Land supply raised for second half of the year

[reporter2]

Land supply raised for second half of the year

Jun 30, 2017

But it may not be enough to satisfy keen developer demand, say analysts

Wong Siew Ying


More development sites will be available to meet the demand for land from developers keen to capitalise on a recovering property market.

But analysts warn that the slight uptick in supply for the next six months may not be enough to satisfy developers, who have been aggressively bidding for sites recently.

There are 16 sites on the Government Land Sales programme for the second half of the year. These can yield up to 8,125 private homes, up from the 7,465 units offered in the first half, the Ministry of National Development said yesterday.

It noted that there is a need for more residential sites to ensure there is an "adequate pipeline supply of new private housing units to meet the needs of our population", given that the demand for new homes has continued to rise in recent months.

Market watchers described this latest allocation as "conservative" and possibly inadequate to meet developer demand.

Mr Ong Teck Hui, national director for research and consultancy at JLL, said: "Given the demand crunch for residential sites, developers could be steered towards triggering sites on the reserve list as well as sourcing from the collective sale market."

Six of the sites are on the confirmed list. Four are for residential - in Chong Kuo Road, off Sembawang Road; Handy Road in the city; Hillview Rise; and Sumang Walk, which is for an executive condominium. There are also two mixed-use sites, in Holland Road and Sengkang Central.

In total, the confirmed-list sites can accommodate 2,840 private residential units - up by 22 per cent from this half of the year - and 26,800 sq m gross floor area of commercial space.

Said Cushman & Wakefield research director Christine Li: "The increase of merely 22 per cent... reflects a mixed view on the turnaround of the residential segment and the strength of the recovery."

But Mr Wong Xian Yang, head of research and consultancy at OrangeTee, said: "Releasing too much land at one go may jeopardise the current stability in the property market, in view of persistent headwinds such as rising interest rates, cooling measures and uncertainties in the global economy."

The reserve list has 10 sites - nine private residential and one commercial. They can accommodate 5,285 private homes and 56,790 sq m gross floor area of commercial space, mostly for office use.

Confirmed-list sites go on sale regardless of interest, while those on the reserve list are launched only when a developer commits to an acceptable bid.

Analysts say the private residential sites in Jiak Kim Street, Fourth Avenue and Cuscaden Road on the reserve list are the ones most likely to interest developers, owing to their prime locations. "These offer very palatable quantums and are expected to set new benchmarks," said Mr Desmond Sim, head of CBRE Research for Singapore and South-east Asia.

Recent tenders have attracted audacious bids, with a 99-year leasehold residential site in Stirling Road crossing the $1 billion mark.

Such bullish bids are not likely to abate in spite of the modest increase in land supply, particular for plum plots in Handy Road, Holland Road and Sengkang Central.

Dr Lee Nai Jia, head of research at Edmund Tie & Co, said: "There is still much capital in the market and we are likely to see more joint ventures between developers and funds. This is especially so for sites that include a retail component."

Developers are likely to continue to dip into the collective sale market to shore up their land banks. Four collective sale transactions - One Tree Hill Gardens, Goh & Goh Building, Rio Casa and Eunosville - were closed in recent months for a combined outlay of $1.5 billion.

[reporter2]

GLS for second half 2017 takes conservative tack, says market

Supply of private homes on reserve list is ramped up, but that through confirmed-list sites is reined in: observers

June 30, 2017

Kalpana Rashiwala


THE Government Land Sales (GLS) Programme for private housing sites for the second half of the year has been described by the market as conservative.

The Ministry of National Development (MND) will release land for an estimated 8,125 private residential units (including executive condo or EC units) on both the confirmed and reserve lists. This is 8.8 per cent higher than the 7,465-unit supply in the H1 2017 slate.

However, when the land supply for ECs is stripped out, the planned quantum of 2,025 private housing units from the latest confirmed list is 13.1 per cent lower than the 2,330 units in H1. (The land supply for ECs - a public-private housing hybrid - comprises just one site in Sumang Walk in Punggol, which has been moved from the H1 reserve list to the H2 confirmed list.)

