PROPERTY developers say they are eager to bring forward project launches to ride the buoyant market but are being held back by their limited land bank.

They were caught by surprise at the rapid market recovery, they say.

‘Many of us are now caught with a depleting land bank,’ the Real Estate Developers’ Association of Singapore (Redas) president Simon Cheong said.

‘We believe the long-term solution to a sustainable and stable market is still adequate supply,’ he added.

Credo Real Estate’s deputy managing director Tan Hong Boon summed up the mood: ‘You never know what will happen. While the going is still good, developers will want to launch quickly. This is particularly so for mass market projects.

The Government recently stepped up the supply of development sites after a lull, and believes supply is adequate.

Yesterday, a 3.02ha site at Hougang Avenue 2 was offered to developers. If interest is adequate, a tender will proceed.

Another reserve list site will be offered by May, on top of confirmed list sites, which are tendered without precondition.

The comments by Mr Cheong and Mr Tan at the Redas Chinese New Year lunch at Capella Singapore yesterday came a week after market cooling measures.

The Government imposed a duty sellers must pay if they sell within a year of purchase. It also capped bank loans at 80 per cent of a sale price, from 90 per cent.

Mr Cheong said developers want land supply fast-tracked to satisfy buyer demand to minimise speculation to ease the pressure for more anti-speculative steps.

‘Given the unexpected return of an active property market, developers over the next few months would also be actively bidding for more land,’ he said.

Redas members look forward to more confirmed list sites to replenish land banks, he said. They are looking to Government land, given limited sources of private land. A developer who declined to be named said private land owners were asking for the sky ’so we can’t buy’.

Mr Cheong said developers would rather have this problem than the bleak effects of last year’s meltdown in the banking system. ‘Managing upside is always easier than managing downside.’

The anti-speculative steps were a timely reminder, said Frasers Centrepoint chief executive Lim Ee Seng at the lunch. ‘Exceptional jumps in prices are not good for us.’ Still, he said: ‘No matter how high it gets, it will still obey the law of gravity.’

An anonymous developer said the measures had hurt sentiment a little. ‘If there are 100 buyers, maybe 10 will change their minds. I expect volume to moderate a bit.’

Still, so far the measures appear to have had little or no impact on recent sales. ‘The market is still hot,’ said an industry observer. The 608-unit The Estuary in Yishun, whose preview opened on Wednesday, has sold over 200 units.

The average price for the 99-year leasehold condo is $750 per sq ft, with units facing the Lower Seletar reservoir costing around $800 psf on average.

Separately, City Developments boss Kwek Leng Beng said at a results briefing for CDL yesterday that sentiment would remain strong among genuine buyers, despite the government measures.

Mr Cheong addressed guest of honour Finance Minister Tharman Shanmugaratnam, saying developers were disappointed at being left out of the Budget.

But they were happy at the productivity push given the long-term gains. Redas called this ‘a deferred payment hongbao’.

Looming launches include the 151-unit Seascape in Sentosa Cove and Cheung Kong Holdings’ 295-unit The Vision. Far East Organization and Frasers Centrepoint plan to release Waterfront Gold in Bedok Reservoir soon. Allgreen may launch RV Residences in River Valley and unsold units at Cascadia in Bukit Timah.

Source: Straits Times, 26 Feb 2010

PROPERTY developers looking to boost their residential landbanks can get their cheques ready for a new piece of state land.

The Urban Redevelopment Authority (URA) said yesterday that a 99-year leasehold site at Hougang Ave 2 is open for applications from interested developers.

URA had introduced six new residential sites to the reserve list under the H1 2010 government land sales programme. This 3.02 ha plot at Hougang is the first of them to be released.

The site can house a low density condominium or landed housing development. For condominium units or flats, the maximum gross floor area is 455,152 sq ft.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said that the site could yield 380-400 units in a non-landed project, or 140-150 houses in a landed development.

The plot is located within a private residential estate and is near Hougang HDB town. It is also near the Hougang and Kovan MRT stations.

