Govt, citing ‘strong demand’, maintains land supply for private housing, commercial buildings

SINGAPORE — Citing "strong demand for land" from property developers, the Government on Wednesday (June 27) announced its latest list of 15 sites available for the development of private housing, hotels and commercial buildings.

If sold, the sites – six under the confirmed list, and nine under the reserved list – could yield about 8,040 private residential units, 930 hotel rooms and 124,200 square metres gross floor area of commercial space, the Urban Redevelopment Authority (URA) said in a press release.

The land supply introduced for this latest Government Land Sales (GLS) exercise – announced every six months – is unchanged from the levels announced since the second half of last year.

Analysts said the six sites in the confirmed list are in good locations and are likely to attract healthy interest from developers, but expressed concerns about a potential supply glut.

For one, URA's data shows that more than 30,000 existing private housing units remain vacant, while another 24,000 units from projects with planning approval are unsold.

Developers also did not pick up any of the nine reserve sites announced earlier this year for 2018's first GLS programme, said Ms Christine Li, the senior director of research at Cushman & Wakefield.

The poor pick-up, she added, suggested that "developers have ample choices from the en bloc market and would only go in if a choice site appears on the list".

URA said more than 30,000 existing private housing units remain vacant, while another 24,000 units from projects with planning approval are unsold. Another 20,000 or so units from GLS and en-bloc sale sites are pending planning approval.

Explaining why the Government maintained the total supply of units in the latest GLS exercise, URA noted the “healthy supply of private housing in the pipeline” but said: “Nevertheless, there continues to be strong demand for land from developers. Transaction volumes are also rising.” 

It added: “Taken together, the total supply in the pipeline will be able to meet home buyers’ demand over the next one to two years, and to meet our population’s housing needs.”

Under the GLS, reserve sites are triggered for tender only if a developer commits to bid at a price acceptable to the land sale authorities. Confirmed sites, however, are put up for sale regardless of market interest.

CHOICE SITES

A choice site on the reserved list in this GLS exercise could be the 1.16ha Tan Quee Lan Street site beside Bugis MRT station.

Ms Li pointed out that this site could benefit from "the ongoing gentrification in the Bugis precinct", following the completion of South Beach and Duo integrated developments.

The URA said this site could yield 585 residential units and 2,000 sqm gross floor area of commercial space, and is expected to be launched in November.

The latest reserved list also comprises two white sites – a 0.78ha Marina View site that has been reintroduced after it was taken off from a GLS exercise in 2015, and a new 2.9ha Woodlands Square/Woodlands Avenue 2 site, which can support 585 dwelling units and 78,000 sqm of commercial space.

The Woodlands site will "help to sustain the development momentum of Woodlands Regional Centre as a major commercial node outside the city, in line with the Government's objective of decentralising employment centres to bring job opportunities closer to homes", the URA said.

POPULAR PICKS

Under the confirmed list, analysts expect the Kampong Java Road site – the only one in the current exercise that is in a traditional prime district – to be the most hotly contested pick.

The 1.16ha site located in the heart of District Nine, just opposite Newton MRT station, could yield about 435 residential units. The site is expected to be launched in October.

More than 15 bidders are expected for this site, said OrangeTee & Tie's head of research and consultancy Christine Sun, noting "there has not been a GLS site sold in this area for a while".

She expects the 99-year leasehold site to be sold for around S$1,400 to S$1,600 per square foot (psf), seeing that a recent collective sales site in the area at Makeway View went for S$1,626 psf per plot ratio.

Analysts said the 3.82ha Pasir Ris Central white site on the confirmed list could be another popular pick among developers.

The site, which is adjacent to the Pasir Ris MRT station, could draw interest from the major consortiums when it is launched in August, said Ms Li of Cushman & Wakefield.

The Government also released two new sites for hotels – at Club Street and Marina View – in its latest GLS programme.

The 0.5ha site at Club Street is the first in the Chinatown area in a decade to feature on the GLS confirmed list, since the Bukit Chermin plot was released in 2008, said Colliers International head of research for Singapore Tricia Song.

URA said the sites will allow developers to provide additional hotel rooms to meet an expected growth in demand. 

Last year, visitor arrivals in Singapore grew by 6.2 per cent to reach 17.4 million.  URA noted that given the favourable global economic outlook, the Singapore Tourism Board is optimistic about tourism prospects for the next few years.

Mr Govinda Singh, executive director of valuation and advisory in Asia at Colliers International, said the release of the sites for hotels showed that the Government’s earlier concerns of an oversupply in hotel rooms have “largely receded”.

In fact, his firm believes that there will be a shortage of hotel rooms here, especially if Singapore meets its target of 20 million tourism arrivals in 2020. 

Noting that visitor arrivals between January and April already rose by 6.7 per cent year-on-year, Mr Singh said: “We believe hoteliers would be very keen on the hotel offerings on both the confirmed list and reserved list.”