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Singapore Government Reduces Supply of Land for Private Housing as Demand Continues to Slow

The Government has decided to reduce the supply of private residential units for the second half of 2019, as demand continues to fall, the Ministry of National Development (MND) announced on Thursday (Jun 6).

Thirteen land sites, comprising five confirmed sites and eight reserved sites, were released for sale on Thursday under the Government Land Sales (GLS) programme for the second half of 2019.

The sites can yield 6,430 private homes, a slight dip from the previous GLS programme for the first half of 2019, which saw 14 sites released with an expected supply of 6,475.

The 13 sites are also expected to yield 92,000 sq m gross floor area of commercial space and 1,100 hotel rooms.

The five confirmed list sites are private residential sites – including one executive condominium (EC) site – which can yield about 1,715 private residential units, MND said. These include 480 EC units.

The reserve list comprises four private residential sites, including one EC site. These sites can yield about 4,715 private residential units – including 595 EC units and about 1,000 units from the first phase of the upcoming Kampong Bugis site.

REDUCTION OF SUPPLY AN “APPROPRIATE” MOVE

Mr Ong Teck Hui, senior director of research and consultancy at JLL, said the move reflects concerns over the “substantial supply of unsold units in the pipeline” due to collective sales.

“The reduction of the supply of private homes in the confirmed list is appropriate given the increasingly bearish economic and business outlook,” said Mr Ong.

The confirmed list supply of 2,875 private residential units for the whole of 2019, is the lowest since 2014, after the Total Debt Servicing Ratio (TDSR) was imposed, Mr Ong noted.

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Analysts highlighted that Irwell Bank Road site is an attractive prime site.

“Developers are expected to be cautious in bidding for the site, given the oversupply in the prime sub-market,” said Mr Ong, adding that it is likely to have a high absolute land price.

“We expect this site to be the most attractive to developers among all the sites in the upcoming GLS slate. Besides being of regular shape and a good size that could house 445 units, it is near the upcoming Great World City MRT station and Great World City Mall,” said Colliers International.

The EC site at Fernvale Lane is likely to see healthy demand from developers, added Mr Ong, as the supply pipeline is not excessive. However, bids may be moderated, as the supply is not as tight as before and market conditions could be less buoyant.

BRIGHTER TOURISM PROSPECTS

CBRE’s research head for Southeast Asia Desmond Sim noted that state planners appeared to favour mixed use sites with some zoning flexibility.

Out of the three white sites listed, the 9.2-ha site in Kampong Bugis is new on the Reserve list.

“Overall, there are no major surprises in the 2H 2019 GLS Programme. It is a programme that ensures land supply elasticity, growth areas in accordance with the Draft Master Plan 2019 and at the same time, allowing greater flexibility in terms of land use through white sites and development autonomy through the Kampong Bugis precinct,” he said.

The River Valley Road hotel site is in a prime location, and should appeal to developers amid brighter tourism prospects, said Colliers International.

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“The site presents a good opportunity to fully establish the Fort Canning area as a major tourist destination, creating additional footfall to Clarke Quay and surrounds, whilst being part of the Singapore River rejuvenation story,” said Mr Govinda Singh, Colliers International’s executive director of valuation and advisory.

The decline in demand follows the introduction of property market cooling measures in July last year. Overall transaction volume fell for the third straight quarter in the first quarter on 2019, while developers’ demand for land also moderated.

Additionally, there are about 44,000 private homes in the pipeline. This includes about 39,000 unsold units from GLS and en-bloc sale sites with planning approval and 5,000 from sites pending planning approval.

Another 24,000 existing private homes remain vacant.

“Given these factors, the Government has decided to reduce the supply of private residential units on the confirmed list for the GLS Programme,” MND said.

“Together with the supply in the pipeline, the supply for the 2H2019 GLS programme will sufficiently cater to the housing needs of our population.”

It added: “The Government will continue to monitor the property market closely and adjust the supply from future GLS programmes, as necessary.”

Source: CNA

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