Saturday, January 8, 2011

Landed home crunch set to worsen

LANDED homes are a rare commodity, and the crunch is expected to get worse in the coming years, going by the limited stock available.


In the past 10 years, the number of landed homes has gone up by just 6 per cent, while the number of apartments has risen by 47 per cent.


Out of a total of 256,513 private homes, 69,701 were landed, as of the third quarter of last year, data compiled by Credo Real Estate showed.


The shortage is likely to mean that developers would look towards intensifying their land use, possibly offering more strata-titled landed homes instead.


These homes, also known as cluster homes, combine the posh appeal of conventional landed homes with shared condo-style facilities like pools and security.


But they come with strata titles, so owners cannot renovate or rebuild their homes like in conventional landed homes.


They are also a blessing for developers faced with a dwindling stock of land.


Developer Tong Eng Brothers could have built 32 landed homes in its Poets Villas development near Peirce Reservoir, but will instead build 40 strata-titled semi-detached houses. One of its houses, with a built-up area of 3,200 sq ft, will cost about $2.2 million.


Managing director Teo Tong Lim told The Straits Times: 'Despite the changes in the rules, I can still fit in more strata-titled units than conventional units, so it's a more optimal and intensified use of the land... which means that it's also more profitable.'


He was referring to the Urban Redevelopment Authority re-introducing a minimum plot size rule in 2009 for strata-titled landed developments, as such estates had become dense and congested.


Landed homes made up 27 per cent of the private residential market as of the third quarter last year, down from 34 per cent in 2000. And while about 60,000 private apartments have been built here since 2000, only 4,000 landed homes have been added, according to Credo.


The scarcity of land is frustrating for developers as demand for landed homes has shot up due to the booming economy.


Of the estimated 250 transactions of private residential sites over the past five years, only 15 plots were for the development of landed properties, said Credo.


The last large government site sold for landed homes was in Jurong West in 2009. It attracted a staggering 32 bids. An auction of 14 parcels for landed homes in the third phase of Sembawang Greenvale last October was also hotly contested, with prices well above expectations.


The supply-demand squeeze is behind strata-titled homes' rising popularity.


Credo managing director Karamjit Singh said these homes allow developers to create more units that make use of common facilities on a site, without having to sacrifice land for roads.


Mr Ong Kah Seng, senior manager of Asia-Pacific research at Cushman & Wakefield, said the scarcity of landed homes may push some buyers into strata-titled property instead - a trade-off that gives up exclusivity and a land title for a newer home with shared facilities.


'Shared facilities can be cost saving for the owner, who does not have to develop the facility,' he added.


Price is never far from the equation. Conventional landed homes still tend to cost more because of their separate title and individual land space, said Ms Christine Sun, senior manager at Savills Research & Consultancy. The average quantum price of a conventional landed home is $3.8 million, while a strata-titled home fetches about $2.2 million, she added.


The difference is more stark when capital gains are taken into consideration.


Conventional landed homes have shot up by 107.5 per cent since early 2009, compared with a gain of 27.9 per cent for strata-titled homes. Many strata-titled homes are leasehold properties.

No comments:

Post a Comment