Saturday, May 22, 2010

Residential sites expected to be sought after

Many of the 27 sites on GLS programme for H2 2010 are near MRT stations, popular launches

THE government has done its homework to make sure that the residential sites on the latest instalment of the government land sales (GLS) programme will be popular with both home-buyers and Many of the 27 residential sites on the programme for the second half of 2010 are near MRT stations and some are even located right next to recently launched projects that sold well. There are also four new executive condominium (EC) sites on the confirmed list - bringing the total number of EC sites, which are in high demand, to five. In comparison, there were just two EC sites in the H1 2010 confirmed list.

'There is a gap right now between mass market affordability and HDB prices,' noted Cushman & Wakefield managing director Donald Han. 'So there is an immediate need to cater for those who have been sandwiched out of the market.'

Mass market private homes are now generally selling for upwards of $800 per square foot (psf), Mr Han noted. EC units, which can sell for around $700 psf, give more buyers a cheaper option.

Li Hiaw Ho, executive director of CBRE Research, also noted that recent state land tenders for two EC sites in March 2010 received good response. This could have led to the four new EC sites being placed on the confirmed list, he said. The new sites are scattered across the island in Punggol, Pasir Ris, Tampines and Segar Road.

Analysts also said that a lot of the residential sites offered in this round of the GLS programme are near MRT stations.

'As is the case with GLS tenders in the last nine months, the sites in close proximity to MRT stations will too prove to be popular and are likely to be hotly contested, as are the ones that are situated closer to the city,' said CBRE's Mr Li. 'For example, in the recent tender exercise at Simei Street 3, there were 18 bidders in total.'

Echoed Chua Chor Hoon, head of DTZ's South-east Asia research team: 'Sites that are near to MRT or LRT stations with HDB upgrader demand are likely to see greater interest from developers.'

She cited the Punggol EC as well as private housing sites in Punggol Central/Punggol Walk; Tanah Merah Kechil Road/Tanah Merah Kechil Link; and Sengkang Square/Compassvale Road as plots likely to be popular.

The same criterion works for commercial sites too. Colliers International's executive director for investment sales Ho Eng Joo said that a white site at Boon Lay Way (next to Jurong East MRT) and a commercial plot at Paya Lebar Central (beside Paya Lebar MRT) will prove to be top draws.

Analysts also noted another interesting trend: some residential sites on the 2H 2010 GLS programme are located beside recently launched projects that have sold well. A residential site at Petir Road (in Bukit Panjang) is next to City Developments' Tree House condo.

Another site at West Coast Link/West Coast Crescent is next to Cheung Kong Holdings' The Vision, which set a new benchmark price for private homes in the West Coast area. Noted one market watcher: 'The government could be trying to make sure prices don't run up in the sub-sale market.'

Another side-effect could be felt by builders and owners of small one and two-bedroom units, which cater largely to investors.

'If developers continue to build many small units, the concern is that there will be many such units completing in a few years' time and competing in the market for sale or rental,' said DTZ's Ms Chua. The situation could be worsened if new investors can pick up larger units for the same total quantum as smaller units generally go for higher per square foot prices.

Source: Business Times, 22 May 2010

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