{"id":56005,"date":"2017-05-26T07:30:53","date_gmt":"2017-05-26T00:30:53","guid":{"rendered":"http:\/\/www.siamlandbank.com\/propertynews\/property-news\/get-the-guru-view-is-the-new-launch-market-heating-up\/"},"modified":"2017-05-26T07:40:20","modified_gmt":"2017-05-26T00:40:20","slug":"get-the-guru-view-is-the-new-launch-market-heating-up","status":"publish","type":"post","link":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/get-the-guru-view-is-the-new-launch-market-heating-up\/","title":{"rendered":"Get the Guru View: Is the new launch market heating up?"},"content":{"rendered":"


\nA crowd of potential buyers at the Park Place Residences showflat. (Photo: Lendlease)
\nPhotos of thronging showflats and news of sell-out projects suggest that the new launch
\nmarket is escaping the doldrums.
\nBy Chang Hui Chew
\nAfter a relatively long period of lacklustre performance, the new launch private condo market looks like it is finally on the rebound.
\nEarlier this month, the Urban Redevelopment Authority (URA) reported that developer sales for April 2017 doubled from the same period a year earlier. Month-on-month however, sales volumes fell by more than 12 percent.
\nBrisk sales in the month of April were attributed to the launch of Frasers Centrepoint\u2019s Seaside Residences at Siglap Link, which saw massive crowds at the showflat prior to the ballot. According to URA\u2019s developer sales figures for the month, the project sold 419 out of 560 units, at the median price of $1,736 psf.
\nThe 99-year leasehold project saw keen interest due to the unique site, one of the last plots of land with sea frontage.
\nIn the month of March, Australia headquartered Lendlease sold all 217 launched units in Phase One of their integrated Paya Lebar Quarter development for a median price of $1,805 psf. The launch was hotly anticipated by potential investors and buyers since the site was awarded in April 2015, as it is part of the Singapore government\u2019s plans to revitalise the area as a regional centre.
\nThe last time a new launch saw such soaring figures was CEL Development\u2019s High Park Residences in July 2015, due to lower quantum prices, which appealed to Singaporeans whose affordability were curtailed by the Total Debt Servicing Ratio (TDSR).
\n\u00a0<\/p>\n

