ANALYSIS: Pros and cons of the Build-To-Order sites to be launched in May 2022

By Elizabeth Choong / EdgeProp Singapore | March 10, 2022 12:36 PM SGT
HDB in Jurong West (Picture: Samuel Isaac Chua/EdgeProp Singapore)
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Strong demand for HDB

SINGAPORE (EDGEPROP) - There is strong demand for Build-To-Order (BTO) flats as seen in the 24,748 applications received for 3,953 BTO flats launched in February 2022. This translates to an application rate of 6.3; up from 4.4 achieved during the BTO exercise in November 2021.
Of the six sites launched in February, King George’s Heights and Dakota Crest were the most over-subscribed. Both are in mature estates and King George’s Heights is the second Prime Location Public Housing (PLH) site. Interestingly, the application rate for Dakota Crest (17.4) is higher than King George’s Heights (13.3) despite not being PLH and launching more expensive 4-room flats. Launch prices for 3-room flats were similar for both sites.
The resale HDB market enjoys some spillover benefits from the buoyant BTO market because some unsuccessful BTO applicants divert their attention to the resale market. Additionally, some buyers change their buy intent from suburban condominiums to HDB resale flats after the recent cooling measures. The increased demand gave a boost to HDB resale prices which is now at a record high of $512 psf; significantly higher than the previous peak of $469 psf in 2013.
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BTO Graph1 - EDGEPROP SINGAPORE
The BTO exercise in May 2022 is closely watched because of the bumper crop of flats offered in the central region. Of the 5,330 flats across six sites that will be launched, 3,680 flats across four sites are in a central location. The two sites in Bukit Merah are also expected to be under the PLH model.

Central region: the crowd favourite

The two sites in Bukit Merah with 2,440 flats are expected to see the strongest demand due to their excellent location and proximity to an MRT station.
However, potential buyers should note that both sites are expected to be launched under the PLH model which means a longer Minimum Occupation Period (MOP) of 10 years instead of the usual five years. The longer MOP could make the flats less suitable for buyers who plan to sell their flats in the near future to fund their retirement or buy a larger home to accommodate their expanding family.
In addition, first buyers of such flats will have to refund a percentage of the sale price to HDB upon sale of the flat. This means that owners will have to sell their flat at a higher price to account for the refund or contend with a lower profit. (Find HDB flats for rent or sale with our Singapore HDB directory)
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Demand for surrounding non-PLH flats could get a boost when unsuccessful applicants turn to the resale market. Despite the higher prices and lease decay, the resale market is worth considering because there is no construction delay as the flats are already built. Buyers can consider Telok Blangah Parcview along Telok Blangah Street 31 which achieved MOP last year or Toa Payoh Apex along Toa Payoh East which will achieve MOP in July.
Unsuccessful applicants with less financial means and no urgent need for a roof over their heads will be glad to know that there will be another 1,500 BTO flats in Alexandra. However, HDB has yet to announce the launch date.
BTO Map - EDGEPROP SINGAPORE
BTO Map - EDGEPROP SINGAPORE
BTO Table1 - EDGEPROP SINGAPORE
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BTO Table2 - EDGEPROP SINGAPORE
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BTO Table3 - EDGEPROP SINGAPORE
BTO Graph2 - EDGEPROP SINGAPORE
Over the last 10 years, prices for resale HDB flats in Bukit Merah grew the most (13%) with Toa Payoh bringing up the rear (8%). Despite flats in Queenstown having the highest average price of $675 psf in 2022, it is actually a decline from $698 psf in 2021. Prices for Bukit Merah and Toa Payoh increased during the same time period. It is noteworthy that the current average prices for all three towns are significantly higher than the islandwide average of $512 psf.
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Taking reference from current resale prices, the BTO flats in Toa Payoh are likely to be launched at lower prices compared to the other three sites; making it most suitable for buyers who are keen on a central location but have a modest budget. However, buyers will face intense competitive for the small number of launched flats in Toa Payoh.
Queenstown would be a good choice for families with young children because of the numerous reputable schools in the neighbourhood. It will also appeal to young couples who enjoy the bohemian vibe of nearby Holland Village. Buyers who work in one-north will also appreciate the short commute. However, families with many children will find it a tight squeeze as only 3 and 4-room flats are launched.
The two sites in Bukit Merah are likely to be launched under the PLH model and hence expected to be the most expensive. Hence, Bukit Merah is a good choice only if buyers have sufficient budget and have no plans to sell in the near future.
Tiong Bahru Market - EDGEPROP SINGAPORE
Tiong Bahru Market (Picture: Samuel Isaac Chua/EdgeProp Singapore)

