Tag Archives: City Developments

Who has been shopping for government land sales sites?

Posted on 11 Jun 2011 | Comments Off on Who has been shopping for government land sales sites?

In 1H2011, the Ministry of National Development (MND) has announced a strong supply of private housing for sale to meet demand. 17 sites were placed on the confirmed list which can yield about some 8,100 residential units. The reserved list had 13 sites which can yield some 6,200 residential units. The supply of land includes private properties, executive condominiums and DBSS properties.

Moving forward, MND is slated to announce the 2H2011 Government Land Sales (GLS) programme. We expect a significant supply of private housing (including sites for Executive Condominiums & DBSS) to address the strong demand.

In addition, a review of the HDB income ceiling is expected to be completed within six months which may impact the demand for private homes, especially in the mass-market segment.

This paper examines the profile of buyers of GLS sites (by tender) since 2010 to 1H2011 in terms of the amount of housing stock that each is holding and the amount of exposure to each housing type.

Amount of GLS housing stock under each developer

To ascertain the housing stock under each developer, a review of all the winning tenderers for GLS sites launched from 2010 to 1H2011 was made. Notably, some of these GLS sites had been launched by the developers for sale.

Henceforth, three factors were considered to arrive at the numbers. Firstly, the number of units in each project as announced by the developer. Secondly, the number of units unsold by the developers based on URA data release[1]. Thirdly, for sites where project details are not announced or finalised, the estimated number of units by the authorities in the land sales package are used.

For sites where joint ventures are undertaken, an even apportionment method is used. For example, if there are 2 parties in a winning tender, it is assumed that the available unsold supply in that project will be evenly split between the two. The same applies for three to four parties in a joint tender. Whilst the apportionment may be different in the actual situation, it is difficult to ascertain the actual interest in the project due to confidentiality issues in some instances.

Chart 1 depicts the top 10 developers based on the estimated housing stock from the GLS sites acquired[2] where the bulk of its stock are ECs (situated at Segar Road (estimated 570 units) and Choa Chu Kang Drive (estimated 490 units)).. Sim Lian Group Limited tops the chart with the highest available housing supply. The Group also has the highest exposure to mass market private homes. City Development is second in term of overall residential supply

Chart 1: Top 10 Developers’ GLS Housing Stock by Property Type

Amount of GLS Land Capital Exposure under each developer
In addition to the estimated housing stock, a rudimentary review is also undertaken for developers based on the potential capital exposure for the land. In this instance, the capital exposure is based on the quantum of the awarded land tender price[3].

A simplistic approach is adopted for this analysis where the land capital exposure is proportionately reduced when the project is launched and sold progressively. The study had not taken into consideration the circumstance where developers break even after achieving a certain sales target which effectively reduces or remove their risk exposure from the capital expended.

The level of debt taken is not considered as the internal leverage policies differ from developers to developers. Henceforth, the total capital exposure is based on the total tender price from the land awarded.

Similar to the earlier section, sites where joint ventures are undertaken, an even apportionment method is used. The amount of capital exposure will be shared among partners where joint ventures are concerned. The amount may differ from actual situation depending on the terms of agreement.

Chart 2 exhibits the top 10 developers with the greatest GLS residential exposure. Not surprising, Sim Lian Group tops the ranking attributed by the high capital exposure from the recent purchase of three condominium sites which collectively accounted for $825 million in land value. City Development fell to the fifth position as their EC sites had a smaller quantum as compared to some other condominium sites. CapitaLand leapfrogged from the ninth position to the third arising from the purchase of the GLS site at Bishan St 14 at $550.1 million.

Chart 2: Top 10 Developers’ GLS Housing Capital Exposure by Property Type

Outlook for mass market residential homes

Regulatory risks to tame the mass market residential market have increased following the post election government statements. If more cooling measures are implemented coupled with any changes to the current HDB income ceiling, demand for private homes, in particular the mass-market segment will be affected.

We expect a significant new supply of private housing for the 2H2011 GLS programme to meet demand. We may expect more new ECs sites to be released arising from the strong take-up for recent EC projects such as Esparina Residences, Prive and The Canopy.

Developers with sizeable mass market homes in their land bank are likely to be more selective. Some may choose to off load their existing land bank before acquiring new sites creating a window of opportunity for others.

In the absence of any new cooling measures, residential sales are expected to remain strong as developers are expected to launch new projects in the coming few months. In April, developers sold 1,788 residential units, the highest monthly volume since November 2010.

