Prime districts enter the collective sales fray in 2018
Fifteen sales in Districts 9, 10 and 11 have already taken place
Sat, May 12, 2018
Yunita Ong
AFTER making its way through the suburbs and city fringe last year, the collective sale fever is sweeping homes in Singapore's prime districts this year, helping to push this year's sale value for residential sites above levels seen last year.
So far this year, there have been 15 residential collective sales valued at S$4.44 billion in the Core Central Region (CCR), which comprises Districts 9, 10 and 11, the downtown core and Sentosa. This surpasses the eight deals worth S$1.05 billion transacted in the whole of 2017, said Colliers International.
On May 10, the sale of Villa D'Este in Dalvey Road for S$93 million pushed the total transaction value in residential collective sales sites this year to over S$8.2 billion, higher than last year's S$8.13 billion.
The latest sale took place at Thomson Road's Peak Court, which went for S$118.88 million to a joint venture between Tuan Sing Holdings and Rich Capital. This works out to a land rate of $1,558 per square foot per plot ratio (psf ppr).
The total value for residential collective sales this year now stands at over S$8.3 billion, including Peak Court.
More prime sites are trying to join the party. The tender for Park House in Orchard Boulevard, has a S$308 million guide price; Holland Tower, with a S$65 million reserve price, will close end May. Cavenagh Gardens will launch its tender next week at around S$1,600 psf ppr, while Trendale Tower in Cairnhill will launch its tender on May 17 at above S$2,000 psf ppr.
Horizon Towers on Leonie Hill Road has garnered about 75 per cent mandate from its owners. Oxley Gardens condo has formed its sales committee, while Hillcrest Arcadia in Bukit Timah will hold a second EOGM this Sunday.
Tricia Song, head of research for Singapore at Colliers, said: "The gathering pace of price recovery and improved market sentiment in the high-end residential property segment in recent quarters have boosted confidence among en bloc sellers to put their prime properties up, and developers to acquire prime sites to position themselves to capture further growth in the market."
Urban Redevelopment Authority (URA) data shows that non-landed home prices in the CCR rose 5 per cent in the first quarter.
Christine Li, senior director of research at Cushman and Wakefield, said the successful launches of new projects such as New Futura at strong pricing have also helped.
She said: "There had previously been an undersupply of freehold units in the pipeline in 2017. Developers seized the opportunity to correct the undersupply by capitalising on the abundance of freehold sites in the CCR."
Last year, sites in the suburbs and the city-fringe such as Tampines Court (S$970 million), Amber Park (S$906.7 million) and Normanton Park (S$830.1 million) dominated the year's collective sales.
Ms Li described the year's focus on sites outside the prime district as historically unusual, going by how the CCR had heated in the mid-2000s en bloc cycle.
Colliers' data showed that in 2006, there were 54 residential collective sales deals worth S$6.5 billion in CCR - 81 per cent of such all transactions in the year. The following year, 50 such deals worth S$8.2 billion, or 71 per cent, were sealed.
Analysts said the cooling measures imposed in the following years curbed the speculative investments and purchases by foreigners that had driven the collective sales frenzy in the mid-noughties.
Tay Huey Ying, head of research and consultancy in Singapore at JLL, said: "These have the effects of channelling home demand to the mass-market segment, which fuelled developers' initial interest in suburban collective sales sites last year."
Another reason last year's collective sales fervour started outside the CCR lay in the limited number of sites offered on the Government Land Sales (GLS) programme, said Ms Song of Colliers.
This year's return of collective sale activity to the prime market "reflects developers' growing confidence in the broadening of the recovery in the home sales market, and their positive mid-term outlook for the prime home market segment", said Ms Tay.
Ms Li of Cushman & Wakefield said that there could be further sustained increases of CCR prices in the short-term, as owners seek replacement properties.
"Buying momentum will be sustained due to the effect of recycling of capital, which may also help to lift the prices of landed properties as landed properties have been lagging in terms of the rebound."
Still, it does not necessarily mean that the non-prime region is being shunned.
Overall sentiment is still buoyant for suburban locations, with new home sales at developments such as The Tapestry and Twin VEW setting benchmark prices with high transaction volumes, said Ms Li.
"I think interest in suburban land sites is sustained over the short to medium term, although developers might veer towards government land sites in the suburbs," she said.
Ms Song of Colliers added: "I think developers will still be interested in selected OCR (Outside Central Region) sites, provided the location is not already being fulfilled by government land sales, and the site has attractive attributes."
Ms Tay of JLL added: "Generally speaking, with the surge in the number of sites available for sale, as well as those in the pipeline, developers can now cherry pick.
"Thus, (both prime and suburban) sites with attractive attributes, including lower supply pipeline vis-à-vis demand, and realistic pricing, will enjoy a higher success rate than others."
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