\u00a0
\nIndeed, the first half of 2017 looks to be really promising for real estate developers. Figure 1 shows the volume caveats lodged for new sales of private non-landed properties and executive condos. For much of 2014 and 2015, figures were in the doldrums, chilled by the frigid winds of the state\u2019s cooling measures.
\nHowever, sales of new homes began to recover towards the latter half of 2016, punctuated by spikes from sales in popular new launches like Queens Peak, The Alps Residences and Parc Riviera.
\nIt\u2019s all about the land
\nIt\u2019s a clich\u00e9 because it is true \u2013 land is Singapore\u2019s most valuable resource. For real estate developers, each square foot of land that they purchase is one that they can use to sell in the future to property buyers. Real estate developers are therefore highly dependent on the land that they purchased to become their future revenue stream.
\nHowever, when cooling measures such as the TDSR were introduced, causing transaction volumes to plummet, developers became more conservative when they bid for land.
\nWhen the state launched two adjacent Fernvale Road sites in June 2014, one plot received four bids while the other saw three. CEL was the top bidder for both sites, paying an average of $443 psf per plot ratio. They successfully launched High Park Residences on the site, selling out more
\nthan a thousand units at a rapid pace.
\nThis needs to be read in the context of the Singapore government\u2019s land strategy. From 2013, the state started to taper the supply of land, in a future-looking move to increase the absorption of unsold units in the market. At the time, even though the supply of land, and hence future revenue, was gradually decreasing, real estate developers were more conservative with their bids.
\nHowever, with private property buyers looking to re-enter the market, real estate developers have begun to make their move.
\nA plot of land close to High Park Residences and the Thanggam LRT station was launched for sale by the URA in August 2016. It received 14 bids, with the parcel awarded to Sing Development for the top bid of $287 million, or about $517 psf per plot ratio.
\n\u00a0
\nHome seekers queueing up to view the show suites at Seaside Residences. (Photo: Frasers Centrepoint Singapore)
\n\u00a0
\nHeating up
\nLand bids have become more aggressive recently, with foreign developers expressing greater interest in Singapore\u2019s real estate market.
\nA plot at Toh Tuck Road, close to the Beauty World MRT station, received a record 24 bids. The whopping top\u00a0bid of $265 million, about $939 psf plot ratio, was made by Malaysian developer S P Setia. Industry experts are suggesting a breakeven price of more than $1,400 psf per plot ratio when the project launches.
\nBreakeven pricing is the estimate of how much a developer would need to charge per square foot when selling the project to cover the costs of land, development and construction. It does not factor in the expected profit margin.
\nAnother Malaysian developer, IOI Group, through its subsidiary Wealthy Link, bid a record $2.57 billion for the white site at Central Boulevard, the highest bid on record for a white site. IOI Group\u2019s offer was more than 16 percent higher than the second highest bid of $2.2 billion by Mapletree.
\nInitially placed on the Reserve List of the Government Land Sales (GLS) programme, a developer had to indicate to URA that it was willing to commit no less than $1.54 billion, before it was put up for open tender. Earlier news reports, which PropertyGuru has not been able to verify, suggested that the initial commitment was made by a mainland Chinese developer.
\nURA also announced that a joint venture between Hong Kong-listed Logan Property, and mainland Chinese firm Nanshan, had won the bid for a land parcel at Stirling Road for over $1 billion (or over $1050 per sq ft per plot ratio), setting a record for a residential land parcel. While aggressive, the bid was not entirely unexpected, given the large site area of 21,109.5 sq m.
\nExploring en bloc opportunities
\nLand sales through the GLS are not the only way for real estate developers to increase their projects pipeline. The other is through the en bloc purchase of older projects for their land.
\nThe recent successful en blocs of Shunfu Ville, near Marymount, and Raintree Gardens in Potong Pasir saw current owners cashing out at an average of $1.78 million and $1.9 million per household. The Raintree Gardens sale is especially encouraging, with more than five developers reportedly bidding for the site.
\nThis has motivated the owners of older properties, such as Eunosville, to initiate the collective sales process in their own communities.
\nWith the greater scarcity of GLS sites in prime locations and the city fringe, en bloc sales are a potential way for developers to launch new projects in these areas. Furthermore, a collective sale is likely the only option for those looking to build freehold properties, as all GLS sites are sold on a 99-year leasehold basis.
\nFor many residents of current older projects however, the process can be arduous and expensive, with each household coughing up fees to the brokerage and if there are objections to the sale, fees for legal representation in the courts.
\nIn general, we do observe a few commonalities when it comes to projects that have sold successfully. Sites that are within government planned growth areas for instance, provide greater impetus for future sales. The Raintree Gardens site, for instance, once redeveloped, will be able to capitalise on the Bidadari growth story.
\n\u00a0<\/p>\n

\u00a0
\nLooking forward
\nWith new project sales on the rise, and competition for land heating up, home buyers looking to enter the market might need to consider their timeline for entry. While URA\u2019s Private Property Price Index continues to fall less than a percent quarter-on-quarter (Figure 2), the downward movement is unlikely to persist in the medium to long term.
\nWith the aggressive nature of land bids for GLS parcels and the cost of redevelopment for en bloc sites, developers will need to launch their new projects at commensurate prices. As such, it is unlikely that the current price climate for new launches will persist.
\n\u00a0<\/p>\n

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\n\u00a0<\/p>\n

This article was first published in the print version PropertyGuru News & Views. Download PDFs of full print issues or read more stories now!<\/p>\n


