Government cuts land supply in 2H 2019

The Ministry of National Development (MND) has reduced the overall supply of private homes under the 2H 2019 Government Land Sales (GLS) programme, as a result of a decline in demand followed by the last round of property curbs and an enormous amount of supply in the next couple of years.

A combined total of 8 sites under the Confirmed list and 8 sites on the Reserve list can potentially yield around 6,430 new private homes; commercial space with a GFA of 92,000 square meters and some 1,100 hotel rooms, announced on 06 June 2019.

Under the latest Confirmed list of sites, the projected number of new homes is 1,715 – 15 percent lesser than the 2,025 units which can be potentially yielded from the confirmed list under the 1H 2019 government land sales programme.

MND noted that the demand for private homes has further declined since the introduction of the cooling measures back in July 2018, while the number of property transactions has also slid for the 3rd consecutive quarter in Q1 2019, and property developers’ need for sites has also moderated,

In addition, there is a huge housing supply of approximately 44,000 private homes which are already being planned. This consists an estimated amount of 39,000 units, which are still unsold, being yielded from land sales and en bloc sale sites that have attained planning approval, and on top of that, another 5,000 units from plots that have their planning approval in the pending stage.

Furthermore, there are also currently estimated 24,000 private homes that remain unsold.

There are 5 sites zoned for private residential, including one EC site, which has the potential to yield around 1,715 homes including 480 executive condo units.

Property consultants said that the reduced number of land supply under the 2H 2019 GLS confirmed list has reflected the market’s unease over the significant amount of unsold homes within the next few years that was a result from the massive amount of collective sales concluded within 2017 alone and the first 6 months of 2018, and the increasingly underperforming business and economic outlook.

The total amount of private homes (2,875) forecasted from the confirmed list for the entire 2019, in fact, is the lowest overall number since 2014 – which was after the introduction of the Total Debt Servicing Ratio (or TDSR) back in June 2013.

Within the last 5 years, the yearly supply of private residential homes under the GLS confirmed list was ranging between 3,095 – 4,355 units.

As for the latest reserve list, it consists of 4 private residential plots including one site for EC development, 1 site for hotel development and 3 others are white sites.

These sites have the potential to yield a total of around 4,715 private homes (inclusive of 595 executive condo units and approximately 1,000 units more from the 1st phase of the GLS site at Kampong Bugis), 92,000 square meters gross floor area of space for commercial purposes and another 1,100 hotel rooms.

Analysts specifically mentioned that the Irwell Bank Road GLS residential site listed under the 2H 2019 confirmed list emerges as an attractive plot being located within the prime residential district of Singapore and near a number of new high-end developments such as New Futura.

Being a vast plot, the future new launch at Irwell Bank Road could possibly yield 445 units in total. Therefore, the overall land price of the site is presumably to be costly and property developers are more likely expected take a cautious approach when bidding for this plot of land, given the private housing supply glut situation right now within the sub-sale and resale market of the Singapore luxury condo district.

The Irwell Bank Road land parcel may draw bid amounts between $1,500 – $1,800 psf ppr, based on the acquisition amount of $1,733 psf ppr concluded for the nearby Jiak Kim Street site (the existing project is now known as Rivière).

And looking at the recent take-up rate at Boulevard 88, Rivière and 3 Cuscaden, market watchers said that it is clear that property investors are wary of the price points and mostly prefer freehold properties.