Healthy response expected for land sales in Potong Pasir, Sembawang

SINGAPORE — Two sites in Potong Pasir and Sembawang, with a combined yield of about 1,300 homes, have been released for sale under the Government Land Sales (GLS) programme for the first half of 2014, with analysts expecting a relatively healthy response by developers seeking to build up their land bank.

At the same time, though, the potential amounts developers may offer are likely to be conservative considering the slowdown in buying activity and home prices following repeated measures by the Government to cool the market.

“Developers are still cash-rich and land bank-poor, so I think the participation rate can still be quite good,” said Mr Ku Swee Yong, chief executive of real estate firm Century 21.

Mr Ku said the 173,829sqf Meyappa Chettiar Road site in Potong Pasir could attract five to eight bidders, citing its proximity to the MRT station and the up-and-coming Bidadari Estate.

The 99-year leasehold commercial and residential site, which is under the confirmed list, has a maximum gross floor area of 608,408sqf and can yield an estimated 685 private homes, said a joint release by the Urban Redevelopment Authority (URA) and the Housing and Development Board (HDB). The tender closes on Aug 19.

“Pricing wise it should take reference from the Sims Drive plot, which is not far away. I think the top bid may be around the S$300 million level,” Mr Ku said.

The tender for a 257,251sqf residential site at Sims Drive was yesterday awarded to First Changi Development, a unit of GuocoLand, for S$530.9 million. The tender had attracted only four bidders, who put in relatively conservative offers.

Meanwhile, the site on Sembawang Road, which is available on the reserve list, is slated for development into an executive condominium (EC), said the URA and HDB. The 309,419sqf parcel will be triggered for tender only if a developer makes an acceptable opening offer, or if it is deemed to have “sufficient market interest”.

Mr Colin Tan, director of research and consultancy from Suntec Real Estate Consultants, expects developers to be keen as the EC segment may be a “safer” bet in the current market conditions. “ECs are supported by a lot of genuine demand, rather than depending on investors who have more or less been weeded out of the market by the cooling measures, so developers may see this as a safer segment to go into,” Mr Tan said.

However, Mr Ku cautioned that weakening resale HDB prices, in addition to loan restrictions for EC units bought directly from developers, could see buyers turn their attention to the resale market.

“Resale HDBs may be a better option for upgraders and first-time homebuyers if prices continue to drop. So if interest from buyers is subdued, and there are still unsold units from (previously-launched projects), I don’t think this site will be triggered for sale so soon.”