Land Sales Programme For 1H08 Draws Good Reviews

Source : The Business Times, December 7, 2007

Large supply of mass market homes but govt holds back on office sites

THE government will release a batch of suburban residential land parcels in the first half of next year but property analysts are divided as to whether there will be enough takers for the homes coming up on the sites.

And on the back of reports that Singapore could see an oversupply of office space come 2010, the government is releasing just one site for office use in its confirmed list in its land sales programme for the first half of next year.

The 21 residential sites on the list will yield 8,250 private homes, including executive condos. This compares to a supply of 8,000 private homes for the second half of 2007.

Eight of these sites - with the capacity for 2,840 homes - are on the confirmed list. The other 13 sites are on the reserve list.

Market watchers said that the large number of suburban residential sites seems to imply that the government is aware that housing prices in popular non-prime locations have risen substantially, which has in turn priced out HDB upgraders.

'By providing sites in suburban locations that are within or near HDB estates, the completed units are likely to be less pricey as their land costs would be lower,' said Li Hiaw Ho, executive director for research at CB Richard Ellis (CBRE).

The homes could also be suitable for expats, who are increasingly coming to Singapore on local terms, said Ku Swee Yong, director of marketing and business development at Savills Singapore.

'As Singapore looks to grow its population, more expats earning in the mid-income range will be coming in,' Mr Ku said. 'These expats might not be able to afford homes in the prime districts and so could look at mass market homes.'

Among the sites offered, those at Lorong 2 Toa Payoh, Woodleigh Close, Tanah Merah Kechil and Bishan Street 14 are perceived as the best of the crop. These sites could fetch between $400 and $600 per square foot per plot ratio (psf ppr), CBRE's Mr Li said.

However, others said that it might have been more prudent of the government to put more sites on the reserve list instead of the confirmed list.

'The market can be very fickle,' said Nicholas Mak, director of research and consultancy at Knight Frank. There is good demand for mass market homes at the moment, but this might not be the case in a few months, he said.

On the other hand, the government's decision to hold off releasing more office sites was well received. In recent weeks, experts have said that Singapore could see a glut of office space after 2010 when several big projects - such as the Marina Bay Financial Centre and the redeveloped Ocean Building - come up.

Yesterday, the government said that it is only releasing one new white site on the confirmed list - bound by Rochor, North Bridge, Ophir and Beach roads and next to Parkview Square - for office and hotel use.

The white site can yield about 1.5 million sq ft of commercial space. Experts said that the site could go for $750-$1,000 psf ppr.

The only other new commercial site, located at North Buona Vista Drive, will be released on the reserve list. An estimated 1.3 million sq ft of commercial space can be developed on the land parcel.

The proximity of the site to one-north will likely see space there being sought after by the research institutes in one-north, said Mr Li of CBRE.