Failed Jurong tender won’t affect activity and prices, say experts; 4 projects slated for launch this year

A tender for an executive condominium (EC) site drew no takers last Thursday. But that will not affect the activity level – or prices – in the EC market this year.

Four new EC projects yielding about 1,400 units in total will be launched over the next three to six months, said a recent CBRE Research report.

These sites – in Compassvale Bow, Punggol Field, Buangkok and Yishun – were awarded in the first half of the year.

ECs are making a comeback after a hiatus of five years as the Government steps in to ramp up supply for Singaporeans who can afford more than an HDB flat but find private property out of their reach.

The last EC launch was La Casa in Woodlands in 2005.

Last Thursday, an EC site tender in Jurong West Street 42 closed without attracting a single bid, taking the market by surprise.

But there will be another four EC sites available for sale later in the year – in Punggol Drive; at the junction of Elias Road and Pasir Ris Drive 1; Tampines Avenue 8; and Segar Road.

These sites can potentially yield another 2,200 units.

An industry expert said the failed Jurong tender may affect the speed of EC launches but not prices.

‘Developers may want to rush out their EC launches because they see that the general property market may be facing more uncertainty,’ he said.

But prices will not be affected as developers who bid high for previous sites will not want to lower their final selling prices, he added.

Mr Li Hiaw Ho, executive director of CBRE Research, said: ‘Given the tender bid prices for the residential sites in recent months, developers are not likely to reduce prices of the new private homes.

‘Assuming the historical 30 per cent price gap between private suburban homes and new ECs remains, median prices of new ECs are likely to stay around $650 per sq ft to $750 psf.’

EC prices have risen with the improving property market, particularly as developers have bid higher at recent EC tenders.

But now that new mass market condos can easily cost nearly $1,000 psf or more, ECs will be attractive to some buyers as they would be priced around

$700 psf, said PropNex chief executive Mohamed Ismail.

A new EC should always be at least 20 per cent to 25 per cent cheaper than a mass market private property, he added.

This is because ECs come with sale restrictions that may cause a buyer to lose out on a market cycle and thus have to wait a few years to cash out profitably, he added.

ECs have initial sale restrictions similar to those for public housing, such as a minimum occupation period of five years.

After five years, they can be sold, but to only Singaporeans and permanent residents. They become private properties after 10 years, when they can also be sold to foreigners.

Mr Ismail said there will always be buyers keen to take the EC route to becoming a private property owner, as first-time EC buyers are entitled to HDB housing grants.

Buyers of new EC units have to meet a gross monthly household income ceiling criterion of $10,000, compared to the $8,000 income ceiling for a new HDB flat.

Source: Business Times, 15 Aug 2010

EC plot in Sengkang fetches top bid of $320.58 psf ppr

(SINGAPORE) The first state land tender to close following the government announcement of bumper land sales for the second half has seen a record price for executive condominium land.

The plot, at Sengkang East Avenue and Buangkok Drive, however drew seven bids, down from 11 bids for an earlier plot at Compassvale Bow/Buangkok Drive at a tender in March.

Industry players also pointed out that for yesterday’s tender, the top bid aside, the other bids were within expectation.

Market watchers suggest the bullish top bid of $320.58 per square foot of potential gross floor area could be due to the top bidder’s ability to control costs better as it involves a joint venture involving a construction group and a steel supplier.

Maxdin Pte Ltd, a subsidiary of Greatearth Holding, which in turn is part of United Engineers, will hold a 65 per cent stake in the tie-up with Lee Carriers, which is part of Lee Metal Group, a leading fabricator and manufacturer of reinforcement steel products and a trader of steel products.

Maxdin was unsuccessful at two earlier tenders for EC sites that closed in March. It placed the third highest bid for a Yishun plot and was the fourth highest tenderer for the Compassvale Bow plot. Interestingly, Maxdin had offered a much lower price of $270.56 psf per plot ratio (psf ppr) for that site, despite the fact that it has a superior location (near Buangkok MRT Station), than its bid yesterday.

