Non-landed DC rates up 9.8% for fifth straight increase

The Business Times - Sep 01
The development charge (DC) rate for redeveloping land has been hiked for non-landed private homes for the fifth straight time, although watchers said that future increases could taper off as property-cooling measures put the lid on the collective-sale frenzy.

Rates for this land-use group have been raised by an average of 9.8 per cent for the next six months, in a move by the Ministry of National Development (MND) on Friday - down from the 22.8 per cent jump in March.

Developers pay the DC, which is based on an assessment of land values, for the right to enhance the use of some sites or to build bigger projects.

Besides non-landed homes, rates for the next six months are up for commercial and industrial sites, as well as plots for hotels and hospitals.

Tricia Song, Head of Research:
The increase in development charge (DC) rates across the commercial, non-landed residential, hotel/hospital and industry uses announced on 31 August was largely expected, with the exception of the hotel/hospital segment. We believe the outcome of the latest round of DC rates revision generally reflected the improved sentiment and robust investment sales activities in the Singapore property market the past six months. 

Against a backdrop of healthy public land tenders and a vibrant collective sale market (prior to the July 06 cooling measures), it comes as no surprise that DC rates for non-landed residential use headed north. On average, DC rates for the segment is due to rise by 9.8%, with Sector 43 (Tanglin Road /Cuscaden Road / Orchard Blvd / Grange Road) and Sector 67 (Dalvey Road / Stevens Road / Anderson Road / Orange Grove Road / Tanglin Road / Napier Road / Cluny Road) seeing the sharpest hike of 33%.

The increase in non-landed residential DC rates in Sector 43 was probably driven by the collective sale of Park House in June which was sold for SGD2,910 psf ppr, a record for any residential land; as well as the Cuscaden Road GLS site which was awarded in May for SGD2,377psf ppr, also a record for a residential GLS land. Click here for full analysis.

Developer sentiment hit by new cooling measures: survey

The Business Times - Aug 31
Developer sentiment has dampened significantly following the government's announcement of new cooling measures, according to a survey conducted by National University of Singapore (NUS) and Real Estate Developers' Association of Singapore (Redas).

Outlook for the prime residential and suburban residential sectors were the hardest hit, while office, business park/hi-tech space and hotel/serviced apartment were relatively unaffected. Redas and NUS had earlier completed a report on developer sentiment for Q2 of 2018, before the latest round of cooling measures were revealed on Jul 5.

A follow-up survey after the measures were introduced showed that the Real Estate Sentiment Index (RESI) took a dive from 6.6 to 3.9. According to Redas, a score below 5 indicates deteriorating market conditions, while scores above 5 indicate improving conditions. 

Tricia Song, Head of Research:
The set of measures announced on July 5 raised the barriers to entry for property investors and foreigners, and even for first-timers with the reduced Loan-To-Value cap.  It is thus not surprising that the developers’ outlook for both prime and suburban residential sectors were the hardest hit. Hence, going forward, we expect developers to be more disciplined in bidding for land via Government Land Sales or collective sales.  In addition, with the sentiment towards office, business park/hi-tech space and hotel/serviced apartment relatively unaffected, developers could also shift their focus or increase capital allocation to these asset classes. In our Investment Sales Q2 quarterly, we have made changes to our forecasts to investment sales post the measures. Click here for the report.

8 St Thomas Walk 'well-received' in private preview by Singapore, HK buyers

The Business Times - Aug 28

Singapore and Hong Kong buyers have scooped up more than 20 out of 250 units at "well over S$3,000 per square foot" at 8 St Thomas in a private preview over the weekend, developer Bukit Sembawang Estates said in a statement on Tuesday.

Eighty five per cent of sales were for one- and two-bedders, and 70 per cent of sales were from locals and 30 per cent from foreigners. Buyers were evenly split between purchasing for occupation and investment purposes.

The District 9 property spanning almost a hectare is completed and ready for immediate occupancy. It boasts one- to four-bedroom units, four-bedroom dual-key units and penthouses, starting from an area of 441 sq ft up to 2,659 sq ft, which each feature a home automation system that controls access to the units, lights and air-conditioners. 8 Saint Thomas also features energy and water efficient fittings and green lots for charging electric cars.

Tricia Song, Head of Research:
Given the cooling measures, the take-up rate is encouraging. It is unsurprising that the majority of the take-up are the smaller one- and two-bedders as they are more affordable. As the units are ready for immediate occupancy, we believe they could appeal to the collective sales beneficiaries who require replacement homes. They also appeal to investors who could collect rental income immediately. Hong Kong buyers would still find Singapore’s prime homes very attractively-priced, compared to their local ones which have more than tripled in prices since 2009.