DEVELOPERS continue to hunger for land. The Urban Redevelopment Authority has announced that a private housing site at Upper Changi Road North/Flora Drive, next to Edelweiss Park Condominium, has been triggered for release from the government’s reserve list.
An unnamed developer has agreed to bid at least $82 million or $177.37 per square foot of potential gross floor area.
The 99-year leasehold plot is next to the Japanese School (Primary) and a stone’s throw from Changi Prison. It is nestled amid several large condominiums developed by the Hong Leong Group over the years on a huge tract of land acquired mostly in the 1970s by the group. The most recent of these projects is The Gale, which was launched last year. Earlier releases include Azalea, Ballota, Carissa, Dahlia, Edelweiss and Ferraria Park condos.
Property consultants polled by BT estimate that the latest plot on offer could fetch top bids of $300-400 psf per plot ratio (psf ppr).
Knight Frank managing director (advisory services) Lydia Sng estimates that a $320-350 psf ppr land bid would translate to a breakeven cost of $580-600 psf and a target average selling price of about $730 psf for the 99-year leasehold project.
In the first two months of this year, units at the freehold Gale and Ferraria Park – the two most recent projects in the area – have changed hands at a median price of about $740 psf, according to caveat data, she notes. The Gale is under construction, while Ferraria Park was completed last year. There’s typically a 15 per cent price difference between freehold and 99-year properties.
DTZ’s South-east Asia research head Chua Chor Hoon reckons that the highest offers for the Flora Drive site will be around $300-350 psf ppr, and the average selling price for the project around $700-750 psf. ‘As it’s not close to any MRT station, the unit land price will be lower,’ she says. ‘The developer can target the mass-market segment, in which there is strong demand.’
Real estate lecturer Nicholas Mak says that the site could draw 6-10 bids, with the highest around $350-400 psf ppr.
Chesterton Suntec International head of research and consultancy Colin Tan suggests that developers may be ‘pretty aggressive’ with their bids.
Most developers have reported excellent results and are sitting on a pile of cash, Mr Tan notes. ‘If the market is hot, you’re running out of land and you need to bid aggressively to get some land, it’s better to do so at the earlier stage of the up-cycle. As time passes by and the market gets closer to the correction point, the risks get higher.’
URA said yesterday that following the triggering of the Flora Drive housing site, another 16 residential plots remain on the first half 2010 reserve list that can potentially be triggered for launch. These include three executive condo (EC) plots and two mixed-use sites where private homes can be built. The 16 land parcels can potentially generate a total of 6,770 private homes.
The H1 2010 confirmed list has eight residential sites that can yield 2,925 units. Of these, four plots have been launched – EC sites near Buangkok MRT Station and at Yishun Avenue 11, the Ten Mile Junction plot and a site at Tampines Ave 1/10 fronting Bedok Reservoir. Two choice sites – one near Lakeside MRT Station and Jurong Lake, and the other diagonally opposite Simei MRT Station – will be launched from the confirmed list before the month runs out.
This week, National Development Minister Mah Bow Tan said that the H2 2010 government land sales (GLS) programme will have a ‘larger supply and wider variety of sites’ on the reserve list to give developers more choice.
DTZ executive director Ong Choon Fah suggests that the H2 2010 GLS Programme may feature more private housing sites further from the city, even if they are near MRT stations, as well as plots near HDB estates such as Choa Chu Kang, Yishun, Sengkang and Simei, where there is strong upgrader demand.
Such sites will hopefully sell at a lower unit land price and translate to more affordably-priced housing for end-buyers – compared with plum sites near MRT stations and closer to the city.
‘I think the affordable price range for private home buyers in the mass market is still $700-800 psf,’ Mrs Ong says.
In the meantime, developers are expected to continue triggering sites from the current H1 reserve list. ‘Developers need to replenish their landbanks and there’s a lot of choice now. So if they like something, why wait?’ says DTZ’s Ms Chua.
Source: Business Times, 13 Mar 2010