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Newsletter Sep 2023

By Kelvin Sin | | 26 September 2023

1. Market

2. New Projects

3. Land Sales & Enbloc

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3-11% drop in Land Betterment Charges

The Singapore Land Authority has just announced the Land Betterment Charges (LBC) for the upcoming six months starting from Sept 1. The decline in LBC for Use Group B2 (Residential, non-landed) by an average of 3% is expected to be met with cheers from developers. Out of the 118 sectors, 111 will witness declines in LBC rates ranging from 3% to 11%. LBC rates for the remaining seven sectors will remain unchanged. The most significant decrease of 11% was reported for Sectors 11, 12, 13, and 14, which comprise the Marina Bay area, Shenton Way, and Raffles Quay. As developer costs continue to rise and their profit margins thin, the reduction in LBC by SLA will be welcomed as the government charts forward to encourage redevelopment in Singapore, especially in sectors such as the Marina Bay area.

Singapore luxury residential sales fall but prices stay firm

Singapore’s luxury residential market continued to soften in 1H2023 amid aggressive rate hikes by the US Federal Reserve and a souring macroeconomic backdrop, according to CBRE in a recent research report. Transaction volumes for both Good Class Bungalows (GCBs) and luxury apartments declined in the first half of the year, mirroring movements in the general property market. GCB prices stayed firm, rising 31.1% compared to 2H2022 to reach $2,760 psf in 1H2023. In the luxury apartments market, 92 properties with a total transaction value of $964.7 million changed hands in 1H2023, easing from the 106 units worth $1.085 billion sold in 2H2022. While luxury apartment sales rose in the first fourth months of the year after the reopening of China’s borders in early January, sales fell in May and June following the doubling of additional buyer’s stamp duty (ABSD) levied on foreign buyers to 60% which took effect from April 27. However, prices held firm despite the drop in transactions. Based on CBRE’s basket of freehold luxury projects, average luxury apartment prices rose 1.1% to $3,463 psf in 1H2023 from $3,425 psf in 2H2022. Looking ahead, transaction volumes in the luxury residential market will likely remain subdued for the rest of the year, predicts Tricia Song, CBRE’s head of research for Singapore and Southeast Asia. “This can be attributed to a combination of considerations, including the prevailing cooling measures, the uncertain macroeconomic outlook, and elevated interest rates, that might leave investors adopting a wait-and-see approach,” she says. Song adds that existing luxury homeowners are likely to support prices, as healthy rental yields and a limited supply of new luxury homes incentivise them to hold on to their assets.

August new private home sales drop 72% m-o-m to 394 units

According to data released by URA on Sept 15, developers sold 394 new homes excluding executive condos (ECs) in August – a 72.1% m-o-m plunge from the 1,412 units sold in July that marked a 20-month high. On a y-o-y basis, sales were down 10% compared to 438 new homes sold in August 2022. The m-o-m drop in sales follows fewer new launches. The stellar sales in July was always going to be a tough act to follow in August, which coincided with the start of the Hungry Ghost month – a period where market activity tends to slow due to fewer launches. Excluding ECs, four new projects were launched in August, namely Orchard Sophia, TMW Maxwell, Lakegarden Residences and The Arden. They were all launched in the first half of August, prior to the start of the lunar seventh month on Aug 16. A total of 590 new homes were launched, about 73% lower than the 2,156 units launched the month before. The performance of the new private launches was softer compared to July. In comparison, new launches in July achieved take-up rates between 29% to 56%. With the escalation of interest rates in the last year and economic uncertainty, affordability has become an increasing concern among homebuyers. This, in turn, has continued to underpin strong demand for EC projects. Excluding ECs, the OCR saw the highest number of new home sales at 192 units. Nonetheless, OCR sales in August were 61% lower m-o-m. In the RCR, developers sold 106 new homes (27% of total sales), down 87% m-o-m.On the flipside, sales in the CCR rose 9% m-o-m to 96 units, supported by the launch of Orchard Sophia. With the August data, this brings cumulative new home sales in 2023 to 5,189 units, 5.6% lower than the 5,496 units sold over the same period in 2022. In 2022, developers launched 15 new private residential projects totalling 4,528 units for sale. In comparison, CBRE estimates that developers have already launched 17 projects totalling 6,773 new homes to date this year. CBRE’s Song believes that pent-up demand among homebuyers has been “mostly absorbed”, while prices have increased significantly, leaving investors limited room for upside. Nonetheless, transactions should pick up in October and November with some new projects potentially hitting the market, including Hillock Green in Lentor Central, and J’Den, a redevelopment of the former JCube in Jurong East, she adds.


