With the expectation of more demand for mass-market homes and the current bearish market, developers are likely to turn to the Government Land Sales (GLS) programme, rather than private collective sale, to enhance their land banks.

In the next few months, the developers should be kept busy by the offering of more plum 99-year private condo sites in mature public housing estates near MRT stations.

(F.1) Second batch of hybrid Private HDB flats launched

The second batch of public housing under the Design, Build and Sell Scheme (DBSS) went on sale on 5 January 2008 at its Boon Keng Road site. The first batch of such public flats at Tampines was launched last year to overwhelming response. The prices of the different flat types are as follows:

By the end of day one, a total of 8,000 viewers thronged the show flat with 1,100 of them impressed enough to hand in applications for the 714 hybrid private HDB flats in Boon Keng.

Another 2,500 such hybrid private HDB flats are being planned for Ang Mo Kio, Bishan, Toa Payoh, Simei and Bedok in the coming months.

(F.2) UOL and joint venture partner clinched Simei site

Main-board-listed UOL Group and its joint-venture partner Peak Century beat two rivals with the top bid of $236 million or $296 psfppr to clinch a Simei residential site.

The 99-year leasehold site - with a gross floor area of 797,434 sq ft - attracted much fewer bids than a similar suburban Woodlands site in November 2007. However, the bid price of $296 is higher than the $232 psf fetched by the Woodland site, probably due to Simei being regarded as a better location.

The Simei site is near Simei MRT station, Eastpoint Mall and schools. The site's new development is likely to sell at between $700 psf and $750 psf.

(F.3) Ho Bee-IOI joint venture awarded Sentosa’s Pinnacle site

The joint venture partnership of Ho Bee Investment and Malaysia's IOI Properties outbid two other developers with a cheque of $1.097 billion (or $1,822 psf ppr) for The Pinnacle Collection site at Sentosa Cove. The record winning bid is 14% above the reserve price of $1,600 psf ppr. It also beat the previous benchmark of $1,799.78 psf set by SC Global for Beachfront Collection.

Escalating cost of construction has been cited as reasons for the absence of the other major property players.

The 231,676 sq ft site has a 2.6 plot ratio and a height limit of 20 storeys, the tallest allowed in Sentosa Cove. The developers will build 280 units comprising a mix of three- and four-bedroom units as well as penthouses.

(F.4) Transitional office site fetches only one bid

Only one bid of $7.8 million offered by an unheralded construction company Mezzo Development, was received at the close of the public tender by the Urban Redevelopment Authority (URA) for a temporary office site in Aljunied Road.

The offer was far lower than the $30 million earlier predicted by experts. In fact, the $7.8 million offer works out to just $38.37 psf ppr - close to the level of some industrial space.

The 1.88 ha site was the fourth transitional office site offered by URA. Last week, the third site at Mountbatten Road was awarded to the same company which also put in the top bid of $69.17 psf ppr.

The lukewarm response to the recent tender exercises for transitional office sites may be due to the lingering worries over a probable recession in the US. Moreover, the rising construction costs may have deterred many cash-strapped developers.

(F.5) West Coast seafront condo site launched

THE Urban Redevelopment Authority (URA) has launched a 99-year-leasehold seafront condo site next to Blue Horizon condo for public tender.

The site can be developed into a new condo up to 36 storeys high with full view of the sea and the West Coast Park directly opposite it. It is within 5 minutes’ drive to shopping and entertainment attractions at VivoCity, St James Power Station and Sentosa.

The site is also near National University of Singapore, one north, and Science Park. So a new condominium should be able to attract high-income professionals, researchers and engineers working at the nearby institutes and facilities.

The site can be developed into a condo with about 300 units averaging 1,250 square feet.

(F.6) Yishun condo site facing reservoir launched

The Housing & Development Board (HDB) has released a 99-year-leasehold condo site at Yishun avenues 1 and 2 for public tender. The site is facing Lower Seletar Reservoir and is near Singapore Orchid Country Club/Golf Course.

Besides the advantage of having the reservoir view and the lush greenery of the country club, the site also enjoys the proximity to Khatib MRT Station and as such the offer bids should be in the region of around $200 to $300 per square foot (psf) of potential gross floor area.

The 2.7 hectare site has a 2.1 plot ratio which allows a 24-storey height and about 500 apartments averaging 1,200 sq ft.

New freehold condo units in the vicinity such as The Sensoria and Northwood were sold at prices ranging from $600 psf to $650 psf. The new condos on the site should be able to fetch $600 psf to $650 psf when launched.

(F.7) Record 20 bids for Jalan Sultan site

Despite recent lull in state land tenders, the Urban Redevelopment Authority (URA) had received a record 20 bids in public tender for a 15,200 sq ft site including 17 two-storey conservation shophouses at Jalan Sultan.

The highest bid of $14.8 million or $973.63 psf also exceeds the reserve price of $7.8 million by about 90%. It is estimated that the cost for each shophouse unit could be around $1.3 million, considering renovation and restoration costs.

(G) News on HDB Resale Market

(G.1) Higher Cash-Over-Valuation (COV) fetched by HDB flats

In the fourth quarter of 2007, a total of 269 HDB flats were sold for $500,000 or more. This is a 69% increase over the 159 flats sold for more than $500,000 each in the third quarter. And 12 resale flats were transacted at $700,000 or higher.

Larger HDB flats in central locations are commanding higher premium than before. The $890,000 transacted price for a 21st-storey executive flat along Mei Ling Street in Queenstown is a case in point.  Last November, another executive flat along the same street went for a then-record $780,000.

Such a trend will push up demand for entry-level private homes for two reasons:

• The price gap between public housing and private homes has narrowed as a result of higher COV; and sellers of such flats will have the financial muscle to buy mass market private homes.
  
  
• Secondly, new homeowners could also consider a private condo, rather than a resale flat for their first home, as there would be very little cost savings when buying a resale flat.

The detailed breakdown of HDB flats sold for more than $500,000 in the 3rd and 4th quarters of last year is as follows:

(G.2) Quantity of HDB resale transactions down but more larger flats sold

The number of HDB resale transactions had fallen to a new record low in 2007 - with only 29,436 transactions. This happened as buyers started to resist higher cash-over-valuation (COV).

The whole year transactions of all resale flats are as follows:

The transaction figure was lower than the previous lowest record of 29,723 set in 2006.

After some strong growth in the second and third quarters, the stock-market jitters in the fourth quarter caused some prospective buyers to stay on the fence, causing resale transactions in the last three months of 2007 to fall 13% to 6,748.

However, on the whole, a healthy economy actually propelled the resale prices 17.5% higher for the whole of last year. In the fourth quarter, HDB resale prices rose 5.7%, lower than the increase of 6.6% in the third quarter.
In the fourth quarter, 86% of all resale transactions required COV, up from 80% in the third quarter. The median COV amount also increased to $22,000 in the last three months of the year, from $17,000 in the previous quarter.

However, a higher number of larger flats such as five-room and executive flat were transacted in 2007 as compared to a year ago.

For the whole year, the number of five-room resale transactions rose 13.3% to 7,275; while the number of executive flats resale transactions rose 17.9% to 2,627 as compared with 2006.

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