Residential Market News Extract - 6 September 2012

Bids likely to dip for small suburban en bloc sites

Developers eyeing collective sale sites might have to redo their sums as the Government caps the number of homes that can be built in non-landed developments outside the central area.

Experts say the newly announced guidelines that discourage the fast-rising number of tiny "shoebox" homes will likely temper developers' bids, particularly for certain small suburban collective sale sites.

This is because shoebox homes - typically less than 50 sq m - can often be sold at higher per sq ft (psf) prices.

Bids for upcoming sites would have to factor in the larger average size of units mandated under the new rules, which are usually expected to feature lower psf selling prices.

The experts add that smaller collective sale land plots are likely to be the most affected by this change as small and mid-sized developers often churn out more units on such sites to claw back the land cost.

Sites that do not have a gross plot ratio (GPR) of 1.4 and with a gross floor area of 30,000 sq ft to 80,000 sq ft will likely be the most affected.

These other sites might see bid prices fall by about 3 per cent to 5 per cent as developers turn cautious and scale back their aggressive bids.

Larger sites that cost more than $200 million are usually the target of bigger players who do not build just shoebox units, and so they might be less affected.

UOB Kay Hian analyst Vikrant Pandey noted that developers keen on riding the shoebox wave will become less aggressive both in acquiring collective sale sites and in their land tender bids for suburban land parcels.

This is likely to result in a change in strategy for developers of small mass market projects such as Oxley Holdings and Roxy-Pacific Holdings, he said.

But experts point out that the impact of the rules has also been muted by an earlier change in guidelines last November that sounded a warning that the Government was closely watching the shoebox segment.

New rules then had set minimum plot sizes for apartment blocks and restricted the number of units that can be built on certain sites, ensuring that some ground will be free for landscaping or facilities.

URA has also been stricter in granting provisional permission. It has been known to throw back building plans with too many shoebox units, sending a signal to the industry that changes were at hand, an expert added.

Source: The Straits Times – 6 September 2012

 

Hotel, residential plots put up for tender

Two sites were put up for tender yesterday - the first hotel site in the Jurong Lake District and a residential plot near the future Beauty World MRT station.

Both are reserve list sites. Unlike those on the confirmed list, they go on sale only when a developer agrees to bid a minimum sum acceptable to the Government.

A 1.02ha site in Jalan Jurong Kechil - near Upper Bukit Timah - slated for private apartments was first made available for sale back in 2006. A developer recently committed to bid at least $24 million for the plot, which can also be used to build retirement housing. It comes with a lease option of 30, 45 or 60 years.

Experts expect a top bid of between $30.7 million and $43 million, or $200 to $280 per sq ft per plot ratio (psf ppr). Five to 10 bids are likely.

The 99-year leasehold hotel site - the first in the Jurong Lake District - was put on sale after a developer agreed to bid not less than $102 million. It was made available for sale in May.

The 0.9ha land parcel, estimated to yield 510 rooms, is envisaged as a distinctive hotel with a garden setting.

The successful bidder is likely to build a four-star 700-room business hotel to cater to the growing commercial hub. Hence, the top bid could be between $650 and $700 psf ppr.

Source: The Straits Times – 6 September 2012

 

The Pines club may be redeveloped next year

Well-known country club The Pines may be redeveloped as early as next year.

And in two to three years' time, a condominium could rise up in its place, with the club's facilities integrated on site, analysts said.

An application to re-zone the club, which sits on prime land in Stevens Road, was recently submitted to the Urban Redevelopment Authority.

But plans to redevelop the 400,000 sq ft club have in fact been made, according to a notice posted on the club's website.

Other construction projects are also planned for the freehold site, though this will depend on government approval and business viability, the notice said.

Property analysts, however, said the project could mean two things - it could retain its status quo as a country club.

Or, the club, currently zoned for sports and recreation use, could be turned into a mixed development - meaning the private club could be housed with a condo or office space.

Condos near The Pines have fetched handsome prices this year. This ranged from $1,515 per sq ft (psf) for Chelsea Gardens, to $2,433 psf for a unit at Three Balmoral.

Source: The Straits Times – 6 September 2012