Jurong West: up-and-coming neighbourhood

The west region of Singapore is gaining popularity with Jurong East designated as Singapore’s second CBD. The completion of four huge malls near Jurong East MRT station; namely Westgate, JEM, JCube and IMM, added to the attractiveness of the region.
BTO Map5 - EDGEPROP SINGAPORE
BTO Table4 - EDGEPROP SINGAPORE
BTO Graph3 - EDGEPROP SINGAPORE
Buyers with a tight budget should consider Jurong West. Resale HDB prices for the town is consistently lower than the west region and the whole of Singapore. Jurong West also has the lowest average price for resale flats among all towns in this BTO exercise. Despite its lower rate of price growth, owners with an eye towards investment should not dismiss Jurong West because it will become more important in tandem with the growth of Jurong East as the second CBD. The opening of the Jurong Region Line in phases from 2027 will also improve connectivity.
Nature-lovers should give this site serious consideration because it is next to Jurong Lake Gardens; offering buyers the opportunity to own a home with unblocked views of greenery. The site is also ideal for families with young children because it is near many schools. Buyers working in Jurong East or the nearby industrial area will appreciate the short commute.

Yishun: not just the twilight zone of Singapore

Yishun has the undeserved reputation of being the town where weird things just happen. However, buyers should not let that deter them from considering Yishun. The BTO site is near many amenities such as malls and schools. Residents can also go for a jog at the nearby Yishun Pond.
The site to be launched in the May BTO exercise is nearer to an MRT station than the nearby site launched in February. Taking reference from the BTO exercise in February, 4 and 5-room flats were launched at prices (excluding grant) starting from $270,000 and $385,000 respectively. The flats at Yishun for the current BTO exercise are expected to be launched at similar affordable price levels.
BTO Map6 - EDGEPROP SINGAPORE
BTO Table5 - EDGEPROP SINGAPORE
BTO Graph4 - EDGEPROP SINGAPORE
During the last 10 years, HDB resale prices for Yishun grew 15%; a tad faster than Woodlands (14%) but slower than Sembawang (17%). Yishun takes the middle ground again when it comes to current average price; providing buyers an affordable choice with some growth potential.
Northpoint City - EDGEPROP SINGAPORE
Northpoint City (Picture: Samuel Isaac Chua/EdgeProp Singapore)

Another opportunity in August 2022

Those who are unsuccessful in the May BTO exercise should turn their sights to the BTO exercise in August when 6,300 to 6,800 flats will be launched across six sites. At the time of writing, HDB has yet to announce the details for each site.
There is a site each in Bukit Merah and Queenstown. As per the BTO exercise in May, only 3 and 4-room flats are available; making them less suitable for large families. However, Ang Mo Kio will have 3-Gen flats which should interest large families.
The west region also has two sites. The Jurong East site is likely to be near Singapore’s second CBD so it might appeal to those working in area. The lack of 5-room flats in the Jurong East site might encourage large families to consider Choa Chu Kang which is further from the CBD but will have 5-room flats.
For the north region, there is a site in Woodlands. The average price of resale HDB flats in Woodlands is lower than its counterparts in the north so the BTO flats is likely to be very affordable. There is also potential for price growth as Woodlands is slated to be a regional hub.

To conclude

  • Intense competition is expected for the four sites in the central region during the May BTO exercise. The sites in Bukit Merah are expected to be under the PLH model so the flats will be the most expensive. Buyers with a modest budget but still keen on a central location might want to consider Queenstown or Toa Payoh. Prices for HDB flats in the central region tend to trend higher than islandwide average but enjoys strong capital appreciation.
  • The Jurong West site is ideal for families because it is located near numerous schools, has lots of open space and larger launched flats.
  • The flats in Yishun are a good choice for those who likes the north region because it offers a good balance between affordability and capital gains.
  • Unsuccessful applicants for the Bukit Merah and Jurong West sites during May BTO exercise should consider the Bukit Merah and Jurong East sites in the next BTO exercise in August.

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