SINGAPORE - THE Ministry of National Development (MND) brought some joyous tidings with the announcement that it will release some plum sites for private housing in the first half of the coming year. Many are in locations that have been rarely touched of late as part of the Government Land Sales (GLS) programme.
MND is trying to pull off a balancing act. It will be releasing roughly the same quantum of land over the next six months as it did in the current half-year. It is seeking the right balance between developers' appetite for residential land and potential oversupply as a record number of homes come onstream in the next few years.
Still, market watchers were surprised by the choice sites up for grabs. These include a landed housing site in Coronation Road/Victoria Park Road that can generate about 140 landed homes. The plot is next to the Victoria Park and Rebecca Park Good Class Bungalow Areas. It used to be a Chinese cemetery, where graves were exhumed sometime ago. The Urban Redevelopment Authority (URA) will launch this site in March.
In June, the URA will roll out a site on Mount Sophia, a chunk of which comprises an area which most recently housed the arts enclave called "Old School" and formerly accommodated the Methodist Girls' School. The 2.4-ha site - which includes the former Trinity Theological College and Nan Hwa Girls' School - can be developed into a low-rise condo of about 505 units.
Yet another low-rise condo site is at Faber Walk in the Ulu Pandan area which can yield about 210 units, slated for launch in April. All three land parcels are on the confirmed list, where sites are launched according to a pre-stated schedule, regardless of demand.
In the reserve list, a 2-ha plot on Siglap Road - next to Victoria School, flanked by Mandarin Gardens and Laguna Park, and facing East Coast Park and beach - will be made available in May. As it is on the reserve list, it will be launched for tender only upon successful application by a developer.
"The prime quotient in the GLS Programme has gone up," says Jones Lang LaSalle's head of investments Karamjit Singh. "I suppose they would have figured that supply in the mass-market segment has been well provided for in the past three years' GLS Programmes, and it is probably time to start introducing some supply a few notches higher," he added.
He acknowledged that these plum sites pose competition to en bloc sale sites - the traditional source of high-end residential development land. "But again, developers know that en bloc sites are mostly freehold whereas GLS plots are 99-year leasehold. Ultimately, it boils down to value and price proposition."
Developers are also expected to be keen on two new commercial and residential sites introduced in the H1 2013 programme - a confirmed list plot in Yishun Central (next to the MRT station, bus interchange and Northpoint Shopping Centre) and a reserve list plot next to Potong Pasir MRT Station, says DTZ's Asia-Pacific research head Chua Chor Hoon.
"These will be popular because residential projects which are part of mixed developments next to MRT stations have been highly sought after by home buyers," said Ms Chua.
MND will be launching confirmed-list sites that can generate some 6,935 private homes (including 3,110 executive condos or ECs). Through the reserve list, it is offering land for a further 7,100 private homes. The quantum is similar to the current H2 2012 slate.
Knight Frank chairman Tan Tiong Cheng observed that ECs make up 45 per cent of the confirmed list's residential supply for H1 2013. "It is clear Government thinks that demand for ECs is still strong."
Mr Tan also observed that the three plum sites on Coronation Road, Kim Tian Road and Mount Sophia account for 16 per cent of the supply of homes from the confirmed list.
On the reserve list, he identified four plots - in Siglap Road, Stirling Road, Alexandra View (Parcel A) and Prince Charles Crescent (Parcel B) - which will yield about 3,055 private homes - or 43 per cent of the reserve list's supply. "If you exclude ECs, these plum sites' share of the reserve list supply is even higher."
HSR Property Group's special adviser Donald Han notes that the bulk of new housing supply in recent years has been focused on the suburban or Outside Central Region and "there is a need to balance this by supplying more sites in the prime districts". He added: "Judging from recent prime state tenders in Farrer Road, Jervois Road and the Alexandra corridor - demand has been brisk."
Pointing to the choice housing sites on the latest slate, Savills Singapore's research head Alan Cheong notes that notwithstanding an almost symmetrical GLS programme - in terms of supply quantum - in H1 2013 as the current half, "GLS sales proceeds may be better".
Responding, the URA's spokesman said: "Most of the private residential sites in the (H1 2013) confirmed list are in Outside Central Region or Rest of Central Region - where more affordable private housing is expected to be built".
The H1 2013 confirmed list will supply about 33,360 sq m gross floor area (GFA) of commercial space, with reserve list sites that can generate a further 281,320 sq m. Both figures are lower than the 80,280 sq m and 308,200 sq m respectively in the current half. Market watchers suggest MND's strategy reflects the current soft mood in the office leasing market.
MND noted that H1 2013's reserve list will have three sites for office developments - at Marina View/Union Street in the new Downtown, Cecil Street and Sims Avenue - which are being carried over from the H2 2012 reserve list. These can be triggered by the market, if there is demand. Currently, there is about 1.17 million sq m (12.6 million sq ft) GFA of office supply in the pipeline.
Hotel rooms supply from H1 2013's sites will halve to 1,740 rooms, from 3,655 in the current half. In both periods, the supply is solely through the reserve list.
HSR's Mr Han suggests that the authorities may have become more cautious about the outlook for visitor arrivals given the sombre state of major economies.
On a brighter note, he highlighted that MND has introduced a new hotel site in Havelock Road - the former Warehouse disco - which should be hotly contested for its bite size (URA estimates it can generate 35 hotel rooms) appeal to new entrants and boutique hoteliers. "We expect a record price for hotel land, in terms of unit land price to be achieved for the plot," he said.