Exclusively written by SLP Research & Consultancy Dept.
Almost two months after the government surprised the market by introducing a new round of property market cooling measures, three Government Land Sale (GLS) tenders closed on 4 September. This is a major test of the real estate developers’ confidence in the future of the residential property market in the short term. One of these was the tender for the Executive Condominium (EC) development site located along Canberra Link closed.
The subject site has a land area of 18,040.6 sqm (194,187 sqft) and can develop a maximum Gross Floor Area (GFA) of 45,101.5 sqm (485,468 sqft). This development site could yield about 450 residential units.
Source: Straits Times
The total inventory of unsold EC units nationwide has dropped to a record low of just 21 units in July 2018. This stock of unsold EC units will only be replenished when the next EC project at Sumang Walk in Punggol is launched in 2019. So far this year, only one EC project, Rivercove Residences in Sengkang by Hoi Hup Realty and Sunway Developments, has been launched and it was nearly fully sold out (only 1 unit left as at end of July 2018). Hence, to some developers, EC development is a safer development option in this uncertain market.
The tender for the subject site has attracted 9 bids, which can be considered impressive in the current market. The supply and demand mismatch in the EC market (depleting unsold stock and limited sites for EC development) has strengthened the attractiveness of the Canberra Link EC site. Furthermore, the proximity to the future Canberra MRT station, which is slated to open by December 2019, is also one of the reasons that property developers had displayed keen interest in this site.
The aggressive top bid of $271,000,000 for this land tender was submitted by Hoi Hup Realty Pte Ltd and Sunway Developments Pte Ltd. It translates to a unit price of $558.22 per square feet per plot ratio (psf ppr). The bid was about 4.7% higher than the second highest bid of $258,890,000.
The government has not sold any EC site in the Sembawang planning area since the sale of the land parcel of The Visionaire in October 2014, Parc Life in July 2014 and The Brownstone in January 2014. The top bid today was very bullish as it was about 58.1% higher than the land price of The Visionaire land parcel.