Land supply for private housing to be reduced by 15% in 2H2019 GLS: MND

By Bong Xin Ying

/ EdgeProp Singapore |

June 6, 2019 7:39 PM SGT

The government will reduce the supply of private residential units on the confirmed list for the 2H2019 government land sales (GLS) programme, the Ministry of National Development (MND) announced on Thursday, June 6.

There are five confirmed list sites and eight reserve list sites in the 2H2019 GLS programme. The sites can yield around 6,430 private residential units, 990,280 sq ft gross floor area (GFA) of commercial space and 1,100 hotel rooms.

The five confirmed list sites can yield about 1,715 private residential units, including 480 executive condo (EC) units. This is a 15% reduction from the 1H2019 confirmed list of 2,025 private residential units that include 385 EC units, says Colliers International.

According to MND, this is due to a large supply of about 44,000 private housing units in the pipeline, which comprises around 39,000 unsold units from GLS and en bloc sale sites with planning approval, and an additional 5,000 units from sites that are pending planning approval. In addition, there are around 24,000 existing private housing units that remain vacant.

The government will reduce the supply of private residential units on the confirmed list for the 2H2019 government land sales (GLS) programme (Picture Credit: Samuel Isaac Chua/EdgeProp Singapore)

“The 15% reduction in the confirmed supply of residential units on sites to be released for sale in the second half of 2019 shows that the government is aware of the current slowdown in the residential market,” says Leong Boon Hoe, chief operating officer at List Sotheby’s International Realty (List SIR), Singapore.

Wong Xian Yang, senior manager of research at Cushman & Wakefield (C&W), says that this “slight pull-back” of supply is “not expected to have a material impact on the current market and bodes well for the medium to long term stability of the private residential market”.

Developers are likely to adopt a “wait and see approach” this year, and “concentrate on selling off [their] existing inventory”, Wong adds.

With a “continued fall” in demand for private housing since the introduction of the property market cooling measures in July 2018, the overall transaction volume has declined for the third straight quarter in 1Q2019, while developers’ demand for land has also moderated.

The reserve list comprises four private residential sites (including one EC site), three white sites and one hotel site. These sites can yield about 4,715 private residential units (including 595 EC units and an estimated 1,000 units from the first phase of the Kampong Bugis site), about 990,280 sq ft GFA of commercial space and 1,100 hotel rooms.

Kampong Bugis

The white site at Kampong Bugis on the reserve list is to be developed into a potentially 4,000-unit residential space along with an additional 538,196 sq ft GFA for complementary uses, such as retail (capped at 107,639 sq ft GFA), offices, community uses, serviced apartments, sports and recreational facilities. This is "in line with the Draft Master Plan 2019 to be developed into a waterfront precinct”, says List SIR’s Leong.

C&W’s Wong notes that the site will be “keenly watched due to [its] size and relative novelty”, as there are only a few master developer projects in Singapore, citing Marina Bay Financial Centre and Suntec City as examples.

“Given the current market headwinds and large cost of the development, there may be limited interest for this site for now,” says Wong. The total land cost for the entire site could exceed $5 billion and would be “prohibitive”, and demand for the site would “probably come from consortiums of developers which have the expertise to develop large-scale projects and are able to bear the risk,” adds Wong.

Nonetheless, List SIR’s Leong notes that “by the time the site details are released in December, developers will have a clearer picture of the market and a better idea what the project entails”. They would then be in a “better position” to apply for the release of the site for sale, he says.

However, he cautions, there will be a higher risk posed to developers, in light of the hefty taxes (non-remittable tax and additional buyer’s stamp duty or ABSD) and weakening market sentiment.

Irwell Bank Road site

Located within prime District 10 with dual frontages, along Irwell Bank Road and along River Valley Road, is the Irwell Bank Road site in the confirmed list. Its proximity to the upcoming Great World City MRT Station, Great World City shopping mall, and River Valley Primary School makes a “rare sizeable prime residential site”, says Tricia Song, head of research for Singapore, Colliers International.

The site is expected to be the “most attractive” to developers” among all the sites in the upcoming GLS slate, adds Song. It can house 445 units.

List SIR’s Leong notes: “Taking the cue from the bid price of $1,733 psf per plot ratio [ppr] for the site of Riviere at Jiak Kim Street, it is likely that this site might be able to fetch within the range of $1,500 to $1,800 psf ppr. Based on the recent sales at Boulevard 88, 3 Cuscaden and Riviere, it seems that investors are mindful of the price levels and leaning more towards freehold residential projects.”

Canberra Drive Parcel A & B

Previously on the reserve list in the 1H2019 GLS programme, the 4.09ha Canberra Drive is separated into two parcels for sale on the confirmed list in the 2H2019 GLS programme. Parcel A and B can provide 220 and 455 units respectively, compared to 675 units for the entire site earlier, making them “more palatable and attractive to a wider range of developers”, says Colliers’ Song.

According to Ong Teck Hui, senior director, research & consultancy at JLL, the sites would generate entry-level private housing, which would be “in demand by HDB upgraders and first-timers”.

“Parcel A is the more attractive site, being regular in shape, smaller and more affordable,” adds Ong. Both sites are quite near the future MRT station at Canberra Link.

Tampines Street 62

Despite not being near any MRT stations, the Tampines Street 62 (EC) site could “still see some interest”, being the only new addition to residential sites on the reserve list, says Colliers’ Song. The last EC plot in Tampines/Pasir Ris was the Tampines Ave 10 EC site which was awarded in January 2019 for $578 psf ppr to Hoi Hup/Sunway JV, she adds.

Hotel site at River Valley Road

This hotel plot at River Valley Road replaces the Sims Avenue hotel site (575 rooms), which has been removed from the GLS Programme, according to Colliers International.

“The site presents a good opportunity to fully establish the Fort Canning area as a major tourist destination, creating additional footfall to Clarke Quay and surrounds, whilst being part of the Singapore River rejuvenation story,” says Govinda Singh, executive director of valuation and advisory services, Colliers International.

With a potential yield of 560 rooms, this will be a “significant project”, he adds. A developer would position this “more towards the mid-market and/or below segments,” given the likely land price and development charge payable.

“Given the potential size, a smaller lifestyle property could also be added to enhance the overall development [which will] create three value propositions, targeting a wider audience, all of whom have been the main drivers of growth in tourism arrivals in Singapore,” says Singh.

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MND 2H2019 GLS

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