Lack of interest a sign that developers have become more selective

AN EXECUTIVE condominium (EC) site that experts thought might draw at least two or three developers failed to attract a single bid at the tender’s close yesterday.

The surprise lack of interest in the Jurong West site likely stems from the Government’s recent decision to put a record number of sites up for tender in coming months, giving developers a wealth of choice.

Bids were tipped to come in between $230 and $300 per sq ft per plot ratio for the 99-year leasehold site after strong interest in other EC tenders this year.

But developers have become much more selective and the site is not particularly appealing, being next to the expressway with no amenities nearby and some distance from the MRT, said experts.

ERA Asia-Pacific associate director Eugene Lim added: ‘If the site is not attractive, developers would presume that it would be difficult to sell. So why take the risk?’

A developer who declined to be named said: ‘There are too many choices out there. You have only so much resources so you have to pick something that you can make money from.’

EL Development managing director Lim Yew Soon said: ‘I would think most of us want to choose a site that is more attractive. There’s an opportunity cost even if you put in an opportunistic bid as you may miss the next tender.’

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said developers will be more cautious with sites where they see limited pricing flexibility.

ECs are aimed at households with a gross monthly income ceiling of $10,000 so developers would want to price units at below a million each, he said. They should cost at least 10 to 15 per cent less than a private mass market condo unit.

The last time an EC site had no takers was in late 2008 when the market was weakening. That site – at the junction of Punggol Field and Punggol Road and near Punggol MRT station – eventually sold in June this year.

A Ministry of National Development spokesman said: ‘It’s not possible to conclude the lack of bids is a sign of the market cooling. Developers’ participation on Government land sales sites is affected by several factors, of which location of the sites and supply of sites are some of the considerations.’

However, Mr Mak said the Jurong West outcome will have a ‘psychological effect on the land sales market’.

‘It could signal to developers that they no longer need to bid high for sites that are not attractively located,’ he said.

The Jurong EC site can yield an estimated 460 units with a maximum permissible gross floor area of 542,988 sq ft.

Meanwhile, demand for new build-to- order (BTO) HDB flats remained strong, with 2,163 applications received for 171 four-room flats in Jurong West.

Applications for the five-room flats in the same area were nearly 12 times the 104 units on offer. The project in Bukit Panjang drew 2,123 applications for 313 four-room flats.

Source: Straits Times, 13 Aug 2010

Site’s remoteness, supply of govt land in the pipeline cited for poor response 

(SINGAPORE) The tender for an executive condominium (EC) site at Jurong West drew gasps of astonishment from market watchers when it closed yesterday – not because there were many bids but because there was absolutely none. 

Observers attributed the lack of interest to the site’s remoteness, and suggested that developers had become more selective given the many other pieces of state land available for sale. 

The Housing and Development Board launched the 99-year leasehold site from the confirmed list for sale last month. It sits at Jurong West Street 42 and is some distance away from Lakeside MRT Station. 

The site could have yielded around 460 units. Consultants which BT polled then did not think it was particularly attractive, but thought it might still reel in bids ranging from $230-$300 per square foot per plot ratio. 

With no bids coming in, the site could be brought over to next year’s government land sales (GLS) programme. The Ministry of National Development (MND) told BT that it will make future plans for the site known at a later date. 

For an industry which has gotten used to seeing 10 or more developers vying for a residential site since the second half of 2009, the absence of any takers in the latest tender was surprising. 

November 2008 was the last time when an EC site on the confirmed list saw no demand – the global downturn had kept developers away from the plot at Punggol. But it was subsequently sold in June and its tender drew five bids. 

A developer who has been actively bidding for land told BT that he gave the tender of the Jurong West site a miss because the plot is not near an MRT station. Good location is especially important for ECs, he said. Furthermore, the government will be releasing more land and he has to ‘reserve ammunition for better located sites’. 

Consultants echoed these views. Colliers International investment sales executive director Ho Eng Joo said that developers are likely to be less aggressive and more selective given the many sites they will have to choose from. 

The government has been increasing land supply as private home prices climbed in the last few quarters. The second half GLS offers 31 sites for private residences, which include a few other EC plots at areas such as Pasir Ris and Tampines. 

Knight Frank’s consultancy and research manager Ong Kah Seng also suggested that developers which bought land recently could be focusing on preparing those sites for launch. 

Industry watchers hesitated to say if the lack of demand for the site at Jurong West signalled a cooling of the property market. 

MND also said it was not possible to conclude so. Developers’ participation in tenders ‘is affected by several factors, of which location of the site and supply of sites are some of the considerations’, it said. 

