The response to the Government Land Sale (GLS) Programme often acts as the barometer of the general health of the real estate market. The number of bidders and the quantum of the competing bids in each GLS exercise are a direct reflection of the on-going market sentiment and the developers’ confidence in the near- to mid-term prospect of the property market.

The Urban Redevelopment Authority (URA) has awarded a Woodlands industrial site to top bidder Soilbuild Group Holdings - two days after the tender closed on 22 July, with a bid of $13.61 million or $30.10 psf.

The 180,835 sq ft site, at Woodlands Industrial Park E5, comes with a 60-year lease and development costs are expected to be around the region of $35-$40 million. The site is expected to be completed in 2010 and is targeted at Small and Median Enterprises (SMEs).

Meanwhile, for a tender last week for a hotel site in Balestier Road that drew three bids - all below market expectations - there is no announcement yet from the URA on its decision.

According to URA data, 46,480 private homes are expected to be completed between Q3 2008 and end-2011. This figure is 18% – or 10,021 units – lower than the figure of 56,501 units slated for completion between Q2 2008 and 2011 listed in URA's Q1 data.

Notwithstanding this, URA highlighted that the total supply of new private homes in the pipeline stood at 67,569 units as at end–Q2 2008 – about the same as 67,736 units at end–Q1. However, more of these units may now see completion after 2011.

The double whammy of rising construction costs and faltering sentiments have apparently caused some private residential property developers to delay their projects.

According to URA figures, the prices for HDB resale flats were up 4.5% in Q2 208, after increasing 3.7% in Q1 2008. The resale transactions grew 22% to reach 7,760 in Q2 2008. July started promisingly and ended with a bang with a total resale tally of 2,456 – the highest one-month sale since December 2007, and the third highest since January 2007. [See detailed statistics below].

The above table shows that, in terms of resale transaction volume, it is all the way up, especially for the bigger flats.

It is worth noting that for the first time in many years, the transaction volume of Executive Flats has crossed the important 200 mark – reaching 214 transactions in July 2008. The increase in the transactions of bigger flats is often underpinned by a robust economy where the average Joes are enjoying good runs in wage increases. Despite the increase in the unemployment rate, new wealth is being created in many new frontiers such as private banking and wealth management which might well replace the traditional growth engine such as manufacturing.

In Q2 2008, buyers of resale flats in popular locations paid lower COV, i.e. $1,000 lower than the first three months of the year. When compared to the COV portion of Q4 2007, the savings was $22,000 cash. Last year, it was not uncommon for buyers to pay between $80,000 and $100,000 in COV.

• One of the reasons for a lower COV in Q2 could be the higher market valuation of resale flats. However, there would still be rare occasions where the buyers paid extremely high COV probably due to the limited supply of flats in choice location such as Marine Parade and Bukit Timah. For example, a buyer paid $93,000 COV for a 5-room flat in Toh Yi estate.
  
  
• Another reason for a higher valuation is the responsiveness of the HDB resale unit in releasing the transacted prices via the HDB Info-Web. Nowadays, successful transacted prices are released publicly via the Info-Web upon the first appointment date of the transactions. This makes the sale data more current, and as a result the valuers are able to give a better estimate of the current market valuation of the flats being marketed.

The table below shows the typical COV amount in some popular heartlands:

According to the Department of Statistics, Singapore's PR population rose from 287,500 in 2000 to 386,800 in 2005. And this will underpin the demand for HDB resale flats in the near- to mid-term.

In recent months, as much as 20% of resale flat buyers were PRs compared to a mere 5% two years ago. Last year, 29,436 resale flats changed hands. If the volume holds for this year, it will mean about 6,000 flats could be snapped up by PRs. About 70% of the PR buyers are from China and India with the rest from countries such as Malaysia and the Philippines.

With the spiralling rents, it simply makes more sense to buy. For example, rents for a four-room flat in an established estate ranged from $1,000 to $1,200 two years ago. Today, they are $1,800 to $2,000.

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