Altura Executive Condo (EC) 88% sold in second-timer balloting

Altura executive condo (EC) saw a strong response in the second-time HDB buyers' balloting, with Qingjian Realty and Santarli Realty initiating the process on September 16. Out of the available units, 95 were successfully sold, resulting in an impressive take-up rate of 87.5%. The average price for the sold units was $1,470 per square foot (psf). Currently, only 45 units out of the total 360 remain in the EC located at Bukit Batok West Avenue 8, primarily featuring four- and five-bedroom plus flexi configurations. Ismail Gafoor, PropNex CEO, emphasized that the substantial demand from second-time buyers at Altura comes as no surprise. Executive condos continue to be an attractive choice for HDB upgraders due to their relatively more affordable pricing and potential for appreciable capital gains. Gafoor also noted that with the recent record-high EC land rate in a land tender, some buyers may feel compelled to make a move soon, concerned that prices might rise further. Marcus Chu, CEO of ERA Singapore, highlighted the positive reception of Altura among first-time buyers, considering it's the first EC launched in Bukit Batok since 2001. Additionally, Altura's proximity to the future Tengah Integrated Transport Hub and Anglo-Chinese Primary School adds to its appeal. Mark Yip, CEO of Huttons Asia, noted that ECs are in high demand due to the upfront remission on additional buyer’s stamp duty (ABSD) offered to buyers.


Tender launched for GLS site at Lorong 1 Toa Payoh

The Urban Redevelopment Authority (URA) has initiated the tender for a parcel of land under the Government Land Sale (GLS) program, located at Lorong 1 Toa Payoh for the 2H2023 GLS Programme. The site spans 169,456 square feet and has a leasehold of 99 years, with a potential to accommodate approximately 775 residential units. Wong Siew Ying, head of research and content at PropNex Realty, predicts that the mature location of the site and the limited supply of new private homes in the Toa Payoh estate since 2016 will attract the interest of developers. The previous GLS site tendered in the area was across the road on Lorong 6 Toa Payoh and Lorong 4 Toa Payoh, which was awarded for $345.86 million ($755 psf per plot ratio) in June 2015, leading to the development of the 578-unit Gem Residences. Wong anticipates a sizeable pool of potential HDB upgraders who may want to continue staying in this popular HDB estate. Lee Sze Teck, senior director of data analytics at Huttons Asia, agrees that the site's appeal lies in its proximity to amenities such as Braddell MRT Station and several schools. Orange Tee & Tie’s deputy CEO, Justin Quek, anticipates that the site will attract a good number of bidders, with a high bid price ranging from $1,100 to $1,250 per square foot per plot ratio (psf ppr). However, Wong Siew Ying from PropNex suggests a more conservative estimate of bids and a top bid price of around $783 million to $854 million (or a land rate of $1,100 to $1,200 psf ppr), considering the current market conditions. Huttons’ Lee shares a similar view, noting that other GLS tenders closing on the same day might divide developers’ attention.

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Plantation Close EC site at Tengah awarded to Hoi Hup Realty and Sunway Developments at record $703 psf ppr

Hoi Hup Realty and Sunway Developments secured the executive condominium (EC) site at Plantation Close in Tengah through a land tender, as revealed by the Housing and Development Board's results announcement on September 11. This is the second EC plot introduced in the Tengah housing estate and is projected to accommodate 495 units. They were awarded the Plantation Close executive condominium (EC) site at a tender price of $348.5 million, equating to a record land rate of $703 per square foot per plot ratio (psf ppr) for an EC site. Wong Siew Ying, the head of research and content at PropNex Realty, pointed out that this surpassed the previous record set by the EC plot at Bukit Batok West Avenue 8. This land rate is nearly 17% higher than the first EC site at Tengah, demonstrating the developer's confidence in the EC market and Tengah, according to Lee Sze Teck, senior director of data analytics at Huttons Asia. The location's appeal is enhanced by its proximity to the future Tengah Park MRT Station, offering easy access to key areas like Jurong Lake Gardens, Jurong Innovation District and Nanyang Technological University via the Jurong Regional Line. Given the recent increase in additional buyer’s stamp duty for a second property purchase, ECs are expected to garner more interest as they offer upfront remission, Lee notes. ERA Singapore's Eugene Lim estimates the launch price for the upcoming EC at the Plantation Close site to range between $1,450 to $1,550 psf, while PropNex’s Wong predicts an average selling price of about $1,500 psf.

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City Development Limited puts in top bid for Champions Way GLS site at $904 psf ppr