The Compassvale Bow plot drew a top bid of $315 psf ppr from a partnership between Frasers Centrepoint and Lum Chang. At yesterday’s tender closing, Frasers Centrepoint, bidding solo, emerged in third position, with a $288 psf ppr bid.

‘Bidders with financial muscle who have not been successful at recent tenders and who need to replenish land are hungrier than those who have already secured at least one site,’ a developer suggested.

At yesterday’s tender, the top bid was nearly 10 per cent higher than the second highest offer, of about $292 psf ppr, from a tie-up between Hoi Hup Realty and Sunway Developments.

Others who took part in yesterday’s tender included Qingdao Construction (Singapore) at about $286 psf ppr, GuocoLand unit First Capital Holdings ($260 psf ppr) and a JV between NTUC Choice Homes and Chip Eng Seng ($240 psf ppr). Sim Lian Land placed the lowest bid, of $211 psf ppr.

Market watchers say the breakeven cost for Greatearth and Lee Metal could be around $600 psf. According to CB Richard Ellis, resale units at the neighbouring Park Green and The Rivervale ECs as well as The Florida in Hougang have been selling at $500-620 psf between January and May this year.

A spokesman for Greatearth’s parent, United Engineers, said yesterday that the group’s proposed scheme is for a project with about 500 units – comprising two, three and four-bedroom apartments with three-bedders making up the bulk of units. ‘We’re looking to launch the project in about six months. Greatearth will be project manager, and provide the design and build services, with Lee Metal being the passive investor.’

When the site was triggered for tender, analysts had estimated it would fetch $200-300 psf ppr. Before yesterday’s tender close, the record price for EC land was the $315 psf ppr that Frasers Centrepoint and Lum Chang paid for the Compassvale Bow plot in March. That surpassed the previous record of $220 psf ppr for the Summerdale EC site in Boon Lay in May 1997.

‘Give it time, land bids will tame. There’s a lot of caution in the air,’ said Knight Frank chairman Tan Tiong Cheng.

Industry players say visitorship at showflats slowed at the weekend, due to the weak stockmarket and the bumper land sales programme for H2.

Source: Business Times, 26 May 2010

Many of the 27 sites on GLS programme for H2 2010 are near MRT stations, popular launches

THE government has done its homework to make sure that the residential sites on the latest instalment of the government land sales (GLS) programme will be popular with both home-buyers and Many of the 27 residential sites on the programme for the second half of 2010 are near MRT stations and some are even located right next to recently launched projects that sold well. There are also four new executive condominium (EC) sites on the confirmed list – bringing the total number of EC sites, which are in high demand, to five. In comparison, there were just two EC sites in the H1 2010 confirmed list.

‘There is a gap right now between mass market affordability and HDB prices,’ noted Cushman & Wakefield managing director Donald Han. ‘So there is an immediate need to cater for those who have been sandwiched out of the market.’

Mass market private homes are now generally selling for upwards of $800 per square foot (psf), Mr Han noted. EC units, which can sell for around $700 psf, give more buyers a cheaper option.

Li Hiaw Ho, executive director of CBRE Research, also noted that recent state land tenders for two EC sites in March 2010 received good response. This could have led to the four new EC sites being placed on the confirmed list, he said. The new sites are scattered across the island in Punggol, Pasir Ris, Tampines and Segar Road.

Analysts also said that a lot of the residential sites offered in this round of the GLS programme are near MRT stations.

‘As is the case with GLS tenders in the last nine months, the sites in close proximity to MRT stations will too prove to be popular and are likely to be hotly contested, as are the ones that are situated closer to the city,’ said CBRE’s Mr Li. ‘For example, in the recent tender exercise at Simei Street 3, there were 18 bidders in total.’

Echoed Chua Chor Hoon, head of DTZ’s South-east Asia research team: ‘Sites that are near to MRT or LRT stations with HDB upgrader demand are likely to see greater interest from developers.’

She cited the Punggol EC as well as private housing sites in Punggol Central/Punggol Walk; Tanah Merah Kechil Road/Tanah Merah Kechil Link; and Sengkang Square/Compassvale Road as plots likely to be popular.

