Prime sites may yield high-demand homes

Should the sites currently earmarked for future residential use be put up for sale, the public can expect some juicy baits from developers as these sites are in prime locations near the city centre.

Tanglin ResidencesThe 2 sites which are particularly beguiling are the former Ministry of Home Affairs Phoenix Park site in Tanglin road and the former Overseas Family School plot in Paterson road. Both sites are under governmental ownership and while the location of these sites will excite developers and buyers alike, the government is unlikely to put them up for sale anytime soon. They have in fact been holding back on the release of land sites possibly contributing to the increased number of successful en bloc sales in recent months.

Paterson SuitesThese sites with their exclusive addresses are currently put up for interim use though should they eventually be placed for sale, they are likely to yield 450 to 700 homes in the Paterson road site and 850 to 1000 units averaging 800 to 1,000 sq ft on the Phoenix Park site. The latter is currently tenanted by LHN Facilities Management who will have the option of renewing till the end of 2020. The proximity of this site to various embassies in the Tanglin area will however mean restrictions may be placed on the height not to mention possible heritage conservation regulations.

 

Long-term potential of Commercial property in Singapore

Commercial properties in Singapore still hold a special place in the hearts of investors, if the activity in the market last year was anything to go by.

straitstradingbuildingThere were some massive bulk purchases of prime sites from foreign entities in 2016 and developers were actively buying up land sites. Investors are obviously seeing huge potentials of the commercial property market here. The 43-storey Asia Square Tower 1 for example was sold at $3.38 billion to Qatar Investment Authority’s sovereign fund in June 2016. This record sale by investment firm BlackRock was the largest single-asset and office transaction in the Asia-Pacific region. On a smaller but not any less worthy scale, is the sale of the Straits Trading Building to Indonesia’s Mayapada Group for $560 million. At $3,250 psf, it set a record for psf prices in the district.

Investors from all over the world are spotting the potential for long-term positive growth in this region and in extending their reach in Singapore. Large assets here are of particular interest and 2017 may see more such transactions taking place.

sbf-centerNot only are they investing in completed commercial properties, but also in land with developmental potential, such as a white site in Central Boulevard which was purchased by Malaysian plantation and real estate tycoon, Lee Shin Cheng. This Marina Bay mixed-use site was released under the Government Land Sales (GLS) programme. Though the office rental market has not been in its best form last year, there is hope that it will bounce back up by 2021.

 

Will current property bright spots continue to shine in 2017?

Private home prices have continued to fall in 2016, and while that may have coloured the market atmosphere somewhat grey, bright spots are beginning to shine through the gloom, with 3 sectors performing particularly well this year.

Miro condo on Lincoln Road, just off Novena at the City Fringe districts.

Miro condo on Lincoln Road, just off Novena in the city fringe.

The luxury residential property, commercial office and collective sales segments have all shone this year. And industry players are no doubt hoping that the positive streak will continue in 2017. In this year alone, 3 en bloc sales were closed. Only 1 such transaction was recorded for 2015 and none in 2014. Even for the private home market, sales volume has risen 9.8 per cent this year despite 10.8 and 10.7 per cent fall respectively in sale prices and rents in 12 consecutive quarters.

Some property analysts however consider the fall in property prices a good thing, as this has enticed more buyers back into the market. Buyers who may have previously stayed away from the market due to the increased stamp duties and fees implemented by the authorities in the past few years to attempt to cool the market, have now returned and are now swiftly closing transactions.

2 RVG condo apartment in River Valley

2 RVG condo apartment in River Valley

In the prime districts of 9, 10 and 11, private home transactions were already 42.6 per cent higher than the total in 2015. 2,601 deals were sealed in the Orchard, River Valley, Bukit Timah and Novena areas as of mid-December. With more land allocated under the Government Land Sales (GLS) scheme and developers on the lookout for smaller prime location sites, the market may see a lot more activity quite soon.

Prime land plots released for H1 of 2017

Out of the 5 residential sites which were released under the Government Land Sales (GLS) scheme‘s confirmed list for H1 of 2017 are 3 sites which may see heated competition from bidders – one on Jiak Kim Street where the Zouk nightclub used to stand, another on Fourth Avenue right next to the Sixth Avenue MRT station and yet another on Woodleigh Lane, near the new Bidadari township and Woodleigh MRT station.

rmaisonThese 5 sites are expected to yield up to 2,330 new homes, about 50% more than the 1,560 units yielded by land released in the first half of this year. Bidding on the last few sites released this year have gotten developers and property analysts excited about the potential volume and size of land plots to be released next year, but the authorities have kept it conservative thus far, having released only 10 sites on the reserve list. This includes 1 mixed-use site and 2 commercial sites.

It is possible that the Government is concerned about the stock of unsold executive condominiums (EC) currently in the market. In addition, most of the units sold this year were purchased by investors and not true home-occupiers. The Monetary Authority of Singapore has also recently flagged their concern about rising vacancy rates in the private property market. This combination of factors may have influenced their decision on how much land supply to release in 2017. Only 1 EC site was released on the confirmed list and another on the reserved list.

