Govt cites prevailing uncertainties; reserve list has 2 more sites

THE local property market may be showing signs of buoyancy but the Government is playing it safe by continuing to suspend the sale of 'confirmed'
land sites for six more months.

It cited 'prevailing market uncertainties' for the suspension.

Confirmed sites will definitely be put out to tender, as opposed to sites on the 'reserve' list which are put out to tender only if enough initial interest is shown by developers.

The move, said analysts, is prudent as it will allow the property market more time to stabilise. CBRE Research said that, notwithstanding the recent uptick in activity in the private home market, the Singapore economy remains weak.

The Government cannot be sure if the renewed buying interest will last, said Knight Frank's director of consultancy and research Nicholas Mak. There is ample 'reserve list' supply, he said.

The land sales programme for the second half will include almost all - 36 - of the reserve list sites carried forward from the first half, as well as two new sites. It is removing a white site at Outram Road as the site will be affected by future infrastructure works.

The Government had late last year removed all sites from the 'confirmed list' to help stave off oversupply risk as the sector was clearly on a downtrend.

The move to continue the suspension will 'provide flexibility for the market to adjust supply in accordance with current market economic conditions', said the National Development Ministry.

Despite the generally cautious approach, the Urban Redevelopment Authority (URA) has added to the reserve list a 505-unit condominium site in Bartley Road and a commercial-cum-residential site at Bedok Town Centre.

A URA spokesman defended the move, saying the two sites 'provide a greater variety of choices for developers if they desire to initiate more supply'.

'Although the outlook for the Singapore economy and property market remains uncertain, there are some positive signs of increased activities and investment interest in the property market.' For instance, some developers have enquired about reserve-list sale sites. There has been increased take-up of new private homes as well.

The release of the two new sites is also to meet planning objectives as the Bartley Road site will help to raise the ridership catchment for the rail line, he said.

The Bedok North site is part of rejuvenation plans for Bedok Town Centre. The proposed development will have to incorporate a new bus interchange.

Mr Mak reckons the Bartley Road site can fetch about $150 million, or $250 per sq ft per plot ratio (psf ppr) today while the Bedok site can fetch $280 million, or $300 psf ppr. Both are in attractive locations, with the latter most certain to draw developers' interest as Bedok New Town has no shopping major mall, said CBRE Research director Leonard Tay.

Other sites that might interest developers include the residential ones in Bishan, Dakota Crescent and Serangoon Road, and maybe a few smaller-sized hotel sites, he said. But office sites are off developers' radar screens as the sector remains very weak.

Meanwhile, supply from other government agencies will include only 28,000 sq m of gross floor area of commercial space, down from a planned 40,000 sq m for the first half.

New Sites May Entail Hefty Bids

Source : The Business Times, June 4, 2009

High values may limit number of bids for the two sites, say market watchers

THE two new sites that have been added to the Reserve List for second-half 2009 Government Land Sales (GLS) Programme are attractively located next to MRT stations. However, with estimated values of about $150 million (for the residential plot next to Bartley Station) and $300 million (for the commercial and residential plot in Bedok), bidding for the sites will involve substantial sums and this may limit the number of bids, market watchers say.

'With no new hotel rooms in the pipeline, hotels will face less pressure in resorting to fierce price-cutting measures which is currently being practised. The residential property market should sustain the recovery that we have been experiencing in the last few weeks.' -- Kwek Leng Beng

'We've seen some smaller developers starting to look out for residential sites to restock their land banks but they are generally looking for smaller-scale sites, costing less than $100 million each,' says DTZ executive director Ong Choon Fah.

Developers may still bid for bigger sites - such as the new plots announced yesterday by the Ministry of National Development (MND) - but may form joint ventures to mitigate the investment risk, she added.

The 1.98 ha plot next to the newly opened Bartley MRT Station on the Circle Line can be developed into a new condo with about 505 units. The plot has a 2.8 plot ratio (ratio of maximum potential gross floor area to site area).

It is currently occupied by a plant nursery and the Jin Long Si Temple. 'The temple will be relocated by Sept 30, 2010 or when the site is triggered for sale, whichever is earlier,' a URA spokeswoman said. Earlier this year, the Court of Appeal upheld a High Court judgment that the government did not discriminate against the temple when it acquired its land for the Circle Line.

As for the nursery, it is operating on a Temporary Occupational Licence that expires on July 31, 2009. 'The tenant has been informed to move out by this date,' URA's spokeswoman added.

Knight Frank chairman Tan Tiong Cheng estimates the site is worth about $150 million or $250 per square foot (psf) of potential gross floor area (GFA). That's assuming a new condo on the site can sell for about $600-$700 psf today and based on current construction costs.

CB Richard Ellis highlighted that four of the 19 residential sites on the H2 2009 Reserve List will be of special interest to developers because of their proximity to MRT stations. Besides the new Bartley plot, the other three are at Bishan St 14, Serangoon Ave 3 and Dakota Crescent.

Knight Frank's Mr Tan reckons that the Bedok plot, designated for commercial and residential use, could be valued at about $280 million-$300 million today, based on a blended land price of about $300 to $320 psf per plot ratio. The estimated commercial GFA in the development will be about 31,460 sq m (about 338,632 sq ft).

Market watchers feel that the most logical use for the commercial component of the Bedok project would be retail and entertainment.

The plot's developer will have to incorporate a new bus interchange. 'Transport-oriented developments or TOD are a global trend and Singapore is no different,' observes DTZ's Mrs Ong.

City Developments executive chairman Kwek Leng Beng, commenting on the MND's H2 2009 GLS Programme, which comprises entirely the Reserve List, said: 'With limited supply coming on-stream, the office sector should start to stabilise in that the drop in rentals will be less severe.

'With no new hotel rooms in the pipeline, hotels will face less pressure in resorting to fierce price-cutting measures which is currently being practised. The residential property market should sustain the recovery that we have been experiencing in the last few weeks. Overall, we welcome this news which will certainly help to instill confidence.'

Jones Lang LaSalle's head of research for South-east Asia Chua Yang Liang reckons that even when the market recovers, the Reserve List may remain the mainstay of the GLS Programme. 'The confirmed list is a policy tool for the release of sites for strategic developments,' he said.

Dr Chua acknowledged, however, that a serious drawback of such a strategy is that the lead time for releasing a reserve site is longer than a confirmed site. 'So relying solely on the Reserve List when the market picks up may cause a supply crunch,' he added.