The same criterion works for commercial sites too. Colliers International’s executive director for investment sales Ho Eng Joo said that a white site at Boon Lay Way (next to Jurong East MRT) and a commercial plot at Paya Lebar Central (beside Paya Lebar MRT) will prove to be top draws.

Analysts also noted another interesting trend: some residential sites on the 2H 2010 GLS programme are located beside recently launched projects that have sold well. A residential site at Petir Road (in Bukit Panjang) is next to City Developments’ Tree House condo.

Another site at West Coast Link/West Coast Crescent is next to Cheung Kong Holdings’ The Vision, which set a new benchmark price for private homes in the West Coast area. Noted one market watcher: ‘The government could be trying to make sure prices don’t run up in the sub-sale market.’

Another side-effect could be felt by builders and owners of small one and two-bedroom units, which cater largely to investors.

‘If developers continue to build many small units, the concern is that there will be many such units completing in a few years’ time and competing in the market for sale or rental,’ said DTZ’s Ms Chua. The situation could be worsened if new investors can pick up larger units for the same total quantum as smaller units generally go for higher per square foot prices.

Source: Business Times, 22 May 2010

PRICES of resale executive condominiums (ECs) have risen much faster than those of private mass market homes in recent years, and have hit yet another high, a recent study has found.

From the first quarter of 2007 to the first quarter of this year, the prices of resale ECs shot up 70 per cent, compared with the 39.6 per cent rise in mass market private home prices, the study from Savills Singapore said.

ECs are meant to bridge the gap for buyers keen to upgrade from public housing, but are unable to afford private homes.

As a result of the price gains, resale mass market condos are now – on average – only about 14 per cent more expensive than resale ECs, well down from the 29.7 per cent margin in early 2007.

EC resale prices have risen to $568 per sq ft by the first quarter of the year, which is 17.4 per cent higher than the previous peak in the third quarter of 2008.

Data from the Urban Redevelopment Authority showed that prices of suburban homes were now 7.6 per cent above the previous 2008 peak.

Savills senior manager of research and consultancy Christine Sun said demand for ECs has picked up steadily since 2005.

This could be due to ‘a growing number of first-time home owners, particularly the higher-wage earners entering this market at times when mass market private homes and HDB resale home prices are on the rise’, she said.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said: ‘Singaporeans are starting to realise that resale ECs are good buys because they can be as good as private mass market condos.’

Indeed, prices at two ECs – Bishan Loft and Simei Green Condominium – have outdone the average price of mass market private homes in the same area, though only by 0.4 per cent to 1 per cent.

A few ECs such as Whitewater in Pasir Ris and Nuovo in Ang Mo Kio are transacting slightly below the average mass market resale prices in their areas.

Of the 23 completed ECs, Bishan Loft – within walking distance from Bishan MRT station – commands the highest prices.

The seven-year-old project recorded some of the highest EC resale deals ever done. In the January-March period this year, four high-floor units there went for $800 psf to $806 psf, or $905,000 to $1.19 million.

Bishan Loft was launched for sale in 2001 at an average price of $418 psf.

Nevertheless, the record resale prices have yet to surpass the top prices paid for two ECs in the new-home market.

Buyers bought two Yew Mei Green units of less than 100 sq m direct from the developer back in April 1998 for $810 psf and $844 psf.

ECs were introduced in 1995 to bridge the gap between public housing and private apartments. Buyers of new EC units have to meet a gross monthly household income ceiling criterion of $10,000 a month, slightly above the $8,000 income ceiling for a new HDB flat.

ECs come with condo facilities but like HDB flats, they are subject to a minimum occupation period of five years. After five years, they can be sold, but only to Singaporeans and permanent residents. They become private property after 10 years, when they can also be sold to foreigners.

With more PRs buying resale ECs, the proportion of foreign buyers in the resale EC market has hit 31.8 per cent so far this year, on a par with that of foreign purchases of non-landed private resale homes, said Savills.

Its research also showed that about 35 per cent of ECs rose in price after five years, though all increased in price after 10 years. Six ECs crossed the 10-year mark last year, while another seven would have done so by year end.