Property consultants expect developers to show keen interest in the land parcel. DTZ executive director Ong Choon Fah observed that it sits within an established landed housing estate, and residents there could form a pool of potential buyers.

For instance, young people may be interested in condominium units there so that they can live near their parents, she said.

Mr Mak believes that a developer who plans for a non-landed project on the site could have a higher chance of winning the tender. This is because non-landed projects can be sold for a higher price on a per sq ft (psf) basis, and the developer would be able to bid more aggressively.

He expects the site to attract some four to eight bids if it is triggered for sale, and the higher bids could range from $159-$193 million, which works out to $350-$425 psf per plot ratio.

Nearby, two units at Kovan Residences were sold at $754-$890 psf last month, going by caveats lodged.

URA will make the remaining five new residential sites on the reserve list available soon. It will release one at Stirling Road and another at Hougang Avenue 7 next month. One site in April and two in May will also be available.

In addition, the government will be releasing another four sites on the confirmed list – two in March and two in April.

Together, sites on the reserve and confirmed lists can supply 10,550 units – the highest number in the history of the government land sales programme.

Source: Business Times, 26 Feb 2010

The first government land sale tender to close after measures were announced last Friday to cool the property market managed to draw some solid bids.

A 99-year leasehold residential site at the junction of Choa Chu Kang and Woodlands roads – which houses Ten Mile Junction – drew a top bid of $164 million or $437 per sq ft per plot ratio (psf ppr).

Far East Organization unit Dollar Land Singapore topped seven rivals with this bid.

Chip Eng Seng’s CEL Development put in the second-highest bid of $148.3 million or $395 psf ppr.

The top two bids are not too far from market predictions in early January, even though the government has just introduced anti-speculation measures – a seller’s stamp duty on residential property bought after Feb 19 and sold within a year, as well as a lower loan-to-value limit of 80 per cent for all private housing loans.

The response to the latest government land tender ’suggests that some developers think the measures will not have a significant impact in the longer term’, said Knight Frank chairman Tan Tiong Cheng.

Going by the tender results, Colliers International research and advisory director Tay Huey Ying said some developers are ‘realistically bullish’ and there is still confidence in the mass-market sector.

Still, consultants point out that competition for land seems to have eased from a few months back. Ms Tay noted that bids for sites in the second half of last year were usually much higher than expected.

Jones Lang LaSalle South-east Asia research head Chua Yang Liang noted that there was just a 10 per cent gap between the top and second bids this time around. The gap can be as large as 20-30 per cent when the market is hot, he said.

Other participants in the tender that closed yesterday included Sim Lian Group and a tie-up between Frasers Centrepoint and NTUC FairPrice Co-operative. The lowest bid came from Soilbuild Group, at $71.2 million or $190 psf ppr.

The 1.56-hectare site is occupied by the three-storey Ten Mile Junction. The first two levels comprise commercial space with a gross floor area (GFA) of 121,191 sq ft, while the third houses an LRT station.

The winning developer will gain control of the commercial component. It can also build a residential development with a GFA of 254,394 sq ft on top of Ten Mile Junction. The residential project could yield some 200 apartments.

Going by consultants’ estimates, the average selling price of the residential units could range from $700-$850 psf.

At the 99-year leasehold Mi Casa nearby, launched last year, three caveats were lodged for transactions at $658-$731 psf in January and February.

Source: Business Times, 24 Feb 2010

IN A striking sign of how the property sector has rebounded, a site that failed to sell two years ago when it attracted an offer of just $61 million has now received a bid of $164 million in a new tender.

Eight developers placed bids for the suburban plot that can accommodate residential and commercial development.

The top offers for the site at the junction of Choa Chu Kang and Woodlands roads were all in a fairly tight range, with Far East Organization’s Dollar Land Singapore on top with a bid that beat market expectations.

It offered nearly $164 million, or $436.65 per sq ft (psf) of gross floor area, about 10 per cent more than the $148.28 million or $394.80 psf offered by second-placed Chip Eng Seng’s CEL Development.

Sim Lian Land was next with $138.89 million or $369.79 psf.

