Friday, 5 September, 2014 RESIDENTIAL MARKET Sim Lian tops bids for EC site, beating market expectations The latest state tender for an executive condominium (EC) site in Choa Chu Kang Drive shows that developers would still make a beeline for attractive sites. Located about 550 metres from Choa Chu Kang MRT Station and Bus Interchange and Lot One Shoppers Mall, the 1.9-hectare plot drew eight bids, with the highest at S$361.08 psf ppr from Sim Lian Land - slightly above market expectations. Some market watcher had expected the site to draw 5-6 bids with the winning bid at S$320-350 psf ppr. However, he added: I see a mix of both caution and optimism. The optimism is in the top bid being higher than expected; the caution is the top bid being pretty close to the S$357 psf ppr average price for the two adjacent Choa Chu Kang Grove EC plots sold in February - despite the latest site being more attractive. The pair of Choa Chu Kang Grove sites are about 1.1 km from Choa Chu Kang MRT Station. At the latest tender in Choa Chu Kang Drive, Sim Lians bid was just 2.2 per cent above the next highest, $353.21 psf ppr, from a consortium comprising Hoi Hup Realty, Sunway Developments and Oriental Worldwide Investments. The number of bids and close winning margin indicate the healthy interest in the EC market, despite current market conditions. City Developments Limited (CDL) unit Verwood Holdings teamed up with TID Residential to bid nearly S$343 psf ppr, the third highest. Back in March 2011, CDL had paid S$321 psf ppr for the next-door plot, on which it is developing The Rainforest EC project. Also bidding at Thursdays tender were Nanshan Group Singapore (S$337 psf ppr) and Qingjian Realty (S$331.08 psf ppr). A partnership of Evia Real Estate (6), Ho Lee Group, CNH Investment, OKP Land and Lian Soon Holdings offered S$311.46 psf ppr while MCL Land priced the site at S$305.17 psf ppr . This was significantly lower than the S$357 psf ppr average price that it had paid earlier this year for the pair of Choa Chu Kang Grove plots, in a much inferior location. MCL plans to amalgate the plots and build a project of over 1,300 units. The lowest bid at Thursdays tender - from Koh Brothers unit KBD Ventures - was S$280.21 psf ppr. The strong turnout of eight bidders along with the higher-than-expected top bid of S$361 psf ppr constrasts with the lacklustre performance seen two months ago for an EC site in Sembawang Avenue, about 550 metres from Sembawang MRT Station. That site drew just four bids and its winning bid of S$320 psf ppr was the lowest price for an EC site since November 2012. ECs are a public-private housing hybrid with initial buyer eligibility and resale conditions that are fully lifted 10 years after the completion of the project. Demand for ECs has softened following the December 2013 introduction of a mortgage service ratio (MSR) cap for EC purchases from developers. Nevertheless, pent-up demand for this housing type is expected for the five EC project launches slated by year-end. This is because no new EC projects have been launched in nearly a year, following regulations announced in January 2013 stipulating that developers would be allowed to sell units in EC projects only 15 months from the date of award of the site, or after completion of foundation works, whichever is earlier. Given that mass-market condo prices have started to soften, most analysts would expect prices of EC units to follow suit. Market watchers reckon that based on the top bid for the Choa Chu Kang Drive site, the breakeven cost could be around S$700-720 psf. This still leaves the bidder with some cushion for a potential price softening from current levels. In the first half of this year, developers sales of EC units averaged around S$790 psf going by caveats data. When contacted, a Sim Lian spokesman said that the group expects to launch a project on the site in early 2016, given current rules. Were looking at a project of 500-plus units. This is an attractive location, near the MRT station, a fairly big suburban mall and other amenities. Developers who pay high prices for EC sites may raise the proportion of smaller-sized units - for instance, by building more two-bedders instead of three-bedroom units, in order to keep the price quantum within reach of buyers MSR cap. Source: Business Times – 5 September 2014 Aug HDB resale prices fall 1.1% from July: SRX HDB resale prices likely remained on a slide in August, with latest data from the Singapore Real Estate Exchange (SRX) suggesting a 1.1 per cent drop in resale prices from a month ago. But this is still within what property consultants would term as a soft landing engineered by government cooling measures, with a market consensus that HDB resale prices could drop by 5-8 per cent for the whole year. Resale prices were also down 7.1 per cent from August last year and 8.6 per cent from the peak in April 2013, based on the SRX data. According to SRX, buyers paid an average of S$3,000 less than the estimated market value for flats. Three and four-room flats were the main drag for the month-on-month fall, as their resale prices fell 2 per cent and 0.9 per cent respectively in August. The larger flats - five-room and executive flats - turned out to be resilient in August, with their resale prices edging up 0.8 per cent and 1.5 per cent respectively. Market watcher who expects resale prices to fall by up to 7 per cent this year, noted that the eligible pool of buyers looking for smaller- sized flats is shrinking while some buyers find it hard to obtain sufficient loan for the bigger flats due to their heftier price quantums. But there are also buyers who saw the recent slide in prices as a window to snap up the larger units, he said. The number of resale transactions in August slipped 1.1 per cent over a month to 1,327 flats, which is down 3.3 per cent year-on-year and down 63.6 per cent from the peak of 3,649 in May 2010. ERA Realty key executive officer Eugene Lim attributed the slight month-on-month fall in resale volume to the Hungry Ghost Festival, which tends to slow down house buying activities especially for the more superstitious. We may see more buyers and sellers returning to the market after the seventh month, he added. Meanwhile, rental prices and volume stayed relatively flat, with an estimated 1,550 HDB flats rented in August. Mr Lim said he believes that rents will moderate by 5-10 per cent by year-end, given the curbs on foreign workers and greater competition from more BTO (build-to-order) flats entering the resale market after crossing the minimum occupation period and more private condos being completed. Also forecasting a 5-8 per cent drop in resale prices for the whole year, Mr Lim said: The cooling measures are not designed to crash the market, so we see the HDB resale market finding its footing. Source: Business Times – 5 September 2014
Posted on: Fri, 05 Sep 2014 08:38:11 +0000
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