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Three housing sites launched, but developers likely to be cautious

SINGAPORE — The softening housing market is likely to lead to more moderate bids for three sites launched for sale by tender yesterday under the Government Land Sales (GLS) Programme for the first half of the year, analysts said.

SINGAPORE — The softening housing market is likely to lead to more moderate bids for three sites launched for sale by tender yesterday under the Government Land Sales (GLS) Programme for the first half of the year, analysts said.

Two of the plots are adjacent land parcels at Fernvale Road meant for private residential development, while the third is an Executive Condominium (EC) site at Choa Chu Kang Drive. The sites, made available from the Confirmed List of the GLS, can yield about 1,700 homes, said the joint release from the Urban Redevelopment Authority (URA) and Housing and Development Board (HDB).

Demand for homes has taken a hit from the repeated rounds of cooling measures and the Total Debt Servicing Ratio (TDSR) framework, resulting in several developers slashing prices at their projects to boost sales. These developers will be cautious against over-bidding in the land tenders, analysts said.

Analysts expect the top bid for the 99-year leasehold Fernvale Road sites at below S$500 per square foot per plot ratio (psf ppr).

The sites occupy about 178,723sqf and 187,441sqf with a plot ratio of 3, and can yield about 550 and 580 units respectively.

“In today’s market, it’ll be quite difficult to sell if the sites are bought above S$500 psf ppr. There is a lot of supply around this area and the HDB resale market is also slowing down, so that’s affecting demand from upgraders,” said Mr Ku Swee Yong, chief executive of real estate agency Century 21.

Mr Eugene Lim, key executive officer of property agency ERA, said: “The Fernvale Road sites are rather attractive, as they are close to Thanggam LRT Station … (but) developers are watchful of weak responses to new sales launches. Bidding for the sites is expected to be moderate and realistic.” He expects about five bidders to put in offers between S$450 and S$500 psf ppr.

The 205,138sqf EC site at Choa Chu Kang has a plot ratio of 2.8 and can yield 574,388sqf of gross floor area, or about 535 units.

The tender is also expected to see subdued interest given the changes to the EC scheme, where buyers are now subjected to the Mortgage Servicing Ratio (MSR) and second-timers buying directly from developers have to pay a resale levy.

Besides that, developers are only allowed to launch EC units for sale 15 months after securing land or completion of physical foundation work.

However, Mr Nicholas Mak, executive director of SLP International Property Consultants, said the lack of EC supply in the area would help to draw interest.

“Although there are 12 EC projects with a total of about 6,900 units that could be launched for sale to home buyers from this August to August 2015, most of them are located in the north, north-east and west of Singapore,” he said.

“As such, this EC project at Choa Chu Kang Drive is likely to face less competition than the other upcoming EC developments, especially for buyers who are HDB upgraders seeking an EC in the Choa Chu Kang area.”

Mr Mak expects the parcel to attract five to 10 bidders, with the top bid at S$310 to S$341 psf ppr.

The tenders for the Fernvale sites will close on Aug 7, while the one for the Choa Chu Kang site will close on Sept 4.

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