Other bidders included a joint venture between Frasers Centrepoint and NTUC FairPrice Cooperative, and Soilbuild Group Holdings, which came in last with a bid of just $71.23 million.

CBRE Research had expected bids to range from $135 million to $150 million.

The $164 million bid could reflect a price of $50 million to $70 million for the commercial podium, with the developer possibly selling the apartments for around $700 psf to $800 psf, consultants said.

In April 2008, the site attracted just two bids of $61 million and $45.68 million when its sale tender closed. The bids were rejected as being too low.

The site, to be co-located with the Ten Mile Junction LRT station on the third storey of the podium block, will be near the future Bukit Panjang MRT station, part of the future Downtown Line 2 and due for completion by 2015.

Property consultants said the results showed that demand for land was still fairly strong, particularly coming after the Government’s recent measures to pre-empt a property bubble.

The Government has imposed a duty on sellers who offload property within a year of purchase, and lowered the maximum loan-to-value amount buyers can borrow from 90 per cent to 80 per cent.

Knight Frank chairman Tan Tiong Cheng said: ‘The top three bidders are the more experienced players familiar with the suburban market.

‘Their bids suggest they would think the recent measures would not affect prices in the longer term.’

With fewer sources of private land, developers are chasing government sites as they need to replenish land banks, said Colliers International executive director (investment sales) Ho Eng Joo.

He said the cooling measures will affect the sales market more than developers’ demand for land.

In the short term, some potential buyers will want to wait and see if prices will fall, experts said.

But those who are already planning to buy will likely go ahead.

Ms Christina Sim, Cushman and Wakefield’s director of investment and capital markets, said the one-year timeline for the seller’s duty is relatively short and unlikely to affect the market much.

Still, an analyst who declined to be named said: ‘The latest announcement begs the question – what conditions would qualify as a stable market? If transactions are above 1,000 units a month, that’s probably a warning sign.’

Source: Straits Times, 24 Feb 2010

The Urban Redevelopment Authority (URA) on Tuesday launched a transitional office site at Mohamed Sultan Road for sale by public tender.

The 15-year-leasehold site has an area of about 0.62 hectares and a maximum permissible gross floor area of about 9,200 square metres.

The minimum price for the site is S$9.33 million.

Since October 2008, the land parcel was made available for sale through the Reserve List System. Under the system, a site would be released for sale only if a bid with an acceptable minimum price is received.

Two weeks ago, URA said it accepted an application from a developer to put up the site for sale.

In October 2008, URA had rejected a sole bid for the Mohamed Sultan site as the price offered was deemed to be too low. Back then, RSP Architects Planners & Engineers had put in a bid of S$4.65 million.

The site was subsequently placed on the reserve list. The current tender for the site will close on March 18.

Source: Channel News Asia, 9 Feb 2010

The Housing & Development Board has awarded the tender for the residential site at the junction of Sengkang West Avenue and Fernvale Link to Sunmaster Holdings.

The company submitted the highest tender for the site at S$200.5 million out of a total of 10 bids received.

The minimum offer price was S$70 million.

The land parcel is about 16,998 square metres and is for a proposed condominium development.

The lease term will be for 99 years.

The tender was launched in January this year and closed last Thursday.

Source: Channel News Asia, 8 Feb 2010

A UNIT of City Developments (CDL) lodged the highest bid for a Sengkang site in a hotly contested tender that attracted some of the biggest names in property development.

Sunmaster Holdings trumped its nine rival bidders with an offer of $200.5 million, or $365.26 per square foot (psf) of potential gross floor area, for the 182,986 sq ft plot.

This was 185 per cent above the reserve price of $70 million or $128 psf, said Mr Li Hiaw Ho, executive director at CB Richard Ellis Research.

The Sunmaster Holdings bid for the 99-year leasehold residential site at the corner of Sengkang West Avenue and Fernvale Link was followed by Tuas Hi-Tech Park’s offer of $177 million.

Frasers Centrepoint was just $92,000 behind at $176,908,000.

Other bidders included a joint venture between Hoi Hup Realty and Sunway Developments, First Changi Development, Allgreen Properties, CEL Development and Lippo Estates, with the lowest bid at $115.6 million.

