Tepid Response To Launch Of HDB's Punggol Project

Source : The Business Times, February 27, 2008

THE Housing and Development Board (HDB) launched its first build-to-order (BTO) development for 2008 yesterday, and 278 applications were received for 494 flats on the first day.

Called Punggol Spring, the project has four-room flats priced at between $204,000 and $259,000.

The number of applications is, however, just a fraction of the 2,224 applications received on the first day for the 278 flats offered through HDB's bi-monthly sales exercise for unsold flats earlier this month.

PropNex chief executive Mohamed Ismail believes the number of applications for Punggol Spring is not especially low, but added that many buyers, mainly young couples, do not want to wait for BTO flats to be built as this could take as long as three years.

Still, Mr Mohamed reckons that Punggol Springs could receive at least 2,000 applications eventually.

Recent BTO launches for Damai Grove in Punggol Town and Jade Spring @ Yishun in December last year saw a total of 1,888 and 1,908 applications respectively for the 1,122 flats offered.

Giving an insight into the high demand for HDB's unsold flats, Mr Mohamed said that the applicants probably see these as being 'good investments', especially as many are in well-located mature estates where resale prices are rising.

Interestingly, data from HDB also reveals that in January, 75 per cent of resale flats were sold for more than $10,000 above valuation.

Chesterton International head of research Colin Tan notes that the rising prices of private property have also priced many potential upgraders out of the private market, leading to higher demand for HDB flats.

However, Mr Tan believes that these buyers, being price sensitive, may not be keen on areas like Punggol because of the higher cost of travel. 'They may be concerned about the number of ERP gantries along their daily commute to work,' he said.

With buyers in this segment being so price sensitive, the launch of the latest HDB executive condominium (EC) site at Yishun Avenue 11 yesterday could draw a mixed response from developers.

Mr Tan estimates that the 162,320 sq ft site with a plot ratio of 2.8 could fetch bids of around $80 million, which works out to about $176 psf per plot ratio. At this price, the EC could be launched at around $600 psf, but Mr Tan added: 'Hopefully, the bids will be lower because this will be good for the buyer.'