West Coast Vale and Serangoon Road sites to yield more new homes

The Urban Redevelopment Authority (URA) has just released a West Coast Vale residential site with a tender closing date of Feb 9 next year, on the back of positive response from 14 developers for a Margaret Drive site.

parcriviera2While property analysts are more prudent with their predictions of response from developers for this site, they are nevertheless expecting 5 to 10 bids. It’s location is perhaps not as ideal as the previously released  Margaret Drive and Martin Place sites, but this 99-year leasehold, 16,378 sq m site is situated near the Jurong Lake District and its many amenities such as office and commercial spaces and also shopping malls such as Westgate and Jem.

A recently launched project nearby is the 752-unit Parc Riviera condominium. Sales for this development has been muted thus far with 130 units sold at around $1,175 psf, but analysts are still expecting a winning bid of between $222.1 million to $246.8 million for this new West Coast Vale site. There are speculations that EL Development might go for the bid in order to manage pricing of new homes in the area.

sennett-residencesOn the private front, the Serangoon Road site on which the National Aerated Water Company sits has also been sold to Malaysia-listed developer Selangor Dredging for $47 million. Unknown to some, the National Aerated Water Company used to distribute popular nostalgic soda pops such as Sinalco and Kickapoo Joy Juice and this site used to house its bottling factory up to the 1990s when operations ceased. As the new owner is planning to convert this industrial site into a residential one which could potentially yield 117 apartment units, there is an additional fee of $22.66 million involved in the transaction. This could very well be a worthy investment as the site is close to the Potong Pasir MRT station and upcoming Bidadari HDB estate, in the increasingly popular city-fringe district 12.

West Coast soon abuzz with new properties?

Without question, the west coast has a vibe of its own. A sense of excitement, freedom; a buzzing undercurrent of work and play. So the government’s recent release of a 16, 378 sq m land site on West Coast Vale could potentially mean an even more vibrant district in as soon as half a decade’s time.

AYEPhoto credit: LTA

The plot of land released for sale is under the government’s reserve list, which also means the sale will only go through if the bids meet the minimum set by the government. With its prime location near the Ayer Rajah Expressway and West Coast Highway, and schools such as Nan Hua Primary School, The Japanese School and Commonwealth Secondary School, the area is ripe for a new residential condominium or strata landed housing project.

The neighbouring Parc Riveria may be a good gauge of the potential this new site holds. The land which Parc Riveria stands on was acquired only last year and another private condominium nearby is The Trilinq.

The TrilinqThe government has been more cautious of late with the  release of land for sale under the government land sales programme as the market is becoming more saturated. What may hold developers back from bidding for this site is its distance from MRT stations and other amenities. It may however mean quieter and more exclusive environments which young couples or families looking for a property near schools in its vicinity.

Starlight Starbright

All units at the Starlight Suites have now been sold, and all in good time as their Qualifying Certificate (QC) sales deadline loomed near.

StarlightSUitesA total of 23 units ranging from one-bedders to a 3,000 sq ft penthouse were sold for $48 million and the buyer was linked to Evia Capital. A few months earlier, news about developers hoping to bulk sell units to funds in order to meet their QC deadline and to recoup their losses were put out there. As the quantity of unsold stock in the market increases, developers have been coming up with new ways to entice buyers, individual or group.

For Starlight Suites, the sale price for these final 23 units worked out to be about $1,670 psf. At its launch, the average selling price was at $2,000 psf. The deal was done via a sales of shares in the development company, Meadows Property (Singapore) who are then not bound by the QC rules nor have to succumb to the extension charges. As Starlight Suites is situated near a Martin Place land plot which will be released for tender under the Government Land Sales (GLS) programme next month, this purchase could be a blessing as Evia Capital will be able to use their purchase as a benchmark for units in the adjacent development.

111 Emerald HillA similar deal previously brokered at $75 million last year was 111 Emerald Hill. As the QC deadline for more projects draw near, how will developers react? Could there be further price drops?

Decrease in property launches next year?

Large fresh batches of completed homes will be entering the market next year, which may in turn increase the supply of available private homes and decrease consumer’s demand. Add the Federal Reserve’s rate hike which was just announced yesterday, the market is expected to remain quiet in 2016. The authorities are picking up on these changes and have announced that they will be holding back on the release of land sites for sale in the first half of 2016.

As most of the completed new private homes flooding the market next year will be outside the central regions, that is 55% in the suburbs, suburban private properties might be feeling the crunch in terms of rental competition and sales volume. The total number of private homes reaching completion next year will be a whooping 22,351. Property experts’ have previously projected the market requirement of only 8,000 to 10,000 new units per year. The numbers have almost doubled over the last 4 years, with a total of 70,000 private homes were launched within this time period. Add public housing and the numbers are substantial reason for worry.

Although the government will still keep the Government Land Sales (GLS) programme going in order to keep the property and construction industry going, they will only be releasing 16 sites in the H1 of 2016. Some of the confirmed sites include a residential site in Sembawang,  an executive condominium (EC) plot in Anchorvale Lane which may yield 640 units, a mixed-use plot in Bukit Batok West and a rare plot on Martin Place near River Valley road. The last of the 4 confirmed sites may be of particular interest to developers hoping to snag a prime plot which could yield potential high-end residential units.

Developers and buyers could also be interested in a few other mixed-use sites, in particular one on Holland Drive.