ERA Daily Research - 11 June

Govt hikes private housing supply from confirmed sale sites by 25% for 2nd half of 2021

The Straits Times, 11 Jun 2021, Fri    

By Grace Leong

The supply of private homes from confirmed sites under the Government Land Sales (GLS) programme for the second half of this year has been raised by 24.6 per cent to 2,000 units, up from 1,605 units for the first half of the year, in response to land-hungry developers and the dwindling unsold new home supply.

While this marks the second increase in the private home supply after five consecutive reductions in previous GLS confirmed lists, analysts called it a conservative and measured programme given the macro-economic uncertainties amid the pandemic.

It is a far cry, for instance, from the 7,000-8,000 units that the Government released in the second half of 2010 and 2012 to satisfy the rebound in demand for private housing after the global financial crisis, Cushman & Wakefield said.

"On balance, the Government has decided to moderately increase the supply of private housing on the confirmed list," the Ministry of National Development (MND) said on Thursday (June 10).

MND had raised the private housing supply from confirmed sites in the first half of 2021 by 17 per cent, after cutting it by 23 per cent to 1,370 units in the second half of 2020 as a result of Covid-19.

Nonetheless, Mr Ong Teck Hui, senior director of research & consultancy at JLL, said the phase two (heightened alert) measures to stem the spread of Covid-19 following the emergence of several infection clusters "show that the economy and residential market can be disrupted. This will have an impact on transaction volumes and possibly prices."

Citing URA Realis data, he pointed to a 30 per cent drop in new private home sales in May from April.

The latest confirmed list comprises four private residential sites - including one executive condominium (EC) site - that can yield about 2,000 private residential units, including 375 EC units.

Supply from sites on the reserve list can add another 4,860 private home units, bringing total potential supply to 6,860 units.

This is 2.6 per cent lower than the 7,045 units for the first half of 2021.

The reserve list comprises six private residential sites (including one EC site), two white sites that allow a range of uses, and one hotel site.

Apart from the 4,860 private homes (including 700 EC units), the sites can yield 90,000 sq m gross floor area of commercial space and 530 hotel rooms.

"The Government is erring on the side of caution and leaving most of the units in the reserve list," said Mr Wong Xian Yang, head of research, Singapore, at Cushman & Wakefield.

The latest confirmed list features two new sites - Lentor Hills Road (Parcel A) in Ang Mo Kio and Bukit Batok West Avenue 8 (EC) - as well as two other sites, Jalan Tembusu in Tanjong Katong and Dairy Farm Walk, that were moved from the reserve list.

Ms Catherine He, director of research, South-east Asia, at CBRE, said these sites are likely to attract keen bidding, given the recent robust tender closings for a GLS site at Ang Mo Kio Ave 1, and an EC site in Tengah Garden Walk.

The move to offer more sites in the suburbs may help to stave off a potential supply crunch in this sub-market, providing buyers - many of whom may be upgrading from Housing Board flats - with a wider selection of homes, PropNex chief executive Ismail Gafoor said.

Ms He said: "Together with a site at Lentor Central, which is currently open for tender, the Lentor Hills Road site seeks to revitalise the area, with new parks and commercial amenities planned."

The Lentor Hills Road site, which can yield 595 units, is near the upcoming Lentor MRT Station and amenities in Ang Mo Kio town.

Mr Nicholas Mak, head of research and consultancy at ERA realty, expects strong "double-digit" bids in the upcoming tenders for sites in Jalan Tembusu and Lentor Hills Road.

Read more at: https://www.straitstimes.com/business/property/private-housing-supply-from-confirmed-sale-sites-up-25-for-second-half-of-2021

Increased supply of private homes on confirmed sites a calibrated move as developers seek land

The Business Times, 11 Jun 2021, Fri    

By Nisha Ramchandani

THE bump in the supply of private housing on the Confirmed List under the H2 2021 Government Land Sales (GLS) Programme is a calibrated move by the government - one that will nonetheless be welcomed by developers hungry to replenish their landbank amid diminishing inventory, analysts said.

Analysts expect keen demand for the four residential sites on the Confirmed List, which can potentially yield about 2,000 private homes (including executive condominium or EC units), citing heated bidding in recent tenders for GLS sites at Northumberland Road, Ang Mo Kio Avenue 1 and Tengah Garden Walk.

At 2,000 units, this is a jump of nearly 25 per cent from the 1,605 units released under the H1 2021 GLS Programme. Still, ERA's head of research and consultancy Nicholas Mak pointed out that the supply of 2,000 units is less than the 2,775 potential units that the six Confirmed List sites under the H1 2018 GLS Programme could yield.

