(F) News on Government Land Sale (GLS) Programme

The response to the GLS programme gives a good indication of developers’ sentiment. In this lull market, unless the site on offer has superb qualities or else it will be given the cold shoulder. Even if there were multiple bids, the URA may not award the site to the highest bidder due to what the authority considers ‘low price’. In a nutshell, the lukewarm response to the GLS programme in the first quarter of 2008 signals the advent of a slower growth period.

•  (F.1) URA decides not to award Ten Mile Junction site

The URA had rejected the bid by Peak Green for a residential site at Choa Chu Kang/ Woodlands Road as the $61m or $162 psf ppr offered was considered by URA to be ‘too low’. The value of the site, on which the state-owned Ten Mile Junction currently sits, is thought to be worth between $200 psf ppr and $250 psf ppr.

The 15,645 sq metre (168,403 sq ft) site has a potential residential gross floor area (GFA) of 254,394 sq ft, which can house between 200 and 240 flats or serviced apartments.

• (F.2) Phase Two of Sembawang Greenvale

All the 11 parcels of Phase Two of Sembawang Greenvale were sold for a total of $45.29 million or $223 per sq ft (psf) on average.  The 12 plots of land in nearby Phase One were also fully sold when they were launched in October 2007 for about $285 psf on average. Comparing the two phases, the winning bid prices for Phase Two plots were 22% lower on average than the Phase One plots nearby.

Smaller developers and individuals turned up in force to bid for the phase two plots, which can yield 90 dwellings - one bungalow, 16 semi-detached houses and 73 terraced houses.

• (F.3) Transitional office site in Newton draws 8 offers

A prime transitional office site in Newton attracted eight bids. Broking house UOB Kay Hian emerged the winner with an offer of $34 million or $242.5 psf of gross floor area.

To some analysts, this is a clear reminder that the demand for office space remains high. Tight office supply and strong demand have sustained the growth in rentals.

• (G.1) HDB resale transactions

Transactions of resale HDB flats stood at 6,360 in the first quarter of 2008, against the backdrop of rising asking prices and high cash-over-valuation (COV) demands.
When compared with the same period last year, the first quarter transactions were higher. Compared month-on-month, the transaction figure in April 2008 was 2,339 - the highest in this year.

Traditionally, the rush is at the end of the year where more buyers would request the handing-over of the flats before Chinese New Year (CNY). Once potential buyers know that they would not be able to meet the CNY target date, they tend to slow down the purchase – hence the usual lull in the first quarter of the year.

The table below shows that in the first quarter of 2007, the sale figure was also very low. When compared, the first quarter of 2008 did better than the same time last year – which may be read as a sign of an improving HDB resale market.

Table [ 13 ] – The quarterly performance of HDB resale flats since 1Q 07

• (G.2) HDB buyers paying less COV

The latest HDB statistics showed that median cash-over-valuation (COV) prices in many popular estates like Marine Parade, Queenstown and Clementi have come down.

One example is in Bukit Batok where home-owners in Bukit Batok used to demand nothing less than $50,000 cash upfront just six months ago. In the last month, however, this had dipped to about $20,000 to $30,000.

The drop in COV was due largely to valuations of HDB homes rising sharply to reflect more accurately prevailing market prices.

In the most recent quarter, the median price went up to $450,000. However, the COV fell to $30,000, which meant that the valuer had valued the flat higher at $420,000.

Another reason for the decrease in COV could be that sellers' expectations have moderated due to the recent softening of the property sector, coupled with volatile global markets.

A lower COV simply means lower demand for HDB resale flats for the time being. It also means that buyers of resale HDB flats only need to fork out lower upfront cash; they can use their CPF savings to pay for the rest of the down-payment.

• (G.3) HDB Rents are rising fast

More flat owners are applying for HDB’s approval for whole flat sub-letting. And in the meantime, the median rent for HDB flats is rising.

Rents for some executive flats in Queenstown have gone as high as $2,900 a month. At close to $3,000 a month and without the luxury offering of a swimming pool or gym, the price would have been impossible two years ago. How things have transformed over such a short time.

The table below shows a comparison between rents collected recently in selected areas with rents collected in the same areas in early part of last year. There have been marked increases in the rental.

Table [ 14 ] - Comparison of rents of HDB flats [for 3 bed-room rented] between early 2007 and early 2008

Source of information: INFO-TOOLS Monthly Transacted Guide

• (G.4) Transactions of HDB Resale market in April 2008

Below shows the most current HDB resale transactions in April 2008 and the figures can be compared with previous months’ transactions to gauge the prevailing market sentiment.

Table [15] – April 2008 HDB resale transactions

Table [ 16 ] – Comparison of HDB resale transactions from January to March 2008

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