Share:

Analysis on Singapore’s Government Land Sales Programme for H1 2020

09/12/2019
In view of high levels of unsold inventory and a tepid economic outlook, the authorities continue to be prudent in releasing land for residential development. This is reflected in the release of new sites for the first half of 2020 Government Land Sales (GLS) programme which only saw around 1,775 residential units in the Confirmed List, similar to 2H2019 of 1,715 units. The authorities continue to be prudent and err on the side of caution by pushing out a limited number of sites in the Confirmed List while leaving the bulk of supply in the reserve list.

A total of 6,490 residential units can be potentially released in the 1H2020 programme with 1,775 units in the Confirmed List and 4,715 units on the reserve list. Notably, only three sites were released on the Confirmed List, the lowest number of sites over the last five years. Furthermore, the bulk of units are from the site at Jalan Anak Bukit which will supply 865 units and 20,000 sqm of commercial space. Excluding EC units, there would only be around 1,175 private residential units released in the Confirmed List, the lowest since the first half of 2016 when only 925 private residential units were released.

The Tanah Merah Kechil Link site is expected to be of the greatest interest as it is directly adjacent to Tanah Merah MRT station. This is because demand has been well-tested in the area, as the nearby Grandeur Park Residences is 98% sold, with the latest median price at approximately $1,550 psf ppr. Accordingly, the site is expected to fetch bids in the range of $850 – $900 psf ppr.

Given the lack of sites on the Confirmed List, developers could look towards the reserve list for development opportunities. However, with the unsold pipeline of almost 40,000 units, it is unlikely that developers will be in a rush to trigger any of the residential sites on the reserve list. Redas is also concerned about the high supply pipeline, and has called for a sustainable approach in land purchase and capital allocation. We believe that developers will heed this call and be prudent in their bidding for residential land parcels. As such, the hotel site at River Valley Road is more likely to be triggered as hospitality fundamentals remain robust, and as there has been a slew of hotel investment transactions in recent times.

According to MAS, property prices are now closer to fundamentals after additional cooling measures were imposed in 3Q2018, significantly dampening price growth in subsequent quarters. As the residential market has stabilised, it is unlikely that MAS will impose new cooling measures or remove any of the existing measures as long as price increases are in tandem with income growth. However, MAS may elect to relax a couple of the measures should Singapore fall into recession in the next 1 or 2 years. The measure most likely to be tweaked in a recession scenario would be a relaxing of the LTV ratio, with a reduction of down payment requirement from 25% back to 20%. This is as the other measures such as TDSR, ABSD, and SSD serve to ensure buyers are not overstretched and to reduce speculative activity in the market, which should be maintained even during a recessionary environment.

Number of residential units released in GLS

Source: URA, Cushman & Wakefield Research

RElated Insights

APAC Cold Storage Logistics report
Research • Logistics

APAC Cold Storage Logistics: A Fast Growing Sector Riding on Vaccine and E-Commerce

Cold storage logistics is a sector that has gained traction in recent months. In this report we analyse the key factors driving the demand for cold storage in Asia Pacific and the opportunities for investments in this sector.
Shaun Brodie • 09/12/2020
Office REITs Still Viable Investments despite Challenges in Office Market
Insights • Office

Office REITs Still Viable Investments despite Challenges in Office Market

With the office market continuing to face significant challenges as working from home is expected to remain widespread and a rise in retrenchments resulting in a number of firms giving up spaces, many investors are wondering – are office REITs still a viable investment? 
19/11/2020
Capital-Markets-Overview-
Insights • Investment

What's Next For Asia Pacific Capital Markets - Spotlight on Tokyo

As Asia Pacific begins to show signs of recovery from COVID-19, led by a rebound originating from China, what is the current status of the commercial real estate market and where is it headed?
Anna Town • 12/11/2020