Saturday, July 7, 2012

» North-east region may see glut of homes, says report

Straits Times: Sat, Jul 07


A SPATE of project launches in the north-east has sparked concern that there will be an oversupply of homes in the coming years.

Sites that can yield more than 10,000 homes have been sold in Punggol, Buangkok and Sengkang alone since September 2009, according to Square Foot Research.

These have been developed into projects such as A Treasure Trove, Watertown, H2O Residences and The Luxurie.

If other north-east estates like Hougang, Seletar and parts of Upper Serangoon are included, almost 14,000 units on about 25 sites are on the cards. These units, which include executive condominiums (ECs), are expected to be ready from 2014 to 2016.

Three EC sites in Punggol that can yield about 1,415 homes are also up for grabs in the government land sales (GLS) programme for the current half of the year.

Factor in upcoming Housing Board (HDB) build-to-order launches as well - and you have a daunting set of numbers.

Experts say that while there remains demand from HDB upgraders for private and EC projects, the bumper supply of sites does look 'worrisome'.

OrangeTee head of research and consultancy Tan Kok Keong said investors should be cautious even though Seletar Aerospace Park might boost rental demand.

'Even if there is demand, competition for tenants will be fierce and investors might have to accept lower rents, and hence, lower rental yields,' added Mr Tan.

'It pays to be selective and to choose a unit near an MRT station or an employment place.'

Other experts have played down the oversupply threat.

Chris Koh International director Chris Koh said 'there is no oversupply at the moment as there is high demand'.

Many HDB owners who are familiar with the surroundings do not mind upgrading to a private unit there, he said.

For instance, Punggol - the newest HDB town - will enjoy private home demand as an increasing number of HDB owners within the estate finish up their five-year minimum occupation periods (MOPs). The area's waterway concept is also appealing.

Square Foot Research director Ooi Yi Tung also noted that the oversupply risk is also mitigated by the fact that 46 per cent of the upcoming flats in Punggol, Sengkang and Buangkok are ECs. This includes the EC sites to be sold in the later part of this year.

ECs have condo-like facilities and are an upmarket hybrid of public and private housing. They also have an MOP of five years and can then be sold only to Singaporeans and permanent residents.

This means it could take at least eight years - three years of construction and a five-year MOP - before they enter the secondary market. This staggered supply will reduce the chance of a glut.

But Mr Ooi said potential buyers should note the amount of building going on in new towns such as Punggol, where construction is expected to stretch to at least 2017 given the continued rolling out of new GLS sites.

'Also, there is no need to rush into buying as there are still ample vacant land sites in Punggol.'

Ms Chua Chor Hoon, DTZ head of Asia-Pacific research, noted that Pasir Ris, which has also seen an increasing number of launches, may be of more concern.

NV Residences, The Palette, Ripple Bay, Palm Isles, Seastrand and Sea Esta plus EC projects Belysa and Watercolours have all hit the market recently. The ratio of private to public housing in Pasir Ris is expected to more than double when these projects are completed. This ratio will be significantly higher than the islandwide figure and the highest ratio among all towns, she pointed out.

Some investors told The Straits Times that while they are aware of the large supply in the pipeline in the north-east region, they hope for a first-mover advantage.

Mrs Mae Seow, who bought an investment home in Punggol last October, said the unit was within her budget. Plans for Punggol to become an eco-town and its waterfront features also appealed.

  
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