‘The healthy number of bids received shows that developers remain confident of the market for mass-market homes,’ said the director of research and advisory at Colliers International, Ms Tay Huey Ying.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak pointed out that although developers ‘are still somewhat hungry for good development sites’, most bids were reasonable.

This is possibly because of the ample supply of government land sales projects coming up in the first half of the year, he said.

The site is estimated to be able to accommodate up to 465 condominium units and has a maximum allowable gross floor area of 50,996 sq m or 548,916 sq ft. It is near the Layar LRT station on Sengkang West Avenue.

Based on breakeven estimates of $650-$700 psf, Mr Li expects selling prices at the new development to range from $750 to $800 psf.

Units at another condominium in the vicinity, the Quartz, had been transacting at prices averaging $745 psf since last October, Ms Tay said.

With five-room and executive resale HDB flats in Sengkang selling for $400,000 to $500,000, Mr Li believes that there should be demand from HDB upgraders whose flats have or will soon turn five years old.

Demand could also come from the nearby Seletar private estate, he said.

The Housing Board will award the tender within the next two weeks.

Source: Straits Times, 5 Feb 2010

A REVIEW of the reserve list system for government land sales is in the works, after the Economic Strategies Committee (ESC) called for changes to help developers trigger the sale of sites more easily.

This would be the first revamp of the system since it was introduced in 2001. One possible tweak could allow developers to pay lower deposits after they apply for a site on the list.

In a report released yesterday, the ESC sub-group tasked to find ways to boost land productivity noted the importance of managing cost volatility. The degree of fluctuation in housing and office rents could influence corporate and individual decisions to relocate to Singapore, it said.

Reviewing the reserve list system to make it ‘less onerous’ for developers to trigger the sale of sites could ensure that ’supply can be more easily activated when needed’.

Senior Minister of State for National Development and Education Grace Fu, who is also co-chair of the sub-group, shared more details in an interview. She said there has been feedback from developers about the cost of triggering the sale of sites.

‘We are trying to look at ways to make this as low-cost as possible, so developers do not have to cross a very high barrier to trigger,’ she said. ‘That is to make the government land sales system more responsive to the market.’

At present, a developer keen on a site on the reserve list has to submit an application to the government, stating the minimum price it is willing to pay. Only when the state accepts the application will the developer have to pay a deposit, which is 5 per cent of the minimum price committed.

The developer has two weeks to pay the deposit via a cashier’s order, banker’s guarantee or a bank transfer. If this does not happen, acceptance of the application lapses.

Take the sale of a residential site at Upper Thomson Road last year, for example. A developer committed to pay at least $82 million for the plot. This means the deposit was $4.1 million.

Industry players BT spoke to had few issues to raise about the reserve list system. Roxy-Pacific chief executive Teo Hong Lim said financially-prudent developers would most likely have ‘blessings of bankers’ before even applying for a site. A Hiap Hoe spokesperson agreed, saying developers would usually have prepared funds for the entire development cost when bidding for a site.

Reducing the deposit needed could encourage a few more developers to apply for sites, said Ngee Ann Polytechnic real estate lecturer Nicholas Mak. The deposit could be cut to 2-3 per cent of the minimum price committed, he added.

Apart from the deposit, other procedures in the reserve list system are under review. Knight Frank chairman Tan Tiong Cheng suggested the government provide an indicative range of reserve prices for sites, so developers can be more certain their application would be accepted.

On the whole, the system works ‘pretty well’, he said. ‘It’s a case of what’s in the reserve list. The quality of the sites is important.’

Source: Business Times, 5 Feb 2010

A RESIDENTIAL plot at Tampines was put up for sale by the government yesterday – the fourth so far this year.

In January, the government released three residential sites – including two for executive condominiums – for sale through its confirmed list.

Interest in the latest plot, at the junction of Tampines Avenue 1 and Avenue 10, is expected to be strong. Analysts say it could fetch anything between $300 and $460 per sq ft per plot ratio (psf ppr).

