After seeing housing prices rise in defiance of escalating interest rates and punitive stamp duties, Singapore authorities have announced plans to sell more housing sites during the first half of 2023 than in any period over the past decade.
In documents published late last week, Singapore’s Urban Redevelopment Authority (URA) said it will auction off seven residential and flexible use “white sites” within the first six months of 2023 that could yield up to 4,090 new homes.
“Given that underlying housing demand remains resilient and continues to accumulate, pushing out new housing supply would mitigate a potential sharp recovery in prices when market conditions recover,” said Xian Yang Wong, research head for Singapore at Cushman & Wakefield.
The government land sale plan (GLS), which features substantial plots in the emerging commercial hub of Jurong Lake District as well as in Marina Bay in the central business district, also includes projects that will yield 106,400 square metres (1.15 million square feet) of new commercial space across the city-state.
Expanding Home Pipeline
The land use planning agency has now increased its half-year government land sale programme five times in a row “to cater to strong demand from homebuyers” – making the latest list the largest since the first half of 2014 when the GLS rolled out sites capable of yielding up to 4,630 new homes.
The residential plots in URA’s latest confirmed list – which contains sites with definitive plans for for public tender in the next six months – can provide up to 3,390 private homes and 700 executive condominiums (a kind of hybrid, public-private housing). That figure is 17 percent higher than the 3,505 potential units offered in the second half of 2022.
A plot on Marina Gardens Crescent in Singapore’s central business district is one of the highest profile sites on the list. The parcel in the Marina South area, which is designated as a “white site” which allows development for a flexible range of commercial and residential uses, would be only the second project to go on sale in the corner of the Marina Bay area.
Located next to a Marina Gardens Lane plot launched for sale last week, the Marina Gardens Crescent site is scheduled to be auctioned off around June 2023 and offers 1.73 hectares (4.3 acres) land that can yield up to 775 residential units and 6,000 square metres of retail space.
For Chia Siew Chuin, JLL’s head of residential research in Singapore, participation in the Marina South tender will likely be limited due to the expected cost of the site.
“Potential bidders are likely to form joint ventures in order to consolidate and leverage resources, strengthen competitive edge and dilute market competition,” Chia said.
Largest Commercial Supply Since 2016
The biggest plot on the program is a sprawling 6.8 hectare white site in Jurong Lake District linking to the Jurong East MRT interchange.
With the potential to provide up to 150,000 square metres of office space, 1,760 private homes and 75,000 square metres of retail, hotel or community space, the project is slated to be developed in phases over the next five to 10 years.
For the first phase of the project, the winning bidder is required to build at least 70,000 square metres of office space and 600 homes.
CBRE Southeast Asia research head Tricia Song said the sheer size of the project means developers will need to pay at least S$2 billion ($1.48 billion) in land premiums, or an estimated S$1,300 per square foot of built area, which will push companies to form bidding consortia.
“This marks the largest GLS office space supply since 2016, and the largest in a decentralised location,” she said. “Based on the targeted release date of June 2023 on GLS and assuming 3-6 months of tender period, we expect the earliest office completion will likely be in 2028.”
PropNex Realty CEO Ismail Gafoor predicts that the project will attract large real estate companies with a “strong track record in project development, financial credibility, and long-term vision.”
Feeding Housing Demand
JLL’s Chia said residential sites at Media Circle in the one-north area and on Champions Way in northern Singapore’s Woodlands district show the government adding new projects in undersupplied locations.
The projects in Media Circle and Champions Way are attractive for developers, she added, providing up to 345 homes in Champions Way and as many as 355 units, along with 400 square metres of commercial space, for the Media Circle site.
The other private residential sites are in Jalan Tembusu, Katong and Lentor Central in Ang Mo Kio as well as an EC site in Tampines Street, in the city’s northeast region.
Under its reserve list, which is used to designate sites which could be launched for tender if there is sufficient demand, the URA has included six residential plots which could provide a combined 3,625 residential units and one white site which would yield up to 93,350 square metres of commercial space and a 530-key hotel.
“In mitigating escalating costs and increasing risks from economic uncertainty and rising interest rates, the sites that developers might consider triggering would be the smaller ones where 500 units or less can be built, as larger sites in excess of 700 units are less appetising given the Additional Buyer’s Stamp Duty for housing developers,” said Leonard Tay, research head at Knight Frank Singapore.
Home Market Heats Up
The URA’s boost to Singapore’s land supply comes as the city’s housing market has seen prices continue to rise in the second half of 2022, with new projects routinely selling out within weeks of launch. Prices of private homes across the city have now risen for 10 straight quarters.
Government data shows that home prices rose by 3.8 percent in the third quarter from the previous three months, accelerating from 3.5 percent price growth in the second quarter.
Copen Grand, an executive condo project launched by City Developments Ltd and MCL Land in October is the latest example of housing demand in the city.
The project in western Singapore’s Tengah Town saw all of its 639 units sold at an average price of S$1,300 per square foot within one month of its launch.