Development charges for hotel use jump 45.6%

The Business Times - March 01
Amid waning interest in private residential developments sites following last July's cooling measures, development charge (DC) rates for non-landed residential use have been lowered for the first time in three years.
 
In contrast, DC rates for hotel and commercial use - areas that have been hotbeds of investor interest - continue to rise.
 
In particular, the rates for the use group that includes hotels and hospitals have been jacked up 45.6 per cent on average, based on latest DC rates announced by the government.
 
Effective for the next six months, they follow the 11.8 per cent increase imposed last September.
 
Tricia Song, Head of Research: 
The revision in development charge (DC) rates for the Commercial, Hotel/Hospital, and Residential (Non-Landed) Use Groups announced on 28 February 2019 was largely expected and reflective of current market conditions in the respective property segments.
 
In this latest round of revision, the DC rates for Commercial and Hotel/Hospital uses have been raised, taking into account stronger investment transactions over the last six months as well as brighter outlook for both sectors - underpinned by rising office rents and firmer RevPar (Revenue Per Available Room).  
 
Meanwhile, DC rates for Residential (Non-Landed) use have been cut. The decrease in Residential (Non-Landed) DC rates was not unexpected, given the fewer transactions and weaker sentiment in the residential property market. Since the fresh property cooling measures were implemented in July 2018, developers’ perceived risk-reward ratio on residential deals has shifted, resulting in waning investment appetite. Click here for our analysis.  
 
 

Florence Residences sells close to 60 units on launch weekend

The Business Times - March 04
The property market has not yet fully recovered from last year's onslaught of cooling measures, going by first weekend sales at one of this year's most-anticipated condo launches.
 
The Florence Residences in Hougang released 200 units for its first phase of sales on Saturday, of which close to 60 units or 30 per cent were sold.
 
The 1,410-unit condo project is this year's first mega launch. Developed by Logan Property, Florence Residences sits on the site of Florence Regency, the privatised HUDC estate that was sold en bloc in October 2017.
 
Tricia Song, Head of Research:
The Florence Residences launched despite the competition around it, due to the developer’s confidence in the product, as well as to leverage on the announcement of the Cross Island Line. There are over 100 floor plans and configurations available to cater to a wide audience, and we deem them to be mostly efficient and varied. Coupled with a per square foot price point of close to SGD1,400, which is at a discount to the competing projects, the project offers affordable quantum and attractive value. So while the earlier projects had a head-start and soaked up pent-up demand in the locality, we expect pre-sales for The Florence Residences would progressively pick up.    
 
 

URA launches tender for Clementi Avenue 1 residential site

The Business Times - March 01
The Urban Redevelopment Authority (URA) has launched a public tender for a 99-year residential site at Clementi Avenue 1, under the Confirmed List of the first half 2019 Government Land Sales (H1 2019 GLS) programme.
 
The site has a permissible gross floor area (GFA) of 57,900 square metres on 16,542.7 sq m of land, which works out to a gross plot ratio of about 3.5 times.
 
The maximum building height is 140m, and the project completion period is 60 months.
 
Tricia Song, Head of Research: 
We expect the site to potentially attract 4-6 bids, fewer than the seven bids we saw at the Kampong Java private residential site that closed in January 2019 (with a winning bid of SGD418 million), as this site is relatively larger. There is a cap of 640 units, which conforms to the minimum average size guideline of 85 sq m (915 sqft). There is also a requirement to provide a Childcare Centre (CCC), for a minimum of 10 years from the date of issuance of CCC licence. The Gross Floor Area (GFA) of the CCC shall be a minimum of 700 sq m and is to be computed as part of the permissible GFA for the proposed development. The CCC is estimated to accommodate a total capacity of 150 children (including infants).
 
We estimate the top bid could potentially come in at SGD520 million or SGD830 per square foot per plot ratio (psf ppr). This could put potential average selling price at SGD1,400 psf. Click here for our analysis.