31 May, 2018
Ms. Tricia Song, Head of Research for Singapore, Colliers International:
“The three sites released by URA and HDB provide developers with more development options outside the Core Central Region, and will complement the current slate of redevelopment sites on offer in the collective sale market.
All three land parcels – Dairy Farm Road, Sims Drive and Tampines Avenue 10 (EC) – should find favour with developers given the improved market sentiment and good absorption of new supply. The launches year-to-date have met with good take-up rates and should further bolster developers’ confidence to bid for sites.
We expect to see keen interest for the Dairy Farm Road plot on the Confirmed List which is zoned ‘Residential with Commercial at 1st storey’, with minimum GFA of 500 sqm set aside for a childcare centre. Total GFA for entire development cannot exceed 41,260 sqm, with a cap of 4,000 sqm for commercial uses comprising: a. Supermarket: 1,000 sqm (minimum), b. Food Court: 500 sqm (minimum), c. Shops and/or restaurants: 2,500 sqm (maximum). With prior written approval, a combination of flats with strata landed houses is allowed. The site is about 800 metres away from the nearest MRT Downtown Line Hillview Station. Setting aside some commercial use to support the growing residential population is timely. The site’s most attractive attributes are its proximity to the Bukit Timah Nature Reserve and partial unblocked views over the landed residential plots.
This is the first GLS site to be released for sale in the Dairy Farm area since the site of The Skywoods which was tendered at SGD616 psf ppr in September 2012. Nearby projects Tree House (completed in 2013), Foresque Residences (2014), Eco Sanctuary (2016) and The Skywoods (2016) are currently transacting at SGD1,000-1,300 psf. We expect the top bid for the site to come in at SGD390-420 million (or SGD 880-950 psf ppr).
Of the two sites that have been made available for application under the Reserve List, we think the EC site in Tampines Avenue 10 will likely be triggered for sale sooner rather than later, owing to the diminishing unsold EC stock in the market and the continuing appeal of ECs to home buyers. The robust demand for ECs - a hybrid between public and private housing – was also driven by their relatively affordable price points for the “sandwiched” class. Should it be put up for sale, we believe there will be stiff competition for it and could potentially fetch SGD360 million (or SGD480 psf ppr). This would be lower than the record psf price of SGD583 psf ppr for the Sumang Walk EC recently, but will still be the second highest for an EC site.
The last EC that was offered in the vicinity - The Arc at Tampines, was tendered at SGD302 psf ppr in November 2010 with six bidders. It was later launched at about SGD740 psf in 2011 (the project was completed in 2014) and the latest resale transactions (albeit few and for smaller units) were done at SGD850-950 psf. The nearest new private launch The Tapestry had sold 43% of its 861 units within two months of launch in March 2018, despite a steepened price tag of around SGD1,400 psf.
Meanwhile, the Sims Drive site should attract more bids – and likely more bullish ones - than the four bids garnered by the adjacent site where Sims Urban Oasis currently sits. Sims Urban Oasis had a slow start but had finished strongly with 98% of its 1,024 units sold as of April 2018, with selling prices rising from a low of about SGD1,300 psf to the current SGD1,500 psf. Park Place Residences at Paya Lebar MRT station, one stop away, had been selling at SGD2,000 psf.
The key attractions for the Sims Drive Reserve List site are: it is in a city fringe location and within walking distance (450 metres) to the nearest Aljunied MRT station. We estimate that the site could see a top bid of SGD575 million (SGD1,100 psf ppr) should it be triggered for sale. The land rate would be significantly higher than the SGD687.90 psf ppr for the Sims Urban Oasis site placed by a subsidiary of GuocoLand in April 2014, reflecting the more palatable size of the new site (680 units) and the market recovery since.”