\n
\nSource : proppertyguru.com.sg\/Property Market
\nRead more…Get the Guru View: Is the new launch market heating up?<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

A crowd of potential buyers at the Park Place Residences showflat. (Photo: Lendlease) Photos of...<\/p>\n","protected":false},"author":1,"featured_media":56006,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true},"categories":[1],"tags":[],"class_list":["post-56005","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-property-news"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.siamlandbank.com\/propertynews\/wp-content\/uploads\/2017\/05\/GV-113.jpg?fit=645%2C407&ssl=1","jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p75ss1-ezj","jetpack-related-posts":[{"id":47409,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/park-place-residences-to-open-showflat\/","url_meta":{"origin":56005,"position":0},"title":"Park Place Residences to open showflat","date":"March 10, 2017","format":false,"excerpt":"\r Artist\u2019s impression of Park Place Residences at Paya Lebar Quarter. Source: Lendlease Australian property developer Lendlease plans to launch the Park Place Residences condominium at Paya Lebar Quarter (PLQ) on 25 March. It also announced unit prices at the 99-year leasehold project: the 117 one-bedroom apartments will be priced\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":82775,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/developer-sales-down-28-in-feb\/","url_meta":{"origin":56005,"position":1},"title":"Developer sales down 28% in Feb","date":"March 15, 2018","format":false,"excerpt":"\r Located near Queenstown MRT station, Queens Peak was the top-selling private condo last month. Sales of new private homes, excluding executive condominiums (ECs), dropped by 28 percent in February 2018 to 377 units from 524 in the previous month, according to latest data from the Urban Redevelopment Authority (URA)\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":28310,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/270-units-sold-on-launch-day-at-the-alps-residences\/","url_meta":{"origin":56005,"position":2},"title":"270 units sold on launch day at The Alps Residences","date":"October 3, 2016","format":false,"excerpt":"\r The interior of a two-bedroom unit at The Alps Residences showflat. (Photo: Christopher Chitty) The 626-unit The Alps Residences at Tampines Street 86 sold 270 units (43 percent) on Sunday (2 October), its first launch day after a week-long preview, said its developer MCC Land. Prices range from $491,000\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.siamlandbank.com\/propertynews\/wp-content\/uploads\/2016\/10\/The-Alps-Residences-showflat-768x1024.jpg?fit=768%2C1024&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":92330,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/over-7000-visited-riverfront-residences-showflat\/","url_meta":{"origin":56005,"position":3},"title":"Over 7,000 visited Riverfront Residences showflat","date":"June 25, 2018","format":false,"excerpt":"\r Crowds braved the rain for the opening of Riverfront Residences over the weekend. More than 7,000 people visited the Riverfront Residences showflat, a 1,472-unit residential project with six retail shops in Hougang Avenue 7, after it opened for preview over the weekend (23 \u2013 24 June). \u201cThe response has\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":47827,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/brisk-sales-at-inz-residence-interest-brewing-at-park-place-residences\/","url_meta":{"origin":56005,"position":4},"title":"Brisk sales at iNz Residence, interest brewing at Park Place Residences","date":"March 13, 2017","format":false,"excerpt":"\r A large crowd turned up for the preview of Park Place Residences over the weekend. (Photo: Lendlease) Qingjian Realty\u2019s 497-unit iNz Residence, the first executive condominium (EC) to launch in Singapore this year, sold around 170 units on the first day of booking last Saturday (11 March). \u201cSales at\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":49781,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/50-of-park-place-residences-sold-on-launch-day\/","url_meta":{"origin":56005,"position":5},"title":"50% of Park Place Residences sold on launch day","date":"March 27, 2017","format":false,"excerpt":"\r Overwhelming response seen at the one day launch of Park Place Residences last Saturday. (Photo: Lendlease) Australia-based developer Lendlease sold 215 (50 percent) of the 429 available units at Park Place Residences in Paya Lebar Quarter (PLQ) during the first day of launch last Saturday (25 March). 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