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05 October 2012

5th October, Friday




Exec condo market facing potential headwinds

Source: Business Times

The executive condominium (EC) market is facing a potential supply glut as the government rolls out a record number of EC sites.

A total of 25 EC sites (from both Confirmed and Reserve list) were released to the market via the Government Land Sales (GLS) programme between 1H 2010 and 2H 2012.

This year, 11 sites were put on the Confirmed List (one site was moved from the Reserve List in 1H 2012 to the Confirmed List in 2H 2012). The site at Upper Serangoon View/Upper Serangoon Road (developed into Heron Bay) has since been launched for sale.

Of the remaining 10 EC sites, five have been sold and are awaiting developer's sales launch. The remaining five have not been launched yet for sale under the GLS programme, or are waiting for the tender period to close.

Some 5,600 units from these 10 sites are expected to come on stream by end-2013, which translates to an average annual supply of 4,500 units, said an analyst. By comparison, the average annual supply over the last two years has been about 3,600 units, with average take-up of 3,300 units.

"Viewed from this perspective, the oncoming supply is at a faster rate than the past. Assuming demand remains stable, the projects being marketed would face greater competition ... It's likely to be more of a buyer's market given the wide range of projects coming on stream with the possibility of prices being more competitive," he said.

Location is another key factor, another analyst pointed out. "Certain locations may see heightened caution from developers arising from strong competition from existing unsold and uncompleted mass-market condos and EC developments."

There is also the record allocation of some 27,000 Built-to-Order (BTO) flats to contend with. That BTO flats are significantly cheaper than EC units - even though both are subject to the same Housing Board rules - may push potential buyers towards BTO flats.

The fact that dual ownership of a HDB unit and EC is not allowed also limits the pool of buyers.

Said Lee Sze Teck, DWG's senior manager, training, research and consultancy: "Current HDB owners have to sell their HDB flat when they take possession of their new EC ... But a HDB owner can own both a HDB flat, and a private property. For those who want to rent out their HDB flat, they will buy a private property instead of a new EC."

There is also a worrying trend of BTO flats being sold under the Sale of Balance Flats exercise, noted Mr Lee. "This means that in certain towns, such as Sengkang, Punggol, and Yishun, quite a number of flats from the BTO launches were not sold. Choa Chu Kang is another location where there were a number of unsold HDB flats from 2012 BTO launches," said Mr Lee.

Despite these factors, demand for ECs may remain strong based on historical performance.

The income ceiling revisions for new HDB flats and ECs as well as the increased supply of BTO flats were announced in August 2011. From September 2011 to August 2012, 3,519 ECs were launched for sale and 3,572 units were taken up. (This) shows that demand for ECs remained strong in spite of the knowledge that BTO supply would be increased, some analysts said.

However, one analyst expects demand for ECs to moderate, as buyers turn their attention to project-specific attributes, such as location and design. "Recent EC projects have generally been of better quality and theme. They are also well designed, reflecting initial signs of intensifying competition among developers," he noted.


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Thomson Road white site for sale by tender

Source: Today

The Urban Redevelopment Authority yesterday launched a white site at Thomson Road/Irrawaddy Road for sale by public tender after a developer committed to bid at least S$211.3 million for the 99-year leasehold land parcel.

The site, made available for sale through the Reserve List of the Government Land Sales programme on 30 Nov last year, has an area of about 71,868 sq ft and a plot ratio of 4.2.

At least 30 per cent of the maximum permissible gross floor area of about 301,847 sq ft has to be allocated for hotel use. The remainder can be developed for residential, office, retail and other complementary commercial uses.

Located within an established commercial hub at Novena, the site is near many existing commercial developments, such as Velocity, United Square and Square 2.

The Novena area is also a well-known medical hub, with Tan Tock Seng Hospital, Novena Medical Centre, National Skin Centre, National Neuroscience Institute and Mount Elizabeth Novena Hospital in the vicinity.


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