Despite the sizeable increase in supply over the H1 2021 Confirmed List, JLL's senior director of research & consultancy Ong Teck Hui described the programme as conservative, adding: "The recent wave of Covid-19 infections that prompted heightened measures shows that the economy and residential market can be disrupted from time to time by the pandemic. This creates more uncertainty and will have an impact on transaction volumes and possibly prices."

Cushman & Wakefield's head of research (Singapore), Wong Xian Yang, said: "Amid economic uncertainties, the government is erring on the side of caution and leaving most of the units in the Reserve List, allowing the market to dictate market supply."

On the Reserve List are six residential sites, two white sites, as well as a hotel site at River Valley Road. This works out to another 4,860 private residential units (including EC units), 90,000 square metres (sq m) gross floor area (GFA) of commercial space and 530 hotel rooms. Of the six residential sites, three are newly introduced, namely two parcels at Pine Grove and one at Lentor Hills Road.

Taken together, the Confirmed and Reserve Lists can yield a total of 6,860 units, easing 2.6 per cent from 7,045 units under the H1 2021 GLS Programme.

Sites on the Reserve List are launched only upon successful application by a developer or when there is sufficient market interest in a site.

In a release on Thursday morning, the Ministry of National Development (MND) said: "The unsold inventory of private housing units has declined over the past year amidst strong demand. Nonetheless, even as the economy is recovering from the recession in 2020, there are continued uncertainties in the economic and labour market conditions due to the ongoing Covid-19 situation globally and locally."

As such, the government has decided to moderately increase the supply of private housing on the Confirmed List to 2,000 units, MND added.

This comes after MND beefed up private housing supply from confirmed sites under the H1 2021 GLS programme by 17.2 per cent.

Of the four sites on the Confirmed List, three are in the Outside Central Region (OCR), while the fourth is at Jalan Tembusu in the Rest of Central Region (RCR).

Ismail Gafoor, chief executive of PropNex, said: "We believe the move to offer more sites in the OCR may help to stave off a potential supply crunch in this sub-market, providing buyers - many of whom may be HDB upgraders - with a wider selection of mass market homes."

He added that the supply of unsold private homes has come down sharply from 36,839 unsold units (excluding ECs) in Q1 2019 to 21,602 unsold units in Q1 2021.

Analysts reckon sites on the Confirmed List that will most likely appeal to developers include the Jalan Tembusu site in the Tanjong Katong area, which can yield 645 units, and an EC site at Bukit Batok West Avenue 8, which can yield 375 units.

JLL's Mr Ong reckons that the EC site will be sought after, owing to the moderate supply of new EC projects in the West. He said: "It is good to offer an EC site in the West, after releasing the Tampines Street 62 site (under the H1 2021 programme) so EC buyers are able to find opportunities in different geographical areas."

The EC site is near a recent tender at Tengah Garden Walk which was awarded for S$603 per square foot per plot ratio, said director (research) at Huttons Asia, Lee Sze Teck. Mr Lee added: "This site may fetch lower taking into consideration that it is not within walking distance to an MRT station."

Also on the Confirmed List is a site at Lentor Hills Road which can yield 595 residential units, while a second parcel at Lentor Hills Road with a potential yield of 265 units is on the Reserve List.

Knight Frank's head of research, Leonard Tay, said: "The sites that are likely to be triggered on the Reserve List would be the smaller ones where 600 units or less can be built, as larger sites in excess of 800 units do not currently appear to be appetising for developers given the increased financial risk, as well as the challenge of not being able to sell out within the timeframe for Additional Buyers Stamp Duty remission."

Cushman & Wakefield's Mr Wong also reckons the Lentor Hills Road parcel on the Reserve List could attract developers given that it is the smallest site in the GLS Programme, and will benefit from greater accessibility once the Thomson East Coast Line is up and running.

Source: https://www.businesstimes.com.sg/real-estate/increased-supply-of-private-homes-on-confirmed-sites-a-calibrated-move-as-developers

White site at Marina View triggered from Reserve List

The Business Times, 11 Jun 2021, Fri    

By Nisha Ramchandani

The Urban Redevelopment Authority (URA) will launch for public tender a white site at Marina View after an unnamed developer made a successful application for the site's release from the Reserve List.

The 99-year leasehold site - which can yield about 905 private homes, 2,000 square metre (sq m) gross floor area (GFA) of commercial space and 540 hotel rooms - will be released for sale on June 28. The white site was on the Reserve List of the H1 2021 Government Land Sales (GLS) programme.

