SINGAPORE: Public housing flats built under the Design, Build and Sell Scheme (DBSS) appear to have fallen out of favour with home buyers in recent months.
Analysts say there are about 1,000 units of unsold DBSS flats and sales could slow as a result of the large pipeline of new Build-To-Order flats (BTO) and executive condominiums (EC). But they say DBSS flats will enjoy healthy capital gains going forward.
These units at The Premiere @ Tampines were hot property when they were launched for sale in 2006, but sales of similar DBSS units have not been as brisk in the past year.
At Pasir Ris One, only 30 per cent of 447 units were sold since the project was launched in April this year, according to real estate agencies.
The DBSS was introduced in 2005 by the Housing and Development Board (HDB) to get private developers involved in the development of public housing units.
The government suspended the scheme last year.
"We have got BTO flats, premium flats that come with flooring, finishing that are comparable to DBSS," said Mohamed Ismail, the CEO of Propnex.
"In the last two years, the increased supply of BTO flats and executive condominiums has put a place where DBSS don't seem to be as attractive as it used to be."
Meanwhile, Trivelis at Clementi Avenue 4 has seen better take-up, with 90 per cent of the units sold.
The remaining 10 per cent of the 888 units can only be sold to non-Chinese buyers, according to public housing rules.
But Trivelis' developer said a small number of buyers have backed out previously, citing financial reasons or alternative housing options.
Lim Yew Soon, the managing director of EL Development said: "There could be some cases whereby the launches of the new BTO flats are in good location that seem more attractive, that could be one reason that they have dropped out despite having to pay a penalty for it. Once an option is issued and they decided not to exercise it, they will have to pay 1.25 per cent of the purchase price."
But analysts say these homes still offer substantial capital gains in the resale market after the minimum occupation period of five years.
According to Mr Ismail, some of the earlier launches of DBSS, like in Tampines and Upper Boon Keng, tend to be nearer to MRT and central locations, so sellers will enjoy a premium in terms of Cash Over Valuation or in terms of valuation on the resale market.
They will be able to make a reasonable tidy capital appreciation in the tune of probably 40 to 50 per cent, Mr Ismail said.
For example, the starting price of a four-room unit at The Premiere@Tampines was S$278,000 in 2006, but prices for a four-room HDB resale unit in the area have risen to about S$480,000 this year, representing a significant appreciation of asset value.
Donald Han, the special advisor of HSR said: "Most potential resale (flats) coming from DBSS are likely hit the million-dollar mark, especially those 5-room flats where the units are larger and typically would enjoy better views and those in very good location, for instance in Clementi, Pasir Ris. (The flats are) near to amenities (and) would be able to command a higher premium."
Home buyers would have bought the 5-room DBSS units at prices ranging from over S$308,000 for earlier projects to over S$700,000 for more recent ones from the developers.
Market watchers say there will still be a good demand for DBSS units in the coming years, when the projects are near to their completion date.
They add that the developers are also in no hurry to clear out the remaining units and are therefore not likely to lower prices.
In fact, prices for units at Trivelis have risen by 2 per cent on average since its launch last October.
Meanwhile, Sim Lian Group says it does not intend to offer any discounts to sell the balance units at Centrale 8.
About 70 per cent of the 708-unit project have been sold since its launch in June 2011.
Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)
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