New condo prices in S'pore to stay elevated

SINGAPORE (March 27): Nearly 30 private housing sites were launched for sale in 2011, excluding executive condo sites. In comparison, less than 10 private housing sites were launched for sale in 2016. It is therefore hardly surprising that developers have shown robust appetite for land in recent times, exarcebated by stiffer competition from foreign developers.

Developers have submitted bullish bids in state tenders since mid-2016. Notably, GuocoLand’s top bid of S$1,239 (RM3,920) psf per plot ratio (ppr) for the Martin Place site in June 2016 was the highest unit land price for a pure residential site sold in the government land sales programme. The break-even price for the site would be S$1,800 to S$1,900 psf.

Just three months after the sale of the Martin Place site, a private housing site on Fernvale Road attracted a top bid of S$517 psf ppr from Sing Development and Wee Hur Development. The price was 17% higher than the S$443 psf ppr paid in August 2014 for a neighbouring site that is currently being developed into High Park Residences. With the break-even price projected to be S$950 to S$1,050 psf, the launch price for the new condominium on the site could be over S$1,100 psf. Prices at High Park Residences, meanwhile, have averaged $989 psf.

Separately, MCL Land paid S$998 psf ppr for a residential site on Margaret Drive in December 2016, 15% higher than the S$871 psf ppr fetched for the Queens Peak site and 13% more than the S$883 psf ppr paid for the Commonwealth Towers site. Most recently, China Construction paid S$592 psf ppr for a private housing site on West Coast Vale, 7% higher than the S$551 psf ppr that EL Development paid for its Parc Riviera site next door.

In contrast, developers’ bids were less optimistic in 2015 and 1H2016. The Grandeur Park Residences site, for example, fetched S$761 psf ppr in February 2016, lower than the S$791 psf ppr paid in October 2012 for The Glades site, located a stone’s throw away. Meanwhile, MCC Land paid S$483 psf ppr for The Alps Residences site in May 2015, 14% lower than the S$562 psf ppr it paid for The Santorini site in July 2013.

Recent land sales paint a rosier picture for the Singapore residential market after more than three years of declining prices. The bullish bids would mean that the average development cost will be elevated and, under normal circumstances, this would translate into higher selling prices for new launches. Any upside in price, however, is likely to be modest as buyers remain price-sensitive, and the impact on the overall market may be limited as it is just one of the many variables in the equation.

The resale market, meanwhile, continues to be mired in a slew of challenges. Amid elevated supply and slower population growth, monthly rents for one-bedroom condo and apartment units fell 7% y-o-y on estimate between 4Q2015 and 4Q2016 across market segments. Rents for two-bedroom units were down 3% y-o-y in the high-end segment and 6% y-o-y in the city-fringe and suburban areas over the same period. The change was computed based on average rents at apartments and condos with at least five contracts in each quarter. Meanwhile, the US Federal Reserve is expected to increase rates three times this year, which would dent mortgage affordability.

A new launch may boost prices of resale properties in the vicinity, but the effect may be temporary. The average price at Waterview, a 696-unit condo completed in 2014, fell 8% from S$1,027 psf in 2013 to S$945 psf in 2016. This was despite the launch of Q Bay Residences in 2013 at S$1,043 psf and The Santorini in 2014 at S$1,123 psf — both projects are located within 500m from Waterview. In the Tanah Merah area, the average price at Casa Merah and East Meadows fell 13% and 9% respectively between 2013 and 2016 despite the launch of The Glades in 2013. For context, the URA price index for non-landed homes in Outside Central Region fell 9% between 4Q2013 and 4Q2016. —

For more stories, download pullout here for free.

Like our content? Check out Narratives – where we curate stories based on topics to keep you well and broadly informed about Malaysian real estate.

Looking for property? Check out Location Scan, where we summarize all available options and facts you need in a few clicks. We have updated the tool to include MRT3 stations too.

Curious how much you can borrow? Use LoanCheck to get your maximum loan eligibility from various banks, or LoanReport to get a FREE CTOS/CCRIS credit report.
  1. Guocoland 3Q net profit tumbles 91% to RM6.73 mil
  2. Singapore’s Central Boulevard to generate RM350m-RM450m rental income for IOI Properties, says RHB Research
  3. GuocoLand Singapore embraced property tech through partnership with Showsuite