In a report yesterday, CB Richard Ellis said it expects to see more activity in the EC market when four new projects with some 1,400 units altogether are launched in the next three to six months. 

‘Assuming the historical 30 per cent gap between private suburban homes and new ECs remains, median prices of new ECs are likely to stay at around $650 psf to $750 psf,’ said CBRE Research executive director Li Hiaw Ho.

Source: Business Times, 13 Aug 2010

This year’s launches now top offers for whole of last year

THE Housing & Development Board (HDB) is launching two new Build-To-Order (BTO) projects with 1,016 units at Bukit Panjang and Jurong West.

This brings the number of new flats it has introduced under the scheme so far this year to 9,844 – exceeding the 9,000 for the whole of last year.

Senja Gateway, located at the junction of Kranji Expressway and Woodlands Road, will have 741 standard flats. They consist of 254 studio apartments, 313 four-roomers and 174 five-roomers.

The site is near the LRT station at Ten Mile Junction, and is surrounded by schools such as Pioneer Junior College.

A five-room flat at the estate will go for $308,000 to $398,000. According to HDB, comparable resale flats in the area cost $378,000 to $450,800.

The second project, Corporation Tiara, is at the junction of Corporation Road and Yung Kuang Road. Up for sale are 275 premium flats, comprising 171 four-roomers and 104 five-roomers.

The project will include another 190 studio apartments but HDB will put these up for sale later.

Corporation Tiara is some distance from the Lakeside and Boon Lay MRT stations. But it is near green lungs – Chinese Garden and Japanese Garden.

A five-room flat at the estate will cost $304,000 to $389,000. Prices of comparable resale flats in the vicinity range from $384,000 to $420,000.

HDB has ramped up the supply of new flats this year as prices of resale flats continue to climb – they rose 4.1 per cent in Q2 from Q1. Buyers also had to pay larger cash premiums.

The agency will be rolling out another 1,400 new flats in Yishun next month, and it plans to offer up to 16,000 BTO flats for the whole year.

HDB pointed out that the annual take-up of HDB flats ranged from 7,000 to 16,100 in the last 10 years. ‘There were balance flats almost every year,’ it added.

Source: Business Times, 30 Jul 2010

TWO build-to-order (BTO) Housing Board (HDB) projects that will add 1,016 new flats to the market were launched yesterday. The launch means 9,844 flats have been released in seven months, exceeding the 9,000 units offered for the whole of last year.

The projects are Senja Gateway in Bukit Panjang and Corporation Tiara in Jurong West.

Senja Gateway at the junction of Kranji Expressway and Woodlands Road will have 741 standard flats, comprising 254 studios, 313 four-room flats and 174 five-roomers.

Studios of 35 sq m to 45 sq m will cost $67,000 to $95,000, four-room flats of 90 sq m will be from $242,000 to $306,000 while five-roomers of 110 sq m will go from $308,000 to $398,000.

Corporation Tiara in Jurong West, at the junction of Corporation Road and Yung Kuang Road, will have 275 premium flats, comprising 171 four-roomers and 104 five-roomers.

Four-roomers of between 90 sq m and 93 sq m will cost between $242,000 and $325,000 while five-room flats of 110 sq m to 113 sq m will cost between $304,000 and $389,000.

Under the BTO scheme, flats are built only when a certain level of demand for the project is met.

PropNex chief executive Mohamed Ismail expects this launch to be more than three times oversubscribed as demand is still strong due to the high cash-over-valuations (COV) asked for in the HDB resale market.

He added that the pattern of demand from past BTO launches showed that four- and five-room flats were often the most popular.

‘I think demand will be sustained throughout this year and we might even see a record number of BTO flats being launched,’ he said.

The HDB said that if demand from first-time buyers is sustained, it is prepared to offer up to 16,000 BTO flats this year. This is a significant supply as the total annual take-up of HDB flats in the last 10 years ranged from 7,000 in 2006 to 16,100 in 2000, with flats left unsold almost every year, the board said.

Buyers can expect about 1,400 flats to be launched in Yishun next month while upcoming projects include areas like Woodlands, Punggol and Sengkang.

The BTO stock will also be supplemented by an upcoming supply of 4,700 units under the design, build and sell scheme (DBSS) and executive condominium scheme such as a site launched for tender in Tampines Avenue 5 last month.

The HDB said it is prepared to launch more DBSS sites if demand keeps up.

Applications for the BTO flats launched yesterday can be made online at www.hdb.gov.sg until Aug 11.

Source: Straits Times, 30 Jul 2010