”

Analysts said the Slim Barracks Rise sites could be especially appealing to developers because they are located near the Buona Vista MRT station and surrounded by the one-north biomedical and technology hub.

“Demand for units there will be further boosted considering the bright outlook for the biomedical and technology sectors, which have both benefited from the pandemic,” said Ms Christine Li, head of research for Singapore and South-east Asia at Cushman & Wakefield.

Both sites are small and could attract many bidders owing to their lower total development costs, noted Mr Ong Teck Hui, senior director of research and consultancy at JLL.

The Lentor Central parcel is located next to the upcoming Lentor MRT station and can yield 610 private homes and 8,000 sq m of commercial space.

Given the limited number of GLS sites, more developers are expected to consider sites offered via collective sales as the healthy momentum in private home sales grows, Mr Ong said.

But it will not be to the extent of the collective-sale fervour seen in 2017 and 2018, he added.

“Source:[Supply of land kept moderate amid economic uncertainty] © Singapore Press Holdings Limited. Permission required for reproduction”

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