Tuesday, October 16, 2012

Property cooling measures proving successful: Khaw


OCTOBER 16, 2012
Property cooling measures proving successful: Khaw

Private, HDB resale market stabilising; five residential sites released for sale
BY MINDY TAN

[SINGAPORE] Five sites yielding some 2,880 homes have been released for sale, even as the government has pledged that it remains ready to cool the housing market if necessary.
Minister for National Development Khaw Boon Wan, asked by Members of Parliament yesterday what the government is doing to ensure housing remains affordable, said the cooling measures put in place thus far - including the curb on housing loan tenures - have met with some success. He said: "Both the private property and HDB resale market have shown signs of stabilising."

Specifically, the growth in private property prices has moderated significantly, from 18 per cent in 2010 to 6 per cent last year and to 0.9 per cent in the first three quarters of this year.
On the public housing front, the yearly Resale Price Index growth has also come down; it was 14.1 per cent in 2010, 10.7 per cent last year and 3.9 per cent in the first three quarters of this year. Mr Khaw indicated, however, that the market was not yet out of the woods, going by the uptick in RPI in Q3 2012 - a 2.0 per cent growth from Q2 based on flash estimates.

He added that although the supply of Built-to-Order flats has been significantly ramped up, it will take time for the ramped-up supply to catch up with demand. The government will continue to monitor the public housing market, he said.

Of the five 99-year-leasehold sites launched for sale this month under the government's plans to ensure a significant supply of housing - public and private - in the next two years, two are executive condominium (EC) sites. The first EC site is next to Flo Residence, at the junction of Punggol Field Walk and Punggol East. Sitting on 153,999 sq ft of land, it has maximum gross floor area (GFA) of about 461,997 sq ft and is expected to yield 435 units.

Lee Sze Teck, senior manager of training, research and consultancy at DWG, thinks that, although the demand for ECs should remain healthy, the take-up rate may be slow because of the number of options in the market.

He expects the site to attract a top bid of $270 to $320 per square foot per plot ratio (psf ppr), and pull in four to eight bidders. Nicholas Mak, research head at SLP International, pegs it at $290 to $329 psf ppr. With the significant housing supply in Punggol, he said, three to six bids could come in for this tender.

Jones Lang LaSalle's national director for research and consultancy Ong Teck Hui has put the range for the top bid at $280 to $310 psf ppr, with "moderate interest" from three to five bidders, given that the site is located away from Punggol MRT Station and the town centre. The tender for this land parcel closes on Dec 6. The second site, located next to Sky Habitat in Bishan St 14, sits on a 120,855-sq-ft plot, and has maximum GFA of 592,189 sq ft, enough for 645 units.

The land parcel set aside for Sky Habitat was sold to CapitaLand in February last year at $550 million, or $869 psf ppr.

SLP's Mr Mak reckons that a reasonable land price for the parcel released for sale - one which would yield a launch price attractive to home buyers - could range from $680 to $735 psf ppr. Ten to 15 bids could be submitted, he said. However, CapitaLand is likely to protect is market position, which could ensure the top bid does not fall below $830 psf ppr, he said. DWG's Mr Lee expects the site to attract more than 10 bidders, with the top bid between $800 and $850 psf ppr; JLL's Mr Ong expects the top bid to be between $750 and $830 psf ppr.
The tender for this site closes on Nov 29.

Another EC site at the Sembawang Crescent- Sembawang Drive junction, measuring 233,760 sq ft, will be launched for tender on Oct 30. It has total GFA of 654,527 sq ft and can yield about 650 units.

SLP's Mr Mak said: "Compared to the neighbouring EC development launched in the middle of this year - One Canberra - this land parcel is a choice site for a quality EC development due to its relative proximity to Sembawang MRT Station and Sembawang bus interchange."
He expects the top bids to sit between $295 and $330 psf ppr. "As there's no other new EC project in the vicinity, it could attract some interest from developers. The tender could attract four to seven bids."

But JLL's Mr Ong pointed out that Sembawang is a relatively small new town, so the immediate market catchment could be limited; demand could instead come from "a wider geography". He reckons four to six bidders will submit offers.

DWG's Mr Lee noted the sales performance of One Canberra - 299 units out of 665 units sold as at last month - could result in cautious bidding for this site. He expects the top bid to be between $250 and $300 psf ppr, comparable to the $293 psf ppr for the One Canberra site last October.

Two other sites in Tampines Ave 10, Parcels C and D, were made available for application by developers through the reserve list.

Parcel C is approximately 238,860 sq ft, and has maximum GFA of about 668,806 sq ft. It is expected to contain 680 units.

Parcel D is 168,567 sq ft and has maximum GFA of 471,988 sq ft. It is expected to contain about 470 units.

DWG's Mr Lee said these sites may not be triggered, given the availability of other choice sites on the confirmed and reserve lists; that being said, the trigger price could be $300 to $350 psf ppr. If both land parcels are launched for sale today, Parcel C could fetch $388 to $441 psf ppr, and Parcel D, $390 to $441 psf ppr, said SLP's Mr Mak. The sites will be launched for tender only upon successful application by a developer who pledges to offer a minimum bid price acceptable to the state.


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