Executive condominium land price hits all-time high

SINGAPORE — The price of executive condominium (EC) land has hit a record high as developers bid aggressively in anticipation of strong demand for such hybrid public-private housing, casting doubt on the Government’s efforts to moderate bidding by having site tenders close at the same time.

For the first time, the tender for three EC sites closed on the same day yesterday, but the top bid for a site in Jurong translated to S$418.53 per sq ft per plot ratio, breaking the S$400 psf ppr barrier and the previous high of S$392.45 psf ppr more than two years ago. The other two tenders for sites in Punggol also attracted strong bids.

“This experiment to moderate land prices by closing the tenders on the same day appears to have failed in today’s tenders,” said Mr Nicholas Mak, Executive Director of Research and Consultancy at SLP International Property Consultants.

“However, it is too early to write off such practice as the strong demand for EC development sites is the unintended consequence of a combination of Government intervention (measures),” he added.

Mr Mak cited the introduction of the Total Debt Servicing Ratio (TDSR) framework, effective June 29, and the requirement for developers to launch EC projects only 15 months after securing the land as Government measures that have benefited EC sales.

EC buyers are partially exempted from the TDSR framework, which requires banks approving property loans to ensure that the mortgage does not push a borrower’s total debt obligations to more than 60 per cent of his or her income. Meanwhile, the 15-month gap has put a cap on supply, resulting in some buyers rushing to purchase the hybrid homes.

The bullish outlook for ECs has attracted a large number of developers to bid for the sites, noted CBRE Research Associate Director Desmond Sim. Demand for ECs has been robust, as seen in the recent launches of Lush Acres and Ecopolitan that received more applications than the number of units on offer.

“Developers foresee that demand for ECs will remain strong and has, in turn, drawn interest from a wide spectrum of bidders, including developers and contractors who are not regular players in EC land tenders,” he said.

At the close of tender yesterday, the 217,298 sq ft Yuan Ching Road/Tao Ching Road site in Jurong received 16 bids, the highest of which was submitted by a consortium comprising Evia Real Estate, BBR Development, CNH Investment and OKP Land. With a plot ratio of 3.0, the S$272.84 million bid is equivalent to S$418.53 psf ppr.

The 146,010 sq ft Punggol Central/Edgedale Plains site attracted eight bids, with Master Contract Services and Keong Hong Construction jointly putting in the highest bid of S$156 million. With a plot ratio of 3.0, that translates to S$356.14 psf ppr. The 259,031 sq ft Punggol Drive/Edgedale Plains site garnered six bids, with Peak Square submitting the top bid of S$312.8 million that works out to S$355.17 psf ppr based on a plot ratio of 3.4.

OrangeTee Head of Research and Consultancy Christine Li said: “Developers have gone all out to bid for the Yuan Ching Road site … The bullish bids are because of the potential pent-up demand in Jurong and the encouraging sales of J Gateway late last month.”

The best bid “translates to a break-even cost of S$802 psf and the developer can be selling from S$882 psf if the profit is capped at 10 per cent”, she added.

Source: TodayOnLine 21th July 2013

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Executive condominium land price hits all-time high

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