http://www.businesstimes.com.sg/prem...y-hold-firm-h2

Published June 05, 2012

Residential supply likely to hold firm in H2

Confirmed/Reserve lists could see 28-30 new sites for 14,000 units added: Colliers

By Mindy Tan


[SINGAPORE] The Government Land Sales (GLS) programme for the second half of 2012 is likely to see a sustained pipeline of residential sites, following continued robust take-up by developers.

Chia Siew Chuin, director of research and advisory, at Colliers International, estimates that another 28 to 30 new residential sites for the development of close to 14,000 residential units could be added to both the Confirmed and Reserve lists.

She explains: "The government cannot afford to significantly decrease the supply of private residential land so long as housing prices remain high, and demand for both private housing units and development land remains robust."

Kim Eng analyst, Wilson Liew, suggests that some 6,000 to 6,500 residential units could be rolled out under the Confirmed and Reserve Lists respectively (about 10 per cent below the number of units offered in the H1 2012 GLS) to "partly offset the higher-than-expected actual number of units launched from previous rounds of GLS, as some developers have been pushing out smaller-than-normal units".

While Chua Chor Hoon, DTZ's head of Asia-Pacific research expects the residential GLS supply be similar to levels in previous rounds, she notes that there could be some restrictions on the number of units per plot to control the proportion of shoe-box units.

National Development Minister Khaw Boon Wan had recently noted that even though recent policy moves to ease the public housing crunch were working, shoe-box units (defined as units of less than 700 sq ft) continue to be a cause of concern. He promised to "take action, if necessary".

According to Colliers's Ms Chia, there may be one or two choice plots for residential development within the mature estates of the Central Region in the upcoming GLS programme.

She adds: "Even though it may be unlikely, the government could consider releasing some land for retail development in the East... For example, putting the commercial-zoned plot in front of Kembangan MRT station on the market for a shopping mall development would attract more than its fair share of interest."

Kim Eng's Mr Liew suggests that there may be one to two sites available for residential development at Kallang Riverside.

He says: "Kallang Riverside was planned as a work-live precinct and a growth area under the Master Plan 2008, but compared to Jurong Lake District and even Paya Lebar Central, developments there are slower. Residential sites there should be well sought after due to the location, and could also provide a base for future office/commercial developments in the area."

HSR Property Group special adviser Donald Han agrees, noting that such sites, with or without ground floor retail/com- mercial components, will jump-start the area to complement the Sports Hub development, and revitalise the area.

He adds: "Mixed development projects have proven to be very popular amongst developers in the past 12 months... We will see more mixed development options in particular within strategic development hubs like Jurong Gateway, Paya Lebar, and possibly even Kallang Basin."

Mr Han also expects MND to offer more hotel sites: "There's a strong appetite for hotel sites in good central locations and near MRT stations. The recent tender at Farrer Park saw hotel land prices crossing $1,000 psf ppr for the first time."

In April, a record top bid of $1,078.81 psf ppr was received for the 99-year leasehold hotel plot above Farrer Park MRT station. This was nearly 2.7 times the $403.65 psf ppr minimum price undertaking given by an unnamed party that successfully applied for the site's release from the Reserve list.

Says Mr Han: "This gives ample reasons for the government to continue dishing out small and medium hotel development sites (less than 300 rooms) within central areas, to feed pent-up demand boosted by an underlying robust hospitality market."

Colliers's Ms Chia adds: "Some of the sites on the existing Reserve list may also be transferred to the H2 2012 GLS Confirmed list. One or two new sites may be included in the upcoming Confirmed list."

On the other hand, consultants don't expect new commercial site additions.

Says DTZ's Ms Chua: "As the office market is currently weak and there is a pipeline supply from GLS, private, and M+S sites, the H2 GLS supply is likely to be limited."

That being said, HSR's Mr Han noted that the Paya Lebar commercial site which was withdrawn late last year is likely to be reintroduced in the second half of 2012.

The site, which has a minimum hotel and office component, fetched just one bid, from a UOL Group-Singapore Land tie-up at $565.74 psf ppr.

M+S Pte Ltd, which is owned 60:40 by Malaysia's Khazanah Nasional and Singapore's Temasek Holdings, follows a landmark land swop deal between Singapore and Malaysia in May 2010. The company is developing land parcels at Ophir-Rochor, which is estimated to have a gross development value exceeding $4 billion.