The tenders for government land sale Champions Way closed on Sept 12. The Champions Way site was awarded to City Developments Limited (CDL), who placed the highest bid at $294.889 million, indicating a land rate of $904 per square foot per plot ratio (psf ppr). CDL's offer surpasses the runner-up bid by TID (the Hong Leong Group-Mitsui Fudosan joint venture) by 8.3%, with TID's bid standing at $272.26 million or $835 psf ppr. CDL mentioned that acquiring the site would add to their land reserves, ensuring a consistent pipeline of upcoming launches. Sherman Kwek, CDL's CEO, emphasized the rarity of a private residential project in Woodlands over the past decade. He sees this as a unique opportunity to develop a vibrant and sustainable landmark in alignment with the government's revitalization plans. The Champions Way plot attracted significant attention from developers compared to the Lentor Central plot, which only received two bids. Wong Siew Ying, PropNex Realty's Head of Research and Content, noted that the Champions Way plot had the highest number of bids for a non-executive condominium (EC) site this year. However, she highlighted a considerable gap between the highest and lowest bids for Champions Way, with CDL's bid being 45% higher than Innova Investments Limited's bid of $203.33 million ($623 psf ppr). She pointed out that some bids were below $750 psf ppr, suggesting developers were cautious about the area's risks. Lam Chern Woon, Head of Research and Consulting at Edmund Tie, saw this wide range of bids as a turning point in the property market, with different market players having diverse expectations. Nevertheless, Lam Chern Woon noted that the site would benefit from the growth of the Woodlands Regional Centre, upgrader demand from residents in Woodlands, as well as its proximity to the Woodlands South MRT Station on the Thomson East Coast Line. Leonard Tay, the Research Head at Knight Frank Singapore, anticipates that the starting selling price for the forthcoming project on this site could commence at slightly below $2,000 per square foot (psf). This would constitute a premium of over 53% compared to this year's median resale transaction price of $1,301 psf at Parc Rosewood. Wong from PropNex holds a comparable perspective, projecting the average future selling price to be higher than $1,900 psf. She asserts that this development would establish a fresh standard for pricing in new launches within the Woodlands planning zone.

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Lentor Central GLS site receives two bids, highest bid at $982 psf ppr

The tender for the residential government land sale (GLS) site at Lentor Central closed on Sept 12 with just two bids, with the top bid of $435.1 million submitted by a consortium comprising Hong Leong Holdings, GuocoLand and CSC Land Group. This works out to $982 psf per plot ratio (psf ppr) for the 99-year leasehold, 158,264 sq ft site. The bid was 5.9% higher than the $410.8 million ($927 psf ppr) submitted by Frasers Property. Leonard Tay, the Head of Research at Knight Frank Singapore, highlights that the highest bid is slightly less than the $985 per square foot per plot ratio (psf ppr) paid by GuocoLand and Hong Leong Holdings for the Lentor Gardens site in the previous year. He emphasizes that the recent government land tenders in the Lentor vicinity have some of the lowest land rates compared to the four GLS sites awarded in the Lentor area in 2021. Eugene Lim, the Chief Executive Officer at ERA Singapore, observes a reduced demand for Lentor Central due to the considerable number of sites set to be released in the second half of the 2023 GLS program. Additionally, Justin Quek, the Deputy CEO of OrangeTee & Tie, mentions that developers might exercise caution due to macroeconomic uncertainties, higher interest rates, and implemented cooling measures. Quek adds that developers could also be waiting for potential land releases next year, considering the government's plans to release more land parcels and redevelop old buildings/sites. Lim from ERA Singapore notes that the Lentor Central site is situated within the Ang Mo Kio Planning Area, close to Lentor MRT station, and established schools such as CHIJ St. Nicholas Girls’ School, Anderson Primary School, and Presbyterian High School. Tay from Knight Frank Singapore suggests that the probable selling price for the residential units in this project might commence from over $2,000 psf, aligning with the unit price of $2,080 psf at Lentor Hills Residences launched in July. Tay also remarks that the two bids for the Lentor Central plot illustrate the cautious and defensive stance among developers. He points out that the Lentor area could potentially have an oversupply of condominium projects being developed in close succession. To date, six GLS sites in Lentor have been tendered, with one more site on the Reserve List, totaling a potential addition of about 3,500 new homes to the area.

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Pine Grove up for collective sale at $1.95 bil

Pine Grove, the 99-year leasehold condo, is up for collective sale at a minimum price of $1.95 billion, according to a press release by ERA Singapore on Sept 13. On an expansive 893,218 square foot plot, the cost translates to a land rate of $1,434 per square foot per plot ratio (psf ppr). This calculation includes the incorporation of a 10% bonus gross floor area from various incentive programs and accounts for an estimated land betterment charge of $1.0084 billion, which covers intensification and the renewal of the lease for a fresh 99-year term. Pine Grove has embarked on its fourth collective sale attempt since 2008, and notably, it has secured the necessary consensus for redevelopment for the third time. Situated in District 21, off Ulu Pandan Road, this former Housing and Urban Development Company estate is designated for residential development with a gross plot ratio of 2.1. The property consists of 660 residential units and was completed in 1984. Pending approval from the relevant authorities, the site has the potential to accommodate up to 2,050 new units, as indicated in the press release. Moreover, Pine Grove enjoys a convenient location within walking distance of Dover and Clementi MRT stations, and it is in close proximity to well-established educational institutions such as the National University of Singapore, Singapore Polytechnic, and Singapore University of Social Sciences. The tender for Pine Grove is set to close on November 29th at 3 pm.

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