Price reset seen islandwide
By Cecilia Chow
/ EdgeProp Singapore |
With land costs on an upward trend — fuelled by bid prices at both government land tenders and en bloc sales — new project launches such as Park Place Residences test new highs
Listed Australian property giant Lendlease intends to open the show suite of Park Place Residences for public preview on March 24, with the launch of Phase Two of the project slated for April 7.
When the first phase of Park Place Residences was launched in March last year, 210 units were sold in a single day at an average price of $1,800 psf. It marked a record achievement in an otherwise untested area that the Singapore government had designated as a new commercial district called Paya Lebar Central in 2008.
Lombardo: The second phase of 219 units at Park Place Residences will be priced about 5% higher than the units sold in the first phase (Credit: Albert Chua/EdgeProp Singapore)
Tony Lombardo, Lendlease CEO for Asia, attributes the success of Phase One of Park Place Residences to a number of factors, primarily pent-up demand and the fact that it is part of Paya Lebar Quarter (PLQ), a fully integrated development.
“Discerning homebuyers and investors recognise the value proposition of superior connectivity, green spaces, convenience and quality that Park Place Residences offers as part of the PLQ integrated development,” says Tan Tee Khoon, Knight Frank head of residential project marketing.
Besides the 429-unit Park Place Residences spanning three 17-storey towers, the $3.2 billion PLQ will have a six-storey mall with more than 200 shops, three Grade-A office towers with close to a million sq ft of space and 100,000 sq ft of public landscaped space, which Lombardo says is equivalent to 20 basketball courts.
The entire development will be linked directly to the Paya Lebar MRT interchange station for the Circle and East-West Lines. “It is six stops from the CBD and six stops to Changi Airport,” says Lombardo. The office towers are already more than 50% leased, and tenants include SMRT Corp. Even the mall, which has 340,000 sq ft of retail space, is more than 50% taken up, with new tenant Shaw Theatres joining other anchor tenants FairPrice Finest supermarket and Kopitiam food court.
Besides the 429-unit Park Place Residences spanning three 17-storey towers, the $3.2 billion PLQ will have a six-storey mall with more than 200 shops, three Grade-A office towers with close to a million sq ft of space and 100,000 sq ft of public landscaped space (Credit: Albert Chua/EdgeProp Singapore)
Park Place sets the pace
The second phase of 219 units at Park Place Residences will be priced about 5% higher than the units sold in the first phase, says Lendlease’s Lombardo. There are 43 one-bedroom units of 480 to 580 sq ft, with prices starting from $900,000. Another 110 units are two-bedroom apartments of 650 to 900 sq ft that start from $1.15 million. The remaining 66 units are three-bedroom apartments of 1,080 to 1,350 sq ft that start from $1.8 million.
“Looking at the past year’s price trend, coupled with the positive market sentiment and recovery, the price adjustment is compelling in the light of potential price escalation in future projects,” notes Alice Tan, Knight Frank Singapore head of consultancy and research.
When Lendlease purchased the 99-year leasehold site in a government land sale tender for $1.67 billion, or $943 psf per plot ratio (ppr), in March 2015, it was considered a bullish bid. Each subsequent GLS site has been sold at a higher psf ppr price since, says Lombardo. Last June, a joint venture between Singapore Press Holdings and Kajima Development submitted a top bid for a mixed-use site at Bidadari of $1.13 billion, or $1,181 psf ppr.
“We believe that prices can only head north in the days ahead in the light of firmer economic growth, brighter business prospects and stronger demand for property this year,” says Knight Frank’s Tan. “Integrated developments always command a higher premium over pure residential developments in the long term.” Future prices in Eunos — $1,700-$1,800 psf
There are 43 one-bedroom units of 480 to 580 sq ft, another 110 units of two-bedroom apartments and 66 units of three-bedroom apartments of 1,080 to 1,350 sq ft (Credit: Albert Chua/EdgeProp Singapore)
The increase in land prices will naturally lead to a repricing of residential property, notes Shaun Poh, Cushman & Wakefield’s executive director of capital markets. In late February, the Ministry of National Development increased the development charge (DC) rate for non-landed residential use from March 1 to Aug 31 by an average of 22.8%. It was the highest increase in a decade.
In the neighbourhood of Eunos, near Paya Lebar Central, Fragrance Group paid $220 million for Eunos Mansion on March 9. The price of the en bloc purchase translates into $1,118 psf ppr. The deal was brokered by Cushman & Wakefield. Poh reckons the break-even price is likely to be $1,500 to $1,600 psf, with the future selling price of the new project pegged at $1,700 psf or higher.
Another upcoming development in Eunos is on the site of the privatised HUDC estate Eunosville. It was sold en bloc to MCL Land last June for $765.78 million, which reflected a land rate of $909 psf ppr, including a development premium for intensifying the land use and topping up the lease to 99 years. The new development on the site of Eunosville will have 1,399 condominium units and five shops. It is likely to be launched towards year-end.
Based on the land rate of $909 psf ppr, the break-even price is estimated to be $1,400 to $1,500 psf and the launch price is likely to be $1,700 to $1,800 psf, says Alex Oh, executive director of OrangeTee Advisory. OrangeTee was the marketing agent for Eunosville. “The site is located just next to the Eunos MRT station and one stop from the Paya Lebar MRT interchange,” he says. “Park Place Residences at PLQ will set the benchmark for the area.”