Despite the price increases, there is still a gap between resale ECs of less than 10 years old and private condos, said Mr Mak. Once prices of these ECs are too close to prices of nearby private condos, their popularity will be affected, he said.

Bishan Loft is an exception, he said, as the area has not had a new condo in a while.

Said Credo Real Estate managing director Karamjit Singh: ‘After 10 years, the differentiating factors between ECs and a private condo will be the quality of the finishes, the layout and the view and so on.’

Source: Straits Times, 17 Apr 2010

FOUR plum residential sites which will yield almost 2,000 new homes are being released for tender by the Government in a move to ramp up supply in Singapore’s hot property market.

They include Punggol’s first executive condominium (EC) site, to boast 615 homes, which will be released for tender early next month as a developer has already made a minimum bid of $147.7 million.

In stark contrast, when a Punggol EC site was launched in September 2008, there were no takers among developers.

The other three sites are for another EC – at Sengkang – and two private development sites at Sembawang and Yishun.

This is the latest round in a slew of sites being released by the authorities to inject fresh supply into the market.

Developers have been snapping up land to replenish landbanks as they scramble to meet dizzying levels of demand for new homes.

Since the start of the year, the Government has sold four residential sites and offered three other sites for tender under the confirmed list, said the Housing Board (HDB) yesterday.

These seven sites could potentially yield a total of 2,775 housing units, and that is not counting another residential site at Upper Serangoon Road to be released for sale later this month.

The heightened level of activity is a drastic turnaround from the same period a year ago, when no sites were offered or sold by the Government amid a lacklustre property market.

Sites on the reserve list could offer an extra 7,625 homes in the first half of the year, said the HDB. Reserve list sites are offered on top of the confirmed list and are triggered for tender if at least one developer lodges an initial bid that meets a minimum threshold.

To date, eight reserve list sites – yielding about 3,345 homes – have been triggered in this way, with one sold and seven under tender or to be launched.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said the Government is ‘reinforcing the message that there is enough land’.

‘By announcing more than one site at a time, it is also saying to developers that they do not need to bid so aggressively. The objective is to push out enough land supply so that prices can be moderated,’ said Mr Mak.

Among the new sites, the plot at the junction of Sembawang Road and Canberra Drive and the EC located at Sengkang East Avenue and Buangkok Drive go on sale today.

The Sembawang plot, launched under the confirmed list, can be developed into strata-title landed housing or condominium units offering 290 homes.

CBRE Research executive director Li Hiaw Ho said the site is likely to fetch $95 million to $105 million if a condo is built. The tender closes on June 8.

The Sengkang EC site, triggered by a developer’s bid of $103.8 million on April 1, is served by the Sengkang LRT system and could yield 465 homes.

ECs are condo-style homes but with public housing rules. This tender closes on May 25.

Early next month, the Government will put the EC plot located at Punggol Field and a condominium project at Yishun Avenue 2 up for public tender.

The Punggol plot is near the Punggol Town Centre while the Yishun condo site is in the established Yishun Town and could generate 600 homes. A developer triggered the tender for the Yishun site with the minimum bid of $137.9 million.

HDB said yesterday the total supply of 10,550 homes for the first half of the year from the Government’s confirmed and reserve list is the highest level in the scheme’s history.

Source: Straits Times, 14 Apr 2010

Real estate agents say executive condominiums (ECs) have become more popular.

They are the next best thing for those who are priced out of the private condominium market, where prices have been hitting new highs recently.

Property agents said that in the last two to three years, the price of each square foot has increased by about 70 per cent.

In the first quarter of this year, the resale value of each square foot reached about S$570.

According to senior group district director of PropNex David Poh, the price used to be around S$300 to S$400 per square foot more than three years ago.

This puts the price per square foot of ECs about 15 per cent cheaper than that of private condominiums.

For new ECs, the price is about 25 per cent lower than that of new private condominiums.

Real estate agents said the prices of ECs have not peaked.

Two ECs in Sengkang and Yishun were launched in January. A second EC is set to be launched in Sengkang this week.

Source: Channel News Asia, 12 Apr 2010

AN executive condominium (EC) site at the junction of Sengkang East Avenue and Buangkok Drive will go on sale in about two weeks – and is expected to be warmly received by developers.