Confirmed-list sites are launched according to schedule, regardless of demand; reserve-list sites are those launched only upon successful application by a developer or when there is sufficient market interest in them.

JLL national director Ong Teck Hui said: "Going by the strong private residential sales numbers and developers' strong appetite for residential land, one would have thought the government would increase the supply under the confirmed list for private residential sites."

He and other property consultants note that the authorities seem to be steering developers towards triggering sites from the reserve list.

The fact that the authorities have significantly ramped up the supply of private homes (excluding ECs) through the reserve list by 21.2 per cent to 5,285 units (from 4,360 units in H1 this year) suggests this.

OrangeTee's head of research and consultancy Wong Xian Yang said that mildly adjusting the supply in the confirmed list while keeping ample supply in the reserve list would let the demand for land be shaped by market forces.

"Releasing too much land at one go via the confirmed list may jeopardise the current stability in the property market, in view of persistent headwinds such as rising interest rates, cooling measures and uncertainties in the global economy," he added.

Moreover, Cushman & Wakefield Singapore research director Christine Li noted, the lacklustre leasing market is expected to persist in the near term. "The government's conservative approach also points to a need to avoid a knee-jerk reaction to a select group of bullish developers, who are often foreign players expanding their footprint in Singapore."

Analysts said that another factor for the measured confirmed-list supply is that MND could also be counting on the collective sales market, which has awoken from its slumber, to satisfy some of the developers' voracious appetite for land.

On a more positive note, market watchers were delighted with the slew of plum sites unveiled in the latest GLS slate. These include a private housing site in Cuscaden Road opposite The Regent Singapore in prime district 10, which will be available for application on the reserve list from October.

On the confirmed list, a District 9 housing site in Handy Road near Dhoby Ghaut MRT station will be launched for tender in November.

Also slated for launch via the confirmed list that month is a commercial and residential site in Holland Village, which has been moved from the H1 reserve list.

MND revealed that the maximum retail gross floor area (GFA) for this site will be increased to 13,500 square metres (145,313 square feet) from 6,800 sq m following "market feedback to allow more flexibility for the successful tenderer to curate a mix of uses that can best activate the public spaces in the Holland Village Extension".

A new commercial and residential site beside Buangkok MRT station on the confirmed list could yield about 700 private homes and 13,300 sq m GFA of commercial space.

MND also announced that the maximum retail GFA for the Woodlands Square site, which remains on the reserve list, will be slashed from 8,000 sq m to 3,000 sq m; the change follows a review of the development plans and provision of commercial amenities in the area. This is the sole commercial site on the H2 reserve list and is designated for a mixed-use development comprising mainly offices.

The ministry said: "This site will allow developers to initiate the development of more office space if they assess there is demand."

The Urban Redevelopment Authority (URA), when asked why no new CBD office sites made it to either the confirmed or reserve lists, said that the Central Boulevard site sold last November and the Beach Road reserve-list plot triggered recently will generate at least 100,000 sq m and about 62,000 sq m of office space respectively, hence the lack of urgency to introduce a new office site in the Central Area for H2.

The 83,590 sq m of commercial space on both confirmed and reserve lists for H2 is about half the 158,080 sq m supply in the H1 slate.

The URA added: "In addition, there is a large supply of about 826,000 sq m (GFA) of office space in the pipeline, of which more than 70 per cent is within the Central Area."

Besides the Handy Road plot, the other new private housing sites on the confirmed list are a 0.48-hectare plot in Chong Kuo Road in the Mandai/Sembawang area; this can yield about 90 units.

Another plot, of 1.43 hectares in Hillview Rise, will yield 535 units.

On the reserve list, besides the Cuscaden plot, which can produce some 170 homes, the other new private housing sites are in West Coast Vale (730 units), Canberra Drive in Sembawang (765 units), a plot near Mattar MRT station in MacPherson (255 units) and a site in Silat Avenue (1,160 units).

Two sites, one next to the Sixth Avenue MRT station and the former Zouk site in Jiak Kim Street, will be carried over from the current H1 to the H2 reserve list.

A private housing site in Owen Road scheduled to become available via the reserve list in June 2017 will be pulled out to facilitate a review of the area's development plans, MND said.