The site was first put up for tender in June 2008. But the government decided not to award it then because the sole bid of $118 psf ppr was deemed to be too low.

Bids will certainly be higher this time, analysts say. CB Richard Ellis (CBRE) reckons the site could fetch $300-330 psf ppr, while DTZ has a more positive estimate of $350-400 psf ppr. Others put the figure as high as $500 psf ppr.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said: ‘Assuming the developer launches the new condo on this site in a buoyant market in 2011, a reasonable land price could range from $410-$460 psf ppr. But one or two very bullish bidders could bid as high as $500 psf ppr.’

The site area is about 3.2 ha and, with a maximum gross floor area of 717,500 sq ft, can yield about 600 housing units. It is the biggest of the eight residential sites up for sale in the first half of this year.

Two new projects at Bedok Reservoir Road – Waterfront Waves and Waterfront Key – are being marketed at $700 and $760 psf respectively, said Li Hiaw Ho, executive director OF CBRE Research.

And in the resale market, units in The Tropica, Aquarius By The Park and Baywater were sold at between $640 and $670 psf in the fourth quarter of 2009, he added.

‘Based on these comparables, we expect a new 99-year leasehold project in this location may fetch around $720-$730 psf,’ Mr Li said. ‘This will translate to a land price of $215-$237 million, or $300-$330 psf ppr, for the site.’

DTZ’s South-east Asia research head Chua Chor Hoon said that homes on the development could go for between $750 and $800 psf.

In a statement, the Urban Redevelopment Authority said that another four private residential sites will be released for sale via the confirmed list in March and April.

Together, these eight sites – including the newly launched parcel at Tampines – can yield about 2,925 residential units. This is close to the highest-ever potential supply of about 3,000 units – in the H2 2007 government land sales (GLS) programme – from the confirmed list since the reserve list/confirmed list system started in the second half of 2001.

In addition, there are another 18 residential sites on the reserve list – including three executive condominium plots and two mixed-use sites.

‘The total supply quantum of 10,550 units from the confirmed list and reserve list for the H1 2010 GLS programme is the highest in the history of the GLS programme,’ URA said.

It added: ‘The government will continue to monitor the property market closely. If necessary, more supply can be injected via the second half 2010 GLS programme to ensure property prices are in line with economic fundamentals.’

Source: Business Times, 3 Feb 2010

A NEW condominium with about 600 units could be built on a 3.2-ha site facing Bedok Reservoir that was put up for tender to developers yesterday.

CBRE Research executive director Li Hiaw Ho said upgraders from HDB estates in Bedok and Tampines are likely to take a keen interest in any project that is eventually built on the site.

The 99-year leasehold plot at the junction of Tampines 1 and 10 may have a maximum gross floor area of 66,655 sq m, said the Urban Redevelopment Authority.

It is the fourth residential site launched for sale on the confirmed list so far this year. Confirmed list sites are tendered out on scheduled dates, without the need for developers to indicate their interest.

These sites were brought back recently after a suspension to allay fears of a shortage of homes. The 10,550 units to be made available for sale in the first half of this year will be the highest number in the history of the government land sales programme.

The Tampines site is next to The Tropica condo and about five to 10 minutes’ drive from Tampines Central and Tampines MRT station. It was first tendered out in 2008, when the market was slowing. It attracted just one bid – a lower-than-expected offer of about $118 per sq ft per plot ratio, which was rejected. At the time, property consultants had tipped bids of $200 to $300 psf ppr.

This time, consultants are more optimistic, given the improved market.

DTZ expects to see bids of $350 to $400 psf for the land, with the eventual selling price of around $750 to $800 psf on average.

‘Assuming the developer launches the new condo on this site in a buoyant market in 2011, a reasonable land price could range from $410 to $470 psf ppr ($294 million to $337 million),’ said Ngee Ann Polytechnic lecturer Nicholas Mak.

Mr Li said a project on the Tampines site may fetch about $720 to $730 psf, translating to a land price of $215 million to $237 million, or $300 to $330 psf ppr.

This is based on nearby comparable projects. The tender closes on March 16.

Source: Straits Times, 3 Feb 2010