The Housing & Development Board said yesterday it will release the site, which is on the government’s reserve list. Sites on this list are released after a developer commits to bid at or above a minimum price acceptable to the state – in this case, $103.8 million or $189 per sq ft per plot ratio (psf ppr).

The site will be the third EC plot sold this year. It will add 465 units to the supply of public housing, taking EC supply to 1,365 units in first half of 2010. Two EC sites – at Sengkang and Yishun – with a combined yield of about 900 units have been sold already this year.

‘Following the enthusiastic response from developers for the EC sites at Compassvale Bow and Yishun Avenue 11, it is no surprise a third site has been triggered,’ said Li Hiaw Ho, executive director of CBRE Research.

PropNex chief executive Mohamed Ismail said that given the slowly growing gap between private property and HDB prices – the private property price index for Q1 2010 went up 5.1 per cent, while HDB’s resale price index went up only 2.7 per cent – ‘the time is right for the launch of more ECs to cater to the sandwiched class of those who may not qualify for an HDB flat yet are unable to afford a private property’.

Analysts expect the latest site to fetch between $200 and $300 psf ppr. The site is adjacent to Park Green EC and near The Rivervale and Florida ECs, where units were sold at $520 psf to $600 psf between October 2009 and February 2010.

‘Developers should be able to break even around $500 psf after construction and other costs, and the selling price should be around $550-600 psf, which is about 25 per cent below mass market prices for similar private properties,’ said Mr Ismail.

Eugene Lim, associate director of ERA Asia-Pacific, has a higher estimate – he expects the upcoming flats to be priced at $620-$680 psf.

Source: Business Times, 2 Apr 2010

Another plot of land meant for Executive Condominiums (EC) will be put up for tender.

The Housing and Development Board (HDB) said on Thursday that it will launch the tender of the land parcel at Sengkang East Avenue and Buangkok Drive in two weeks.

The site, which was placed on the government’s Reserve List System, has a 99-year-lease.

It has an area of about 17,000 square metres, which can yield an estimated 465 housing units.

Developers keen on the land parcel must put in a minimum offer of S$103.8 million.

So far this year, HDB has sold two EC sites in Jurong West and Yishun.

Another two EC sites in Jurong West and Punggol remain on the Reserve List for the first half of this year’s Government Land Sales programme.

Just last month, National Development Minister Mah Bow Tan pledged to build more ECs, to cater to the housing needs of the sandwiched middle class.

Source: Channel News Asia, 1 Apr 2010

MORE executive condominiums (ECs) will be built this year to meet the housing needs of the ’sandwiched group’, said National Development Minister Mah Bow Tan yesterday.

This group refers to couples who do not qualify for new Housing Development Board (HDB) flats because their combined monthly income exceeds the $8,000 cap, but who may find private property too expensive.

Mr Mah, who was a guest on Channel NewsAsia’s programme Talking Point aired last night, said that ECs will make up about 10 per cent of the approximately 12,000 new flats to be built this year.

Dr Lim Wee Kiak, the MP for Sembawang GRC, and Ngee Ann Polytechnic real estate lecturer Nicholas Mak were the other guests in the show hosted by Channel NewsAsia managing director Debra Soon.

‘It is well-designed, has good location, it is something that will have all the amenities and at the same time you can enjoy the grant… That is the reason why we will be putting more ECs on the market,’ Mr Mah said.

He added that since the HDB caters to about 80 per cent of the population with incomes ranging from the low to the upper-middle, ECs will be one housing form that the Government will keep tabs on.

‘We have recently let out two tenders. And if there is a market and there is a demand, we will let out more,’ he said.

ECs come with condominium facilities but have initial sale restrictions similar to those for public housing. They become a private property fully only after a decade.

They were introduced in 1995 to bridge the gap between public housing and private apartments, aimed at Singaporeans who could afford more than an HDB flat but might find private property out of their reach.

The gross monthly household incomes of buyers of new EC units cannot exceed $10,000.