The developer has committed to bid a price of at least S$1.508 billion at tender, which works out to about S$1,379 per square foot per plot ratio (psf ppr), given the maximum GFA of 101,629 sq m.

However, analysts expect the winning bid will ultimately be higher. Knight Frank's head of research Leonard Tay highlighted that the trigger price is lower than other comparable GLS residential sites in the Downtown Core, clocking 10.2 per cent and 5.7 per cent less than the winning bids for the Tan Quee Lan Street and Bernam Street sites respectively.

Still, "when the tender closes 12 weeks from the launch, it is expected that the bids will be above all these previous GLS sales on a psf ppr basis, especially if the developer who wins the tender is intent on constructing a luxury class residence with a six-star hotel that would be positioned to benefit in a post-coronavirus world," Mr Tay added.

Desmond Sim, deputy chief executive of Edmund Tie & Company, said that the triggering of the site from the Reserve List is testament to developers' desire to build up their landbank. "It's a good indication that some developers out there are looking to replenish their landbank," said Mr Sim.

Given the large quantum for the site and that smaller sites are presently proving to be more palatable for developers, Mr Sim doesn't rule out consortiums coming together to bid for the site.

Pointing to the site's appealing location in the Downtown Core with the future Shenton Way MRT station at its doorstep, Wong Siew Ying, PropNex's head of research and content, said: "We expect the site to potentially garner good interest among developers which have deeper pockets and have experience in residential or mixed-use developments or perhaps those with hotel interests."

The upcoming hotel supply in the Downtown Core is modest, with 350 of the 5,029 hotel rooms under construction as at end-Q1 2021 situated in the Downtown Core Planning Area, she highlighted.

Meanwhile, analysts expect robust demand for residential units at the site, given that the last major residential project launched in the area was Marina One Residences back in 2014.

Wong Xian Yang, Cushman & Wakefield's head of research (Singapore), said: "With more family offices setting up shop in Singapore, demand for prime residential units within the CBD is expected to rise."

Mr Wong went on to point out that Marina One Residences has sold some 90 per cent of its units thus far, with transactions gathering pace last year. In 2020, 185 new and resale units at Marina One Residences were sold , up from 140 units in 2019.

Based on year-to-date transacted prices of comparable residential properties as well as the trajectory of the property prices, "the future residential units in the development on Marina Bay could be sold between S$2,500 and S$2,800 psf," estimates Nicholas Mak, head of research and consultancy at ERA. The caveat to this, however, would be that no fresh cooling measures are implemented by the government prior to the launch of the project.

"The site at Marina View will further inject more homes into the CBD, supporting the government's vision of making the CBD vibrant after working hours," said Huttons chief executive Mark Yip. "With a hotel component as part of the development, it shows the confidence of the party who triggered the site that global travel will resume soon and it is key to secure a first-mover advantage by acting now."

And with a cap of 2,000 sq m for commercial space, office space - if proposed as part of the mixed-use development - will likely cater to small-and-medium enterprises or flexible space solutions, CBRE's director of research (South-east Asia) Catherine He added.

Source: https://www.businesstimes.com.sg/real-estate/white-site-at-marina-view-triggered-from-reserve-list

Marina View site released for launch with bid of $1.508 billion

The Straits Times, 11 Jun 2021, Fri    

By Grace Leong

 A plum site in Marina View that allows for a range of uses has been released from the Government's reserve list with a bid of $1.508 billion - signalling rising demand for prime residential units within the Central Business District, analysts said.

The Urban Redevelopment Authority (URA), which said on Thursday (June 10) that the white site had been triggered for launch, did not name the developer that successfully applied for its release.

URA will launch the site for sale by public tender on June 28.

The developer has undertaken to bid at least $1.508 billion - which works out to $1,379 per sq ft per plot ratio (ppr) - for the site.

It can yield 905 private residential units, 2,000 sq m gross floor area (GFA) of commercial space and 540 hotel rooms.

Located in the CBD, near the upcoming Shenton Way MRT station, the Marina View site should benefit from the future Greater Southern Waterfront development, which extends from Pasir Panjang to Marina East.

Mr Nicholas Mak, head of research and consultancy at ERA Realty, said that most government land sales (GLS) white sites in the Marina Bay downtown area were used mostly for office development.

But the Marina View site is different because a large proportion will be for residential development and a hotel, he added.

Read more at: https://www.straitstimes.com/business/property/marina-view-site-released-for-launch-with-bid-of-1508-billion

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