SINGAPORE, 06 December 2018 - The Government has adopted a more cautious stance in its upcoming land sales programme by pulling back on land supply for the first half (H1) of 2019, owing to an ample pipeline of upcoming housing supply from sites that were sold via collective sales and public tenders.

Sites under the Government Land Sales (GLS) programme for H1 2019 can potentially offer a total of about 6,475 private residential units (under both Confirmed and Reserve Lists) – down 19.5% from 8,040 units provided for in the GLS for the second half of 2018. It is also the lowest total half-yearly supply of residential units since H1 2007, where 5,475 units were offered.

Please attribute the following comments to Ms. Tricia Song, Head of Research for Singapore, Colliers International:
In trimming the land supply, the Government seeks to ensure that the property market remains sustainable in an environment of heightened uncertainty, global trade tensions, and looming interest rate hikes.

Among the five Confirmed List sites, three of them – Tan Quee Lan Street, Bernam Street, and Canberra Link (EC) – should garner a healthy level of interest from developers. Meanwhile, stand-out sites on the Reserve List are: Dunman Road; Marina View; Sims Avenue; and Fernvale Lane (EC).

Despite the strong demand for Executive Condos (EC) – a hybrid of public and private housing - and their dwindling supply on the market, the Government has maintained a stable supply of EC sites in the upcoming GLS, keeping pace with the private housing supply. 

The unexpected plot on the GLS H1 2019 slate is perhaps the new hotel site in Sims Avenue which will be placed on the Reserve List. We think the site will complement the Government’s plan to rejuvenate the area and transform Paya Lebar into a regional commercial hub. 

Of the 14 sites placed under the Confirmed and Reserve List of GLS H1 2019, seven are new: one-north Gateway; Bernam Street; Canberra Link (EC); Fernvale Lane (EC); Dunman Road; Hillview Rise; and Sims Avenue.

Colliers Research’s analysis on new sites offered:

Confirmed List: 

The Bernam Street site is a rare fresh site in the mostly built-up Shenton Way CBD and near the future Greater Southern Waterfront development. The last time a residential site was offered in that area was back in 2007 – two sites in Enggor Street, which had been developed into Altez and Skysuites @ Anson respectively. We observed that 99-year leasehold residential projects in this area transacted at SGD1,700-2,500 per square foot (psf) on average recently, depending on age and unit size. For the Bernam Street site, which has a lower plot ratio of 5.6x than the Enggor Street sites, and can be built to offer 250 residential units and up to 2,000 square metre (sq m) Gross Floor Area (GFA) of retail space, we expect a top bid of SGD400 million or SGD1,700 psf per plot ratio (ppr).  
The Canberra Link EC site is next to another Canberra Link EC site that was awarded in September 2018 for SGD271 million or SGD558 psf ppr and attracted a whopping nine bids, reflecting the popularity of ECs. We expect ample interest for this site with its palatable size of about 385 units, but as it is slightly further away from the future Canberra MRT station, we expect the top bid to be SGD215 million or SGD520 psf ppr. 

The one-north Gateway site is the smallest site on the Confirmed List with the potential to build 170 units. The plot is next to the one-north Residences which was completed in 2009 and we think the new site should supplement the housing demand generated by the growing working population in the one-north technology enclave. While investment demand has been dampened by the fresh cooling measures, the site is palatable and could appeal to niche developers. one-north Residences have transacted at around SGD1,480 psf for units around 900-1,000 square feet year-to-date 2018. We expect a top bid of SGD150 million or SGD960 psf ppr, and the developer could look to sell at SGD1,550 psf, taking into account the new minimum unit size requirement of 85 sq m. 
Reserve List

We view Dunman Road site as the most attractive site on the Reserve List – given its proximity to the Dakota MRT station, predominantly unblocked views of the East Coast and within minutes’ drive to town. It is also near good schools and the upcoming Paya Lebar Quarter (PLQ). However, a concern could be its relatively larger size – 1,070 buildable units. We expect this site to appeal to larger developers or joint ventures and could attract a top bid of SGD1.15 billion or SGD1,200 psf ppr. 

The Fernvale Lane EC site is not near any MRT and LRT station nor have any river views, but it could still be popular due to the limited choice of EC sites and high demand for affordable quasi-private housing for the sandwiched class. We expect this site could be triggered soon to fetch a top bid of SGD270 million or SGD480 psf ppr. 

The new Hillview Rise site is just across another Hillview Rise plot that was awarded on 3 July 2018 at SGD460 million or SGD1,068 psf ppr. Given the ample supply and lukewarm response to some sites in the vicinity post-measures, we do not expect this site to be triggered soon. 

The 575-room hotel site at Sims Avenue - next to PLQ - offers hoteliers a first mover advantage to build a hotel to cater to the growing business community within the decentralised Paya Lebar hub. With improving tourist arrivals and an easing hotel room supply pipeline, we expect a positive response to this site, with a top bid of SGD244 million or SDG1,170 psf ppr.    

Please attribute the comments below to Mr. Govinda Singh, Executive Director of Valuation & Advisory Services, Asia, Colliers International:
As the development of Paya Lebar into a regional business hub gathers pace, a mid-market/four-star hotel will be ideal as a focal and meeting point for both locals and visitors alike. We would anticipate strong demand from businesses in the year, and given limited existing supply in the area, this should ensure its viability.