Responding to a question by Dr Lim that the aggressive bidding of the two recently closed EC tenders in Sengkang and Yishun might push up EC prices, Mr Mah said that developers are mindful of the monthly income cap of buyers and thus would not bid too excessively.

PropNex chief executive Mohamed Ismail told The Straits Times after the show that with these two sites expected to yield 905 units, he expects to see at least one more site offered this year. There could even be two more ECs if the demand for these initial projects are strong, he added.

Rising public housing prices have been a hot topic among Singaporeans. Early this month, HDB raised the minimum occupation period for resale flat buyers to three years, up from as little as one year, to cool speculative demand for HDB flats.

Asked if the measure was too mild, Mr Mah said it was a calibrated move to remove some froth caused by speculative demand. It was not meant to crash prices or curtail genuine demand from home buyers.

Several suggestions to meet buyers’ demand for flats were offered during the 45-minute talkshow. Mr Mak suggested reexamining the buyer’s selection process to assess why so many first-time applicants rejected their flats while Dr Lim asked if the differential in the pricing of less attractive units compared to the more desirable ones is big enough.

Mr Mah emphasised the unique role that HDB had to play – catering to different segments of income groups, to provide both home-ownership and eventually a source of retirement income.

Despite buyers’ unhappiness over rising prices, the public housing market is generally best left to market forces, Mr Mah added. But he also promised that first time buyers of new HDB flats will not be priced out of the market.

Source: Straits Times, 15 Mar 2010

Executive condominiums (ECs) are back in the spotlight, amid a buoyant property market. They come with finishes similar to a private condominium, but are priced more affordably.

Analysts expect strong interest for two new developments to be launched at the end of the year. But they also caution buyers against being too hasty.

When the Eastvale executive condominium in Pasir Ris was launched, units were going for about S$400 per square foot. A recent sale went for S$600 per square foot, comparable to similar private properties in the area.

Executive condominiums were launched in the mid-1990s, and Eastvale was one of the first projects. They cater to the needs of the “sandwiched” class – buyers who could not afford private properties, but whose household incomes exceed the income ceiling set by the Housing and Development Board (HDB).

Now 15 years on, calls by the “sandwiched” class for more affordable housing are growing, and housing authorities said executive condominiums will form 10 per cent of new flats built this year.

For first-time home buyers, they can apply for a S$30,000 housing grant, as long as monthly combined incomes do not exceed S$10,000. And after a period of 10 years, they can sell them in the private property market.

In line with HDB rules, these units are first subject to a five-year Minimum Occupation Period, after which they can be sold only to Singaporeans and Permanent Residents (PRs).

With interest rates remaining low, it sounds like a good deal. But with a economy recovering, analysts cautioned that interest rates could head higher.

Colin Tan, head of Research & Consultancy at Chesterton Suntec International, said: “Because of all the various government stimulus spending, interest rates have been kept artificially low for quite a long time.

“With a low interest rate environment, it’s easy to put money down and meet the mortgage instalments. But when interest rates double or triple, you expect your mortgage to be doubling or tripling. So the question is, are you able to sustain that.”

Analyst Mohamed Ismail of Propnex said that while such developments perform well in the resale market during boom times, resale prices tend to go down much faster than similar private properties when the market hits a snag.

Tan agreed, saying it is hard for ECs to shake off their image as the “poorer cousin” of private condominiums. One reason is because developers may compromise on the quality of finishes in order to meet the budgets of buyers.

So if the private property market is subdued, as it was in the post-SARS years, then between an executive condominium and a private one, buyers would be more willing to fork out for the latter.

Chua Yang Liang, head of Research (Southeast Asia) of Jones Lang LaSalle, said the increase in executive condominium projects may not impact greatly on the private property market as EC buyers are a select group of buyers, most likely the “sandwiched” class.

He said entry-level mass market private home prices have averaged S$800 per square foot in recent months, and the executive condominiums will have to be priced lower.

“Going by the recent transactions, it’s averaging about S$550 to S$650 psf, so pricing in that market would be around that region – S$550, S$650, and S$750 psf, that kind of range,” said Chua.

Source: Channel News Asia, 15 Mar 2010