Government keeps 1H2018 GLS supply unchanged from 2H2017

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December 13, 2017 3:32 PM SGT
The government has decided to keep the total supply of units for 1H2018 at about the same level as the supply of units from the 2H2017 GLS Programme, says the Ministry of National Development (MND) when it announced the 1H2018 Government Land Sales (GLS) Programme on Dec 13.
The 1H2018 GLS Programme comprises six Confirmed List sites and nine Reserve List sites. In total, the sites can yield about 8,045 private residential units and 63,960 sq m gross floor area (GFA) of commercial space.
According to MND, the government has taken into consideration several factors in determining the supply. While there is strong demand for sites from real estate developers and a pickup in transaction volumes, there is a large potential supply of around 20,000 units from collective sales and GLS sites that have not yet been granted planning approval, says MND. This is on top of about 18,000 unsold units that already have planning approval. And more than 30,000 existing private housing units remain vacant, it adds.
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Including the units from the 1H2018 GLS Programme, the total supply in the pipeline will be adequate to meet the demand from homebuyers over the next one to two years, says MND. “When these are completed, the overall stock of private housing will be more than sufficient to meet Singaporeans’ housing needs.”
According to Lee Nai Jia, head of research at Edmund Tie & Company (ET&Co), the 1H2018 GLS Programme signals the government’s intention to maintain a stable market. “The measured approach will reduce the likelihood of an oversupply situation two to three years down the road.”
The 1H2018 Programme provides varied options for developers in suburban, city fringe and prime locations, and complements offerings on the collective sale market, says Tricia Song, director and head of research at Colliers International.
Among the six sites on the Confirmed List, the 0.57ha site at Cuscaden Road, which can yield an estimated 170 units, and the 0.62ha site at Mattar Road, which can accommodate about 250 units, should be more popular with developers, given their location and size, says ET&Co’s Lee. He expects bids ranging from $1,600 to $1,750 psf per plot ratio (ppr) for the Cuscaden Road land parcel, and the Mattar Road site to be sold at $1,200 to $1,400 psf ppr.
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The Mattar Road site is close to the Mattar MRT station on the Downtown Line and there is “limited competitive supply in the locality”, says Colliers’ Song. However, she notes that it is a relatively untested locale for private non-landed homes that is surrounded by industrial estates, as well as landed and public housing.
According to Christine Li, director of research at Cushman & Wakefield, the Cuscaden Road site could command bids of $1,800 to $1,900 psf ppr, translating into a sale price of above $2,600 psf. The site is close to the upcoming Orchard Boulevard MRT station, she says, and it has strong appeal owing to the high median price of $2,343 psf achieved at Martin Modern in October.
The other pure residential site on the Confirmed List occupies an area of 1.49ha at Jalan Jurong Kechil and can yield an estimated 280 units. The site “is very attractive [owing] to the sterling performance of the adjacent Hillford project,” says Li. The three resale and two subsale transactions since the project was launched have netted investors an average profit of 12.5% over a holding period of 3.1 years. This is in sharp contrast to the movement of the URA’s price index for the rest of the central region, which plunged by more than 8% during the same timeframe, she notes.
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According to Li, there is strong developer interest in the area, as evidenced by S P Setia’s bid of $939 psf ppr for the nearby Toh Tuck Road site earlier this year. She expects the land parcel at Jalan Jurong Kechil to fetch a bid of about $1,000 psf ppr and the future project to sell at around $1,500 psf.
Also on the Confirmed List is a 2.5ha site at Silat Avenue that can yield an estimated 1,125 units and has a commercial component of up to 450 sq m, as well as a 1.97ha site at Dairy Farm Road that can have up to 4,000 sq m of commercial GFA and yield about 500 units. There is also a 1.8ha Executive Condominium (EC) site at Canberra Link that can accommodate 450 units.
According to Colliers’ Song, the Canberra Link EC site “will also be popular as there is limited EC supply and this site is near the future Canberra MRT station”.
“It is very timely that the government introduced at least one EC site in the Confirmed List and two other EC sites in the Reserve List to replenish the looming supply shortage in the EC market,” notes Nicholas Mak, executive director of ZACD Group. He adds that the EC site at Anchorvale Crescent on the Reserve List is attractive as it is within comfortable walking distance of the Cheng Lim LRT station. “Brisk sales at the adjacent EC project, namely the Treasure Crest, might boost developers’ confidence to trigger this site.”
Of the nine Reserve List sites, the 0.72ha site at Peck Seah Street and the 1.7ha site at Sims Drive are “the most attractive and likely to be triggered”, says Colliers’ Song. The Peck Seah Street site has a 4,500 sq m retail component and can yield an estimated 700 residential units.
Cushman & Wakefield’s Li also feels that the Peck Seah Street site is the most attractive among those on the Reserve List, owing to its prime location next to Tanjong Pagar Centre that will appeal to those who want to live and work in the CBD. She expects bids ranging from $1,500 to $1,600 psf ppr for the site.
The site at Sims Drive can yield an estimated 680 residential units. It is within walking distance of the Aljunied MRT station, which is five stations away from the CBD, notes Colliers’ Song. It is also located beside the 1,024 Sims Urban Oasis, which was launched in 2015 and is 89% sold as at October, she adds.