SINGAPORE — Given the modest take-up rate of prime location flats in the latest Built-To-Order (BTO) exercise, the Government could consider waiting longer before launching the next selection of such units, ensure that they are in the city centre and offer larger units, analysts said.

Housing and Development Board (HDB) figures showed that application rates for four-room flats was higher across all three non-prime developments, in Yishun and Jurong West, compared to the two in Bukit Merah and Ghim Moh under the Prime Location Public Housing scheme.

About 1,900 four-room flats under the scheme were up for grabs this time, up from the less than 700 at the Rochor Road district and 300 at Kallang-Whampoa, which were the first two launches under the new scheme in November last year and February this year respectively. 

Past midnight on Friday (June 3), the last day of the latest BTO application exercise, four-room flats at Bukit Merah Ridge and Ghim Moh Ascent were subscribed 4.9 and 3.9 times respectively, in contrast to more than 10 times for the first flats in Rochor under the new scheme. 

Mr Lee Sze Teck, senior director of research at property agency Huttons Asia, said that in his view, the selection of sites for flats under prime location rules warrants a relook.

"Evidently, buyers are not sold on the idea of prime location flats outside the city centre for this scheme. Perhaps HDB can take a leaf from the private market and use the definition of Core Central Region as the boundaries for such flats."

The Core Central Region comprises postal districts 9, 10 and 11 that include Orchard Road, River Valley, Bukit Timah and Holland Road, parts of the Central Business District and Sentosa.

Mr Mohan Sandrasegeran, a research and content analyst at real estate firm Ohmyhome, said that there may indeed be changes to the location of these prime location public flats in future: "The application rate for these BTO projects will be a gauge for HDB to determine the positioning of such flats in the future." 

Mr Lee said that the past few BTO launches have shown that buyers are willing to pay for space. 

"The number of applications for five-room flats have been higher than for four-room flats. Perhaps instead of using this new model as a blunt policy tool to control prices, a better fix will be to increase the supply of five-room and even three-generation flats in mature estates," he added.

None of the four developments so far under the prime location rules in Rochor, Kallang-Whampoa, Bukit Merah and Ghim Moh had five-room flats. 

Mr Nicholas Mak, head of research and consultancy at ERA Realty Network, agreed, saying that given the strong buyers’ preference for bigger flats in HDB's prime location projects, the public housing agency should switch more of the buildable space in such projects from three-room flats to larger flats.

"After all, why should young couples who may plan to have larger families and would thus need five-room flats be excluded from the prime location projects? This is hardly the way to build an inclusive community in the public housing estate in prime locations."

LAUNCHES OF FLATS SHOULD BE STAGGERED

Other real estate analysts believe that the frequency of these launches so far — one in November last year, followed by another in February this year and then again in May — may have affected its take-up rates. 

Ms Christine Sun, senior vice-president of research and analytics at Orange Tee & Tie, said: "Some people may not mind the longer minimum occupancy period and other more stringent selling criteria because they may feel that such flats are exclusive, well-located and potentially can fetch quite good capital appreciation or rental returns in the future.

"However, when there are many of these flats being released at such a short period and in close succession, some people may feel that these flat types may not be as exclusive as earlier expected." 

There are more BTO projects to be launched this year which could come under the prime location model and act as attractive alternatives for buyers-to-be. This includes a Bukit Merah housing project located next to Redhill MRT Station for the August BTO exercise, in addition to one in Queenstown for the November BTO exercise.