The new development on the site of Eunosville will have 1,399 condominium units and five shops. It is likely to be launched towards year-end (Credit: Samuel Isaac Chua/EdgeProp Singapore)
Neighbouring launches benefit
The repricing taking place in the microcosm of Paya Lebar-Eunos-Sims Drive-Geylang East is a reflection of what is happening across most parts of Singapore, notes Tan Hong Boon, JLL regional director. “If you look at en bloc prices achieved in the Amber Road-Meyer Road area of $1,400 to $1,500 psf ppr, future projects on these sites are likely to be launched at prices above $2,000 psf,” he says. “In the Bukit Timah area, land prices of $1,800 to $1,900 psf ppr will lead to new projects being launched at $2,700 to $2,800 psf. In the prime districts, new projects will take their cue from New Futura, where prices have already crossed $3,500 psf.”
Cushman & Wakefield’s Poh is of the same view. “There is no huge pipeline,” he says. “Developers are timing their launches, and even those projects that were launched last year or earlier are adjusting their selling prices upwards.”
A case in point is TRE Residences at Geylang East Avenue 1. The developers of the 250-unit, 99-year leasehold condo took the opportunity to relaunch the project last year when the first phase of Park Place Residences made its debut in March last year. Developed by Sustained Land, Greatview Development and MCC Land, TRE Residences is located next to the Aljunied MRT station and one stop from the Paya Lebar interchange. Following the relaunch, all the units have been sold, at prices ranging from $1,360 to $1,540 psf, according to caveats lodged in January and February.
Just a short drive from Paya Lebar Central is GuocoLand’s 1,024-unit Sims Urban Oasis on Sims Drive. The project was completed last year, and only 30 units are still available for sale. The developer is pricing the remaining units at higher prices of $1,400 to $1,600 psf, compared with the average price of $1,395 psf achieved for units sold.
If Windy Heights, a collective sale site is successfully sold at $806.2 million ($1,171 psf ppr), the new development is likely to be priced at $1,800 to $2,000psf, estimates Loh (Credit: Knight Frank)
Biggest en bloc in the area
En bloc sales have also led to an escalating increase in land prices and prices at new launches. However, JLL’s Tan sees prices in the suburban region stabilising. “It’s simply because prices have run up in the past year,” he says. This has not dampened sentiment in the en bloc market, though. Two MRT stops from Paya Lebar Central is Windy Heights on Jalan Daud in Kembangan.
The private residential estate with 192 apartments, eight penthouses and two commercial units sits on a freehold land area of 250,702 sq ft. The price tag on the collective sale site is $806.2 million, or $1,288 psf ppr. If the 10% bonus gross floor area (GFA) for balconies is included, the land rate would be $1,171 psf ppr. The tender for Windy Heights will close on April 18. If sold, it will be the biggest en bloc sale done this year, says Ian Loh, Knight Frank head of investment and capital markets, who is marketing the property. Loh also brokered the collective sale of Goodluck Garden, which was sold to Qingjian Realty on March 9 for $610 million, the largest en bloc sale in terms of absolute price so far this year.
If the sale price of Windy Heights is achieved, the new development is likely to be priced at $1,800 to $2,000psf, estimates Loh. He attributes this to its freehold tenure.
A mixed-use development with 465 strata retail units and 66 apartments built in 1981, the strata owners in City Plaza are attempting an en bloc sale (Credit: Samuel Isaac Chua/EdgeProp Singapore)
City Plaza attempts collective sale
Located just across the road from PLQ is City Plaza, a mixed-use development with 465 strata retail units and 66 apartments that was built in 1981. The strata owners in the freehold development are now attempting an en bloc sale.
An extraordinary general meeting was held on March 14 to determine the reserve price and share apportionment, according to Derrick Chan, the chairman of the collective sale committee at City Plaza.
Two strata retail units on the third floor of City Plaza were sold in January: a 248 sq ft unit for $888,000 ($3,587 psf) and a 226 sq ft unit for $881,400 ($3,899 psf), according to caveats lodged. The last transaction of an apartment at City Plaza was in April last year, when a 915 sq ft unit on the 16th floor was sold for $938,000 ($1,025 psf). “The City Plaza site is zoned for commercial development,” says Chan. “It can be redeveloped into a Grade-A office development or a hotel.”
Another ageing mixed-use development is Chinatown Plaza, whose en bloc sale could be a catalyst for similar developments to take the same route. “Sometimes, all you need is for one successful deal to boost everyone’s expectations,” says OrangeTee’s Oh.
The tender for Chinatown Plaza, located at the junction of Craig Road and Neil Road in the CBD, closed on March 15. It has a price tag of $270 million, or $1,989 psfof GFA, and is being marketed by Edmund Tie & Co.
For now, positive sentiment and increased market activity are likely to continue, buoyed by sales of en bloc and GLS sites, says Ong Choon Fah, CEO of Edmund Tie & Co.
Cushman & Wakefield’s Poh agrees. What could dampen housing demand is if interest rates climb too steeply, he adds. “However, the increase seems to be gradual for now.”
Follow Us
Follow our channels to receive property news updates 24/7 round the clock.
EdgeProp Telegram
EdgeProp FacebookSubscribe to our newsletter
Top Articles
Search Articles