Warm reception expected for Westwood EC site

PROPERTY consultants agree that the executive condominium (EC) site in Westwood Avenue will be warmly received, but getting them to agree on their pricing expectations is another matter.

That site was one of two released for tender yesterday by the government, the other being a 99-year leasehold residential site in Lorong Lew Lian.

With the Westwood site, the cost per square foot per plot ratio (psf ppr) cited as likely by consultants ranged from $285 to $380.

On the lower end of the range was SLP International's executive director Nicholas Mak, who said he expects a top bid of between $285 and $313 psf ppr.

Taking the middle ground is Alice Tan, an associate director for consultancy and research at Knight Frank, who expects the winning bid to come in at between $330 and $360 psf ppr; DTZ's head of research Lee Lay Keng gave a range in the same ballpark - between $325 and $365 psf ppr.

Ms Tan said that she expected "moderately healthy interest" in the site, although there were four other confirmed EC sites on the Government Land Sales Programme in the second half of this year, and one potential site on the reserve list. "The upcoming sites could see stronger interest, given their proximity to train stations."

The Westwood site spans 186,052 sq ft and has a maximum permissible gross floor area of 520,945 sq ft, based on a gross plot ratio of 2.8.

That the area has not seen the launch of many EC sites for more than a decade - other than a recent sale of a site in Yuan Ching Road - supports some consultants' thesis of pent-up demand. The last two ECs in the area, Summerdale and The Floravale, were launched in 1997.

Pent-up demand underpins the bullish expectations of consultants who cited psf ppr prices on the higher end: Orange Tee's head of research Christine Li and Ong Kah Seng, the director at R'ST Research, gave a range of $360 to $380 psf ppr.

Ms Li also said that the tightening of the mortgage-servicing ratio, the lowering of loan tenure and the implementation of the Total Debt Servicing Ratio (TDSR) framework were measures working in favour of the EC market.

Mr Ong noted that 11,329 EC units were sold between Q4 2010 - when ECs were introduced as a housing class - and Q3 this year. This translates to a yearly average of 3,770 EC units sold each year.

Assuming that previously sold EC sites in Yuan Ching Road, Punggol Drive, and Punggol Central are launched by the end of next year, a maximum of 3,110 EC units will become available next year.

"The supply in 2014 may be insufficient to cater to EC buyers, based on an average yearly demand of 3,770 units," said Mr Ong, who noted that this figure does not take into account buyers who applied but failed to land a unit. "Given that the TDSR will encourage prudent buying, and more EC-eligible buyers will opt for ECs over private condominium units, the recent historical annual demand for ECs should be sustained or grow even stronger going into 2014," he said.

The tender for the Westwood site closes at noon on Jan 7.

The site in Lorong Lew Lian, measuring 150,762 sq ft and with a maximum permissible gross floor area of 452,288 sq ft, was released on the reserve list.

But DTZ's Ms Lee said that the site is unlikely to be triggered in the near term.

Mr Ong, agreeing, said that developers might not trigger the site for sale till the second quarter of next year, given the existing cautious sentiment.

Assuming the site is triggered next year, Mr Ong said that he expects about five bids for the site, with an expected top land bid of between $430 and $490 psf ppr.

SLP International's Mr Mak said that he expects the site to achieve a land price of $620-720 psf ppr, assuming the site was launched for sale today.

The two residential sites are expected to yield 980 housing units.

Source: 1st November 2013

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Warm reception expected for Westwood EC site

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