[1] Table 1 in appendix 1 depicts the list of GLS sites sold to developers, its subsequent project name, the number of units sold and the remaining stock.
[2] Actual Numbers and Further details in Appendix 2
[3] Actual Numbers and Further details in Appendix 3

Source: Knight Frank Research – 1 Jun 2011

Comments Off on Who has been shopping for government land sales sites?

Posted in Property Market / Real Estate

Tagged , , , , , , , , , , , , , , , , , , , , , , , , , ,

Unit at The Sail @ Marina Bay hits $2,999 psf

Posted on 2 Jun 2011 | Comments Off on Unit at The Sail @ Marina Bay hits $2,999 psf

Residents of the 1,111-unit The Sail @ Marina Bay enjoy a spectacular view of Marina Promenade.

There has been a flurry of transactions at The Sail @ Marina Bay, with prices playing catchup with those at Marina Bay Residences (MBR).

Last month, a unit at MBR hit an alltime high of $4,368 psf. A 2,368 sq ft apartment on the 46th floor was sold for $10.3 million on April 15. This trumped the previous record of $3,790 psf, which was achieved when a 1,959 sq ft unit on the 46th floor was sold for $7.2 million in Sept 2010.

At the 1,111-unit The Sail @ Marina Bay, prices breached the $3,000 psf level for the first time this year, when a 1,184 sq ft unit on the 61st storey was sold for $3.6 million ($3,040 psf) on April 4. Prices peaked in April 2008, when a 1,033 sq ft unit was sold for $3.5 million ($3,387 psf).

The two condominiums are located along Marina Boulevard and enjoy spectacular views of Marina Promenade. MBR is a 55-storey, 428-unit luxury waterfront condo located within the Marina Bay Financial Centre, a mixed development built by the consortium of Hongkong Land, Keppel Land and Cheung Kong (Holdings). The condo was completed last year. Meanwhile, The Sail, developed by City Developments and AIG Real Estate, was completed in 4Q2008, at the height of the global financial crisis.

Desmond Tan, group director of Dennis Wee Realty, says, “There is strong demand for both The Sail and MBR, as they are the only two condos with a good bay view. MBR commands a better price than The Sail, as it is farther away from the financial centre and nearer to the integrated resort. MBR is also newer. In terms of monthly rental, a studio unit at The Sail can fetch about $4,000, while a one-bedroom unit at MBR can command between $4,500 and $4,800.”

According to a private investor who owns several units at The Sail, “there’s no doubt that The Sail currently offers the best value for money. That’s why it continues to be the most highly transacted of the properties in the area”.

Between April 29 and May 10, The Sail saw three transactions, with prices ranging from $2,503 to $2,999 psf, according to caveats lodged with URA Realis.

A 2,077 sq ft unit on the 59th floor was sold for $6.23 million ($2,999 psf) on April 29. This represents a 169% gain over the last transacted price of $2.3 million ($1,116 psf) in 2004.

Subsequently, a 1,797 sq ft unit on the 16th floor changed hands for $4.5 million ($2,503 psf) on May 4.

A third transaction was for a 613 sq ft unit on the 24th floor, which was sold for $1.57 million ($2,559 psf) on May 9. This represented a 50% gain over the last transacted price of $1.04 million ($1,701 psf) in April 2007. Prior to this, the unit sold for $921,000 ($1,501 psf) in January 2007 and $726,240 ($1,184 psf) in December 2005.

Tan says, “Asking prices at The Sail are $3,200 to $3,500 psf currently. Most buyers are foreigners. We see quite a few buyers from China and Hong Kong.” He adds that the strong prices at MBR will have a positive impact on condos at One Shenton and The Cliff, al- though it is hard to quantify the extent of the impact, as “there is a big difference” in the view from condos along Shenton Way and from those at Marina Boulevard.

The latest transaction at the 341- unit One Shenton was for a 581 sq ft unit on the 20th floor, which changed hands for $1.28 million ($2,202 psf) on May 9. Prices at the condo hit a high of $2,757 psf in 2007, when a 1,894 sq ft unit on the 44th floor was sold for $5.2 million. The condo was developed by City Developments and completed earlier this year.

Another project completed this year is The Clift along Mccallum Street, a short walk from the Tanjong Pagar MRT Station. The latest transaction at the 312- unit condo developed by Far East Organization was for a 527 sq ft unit on the 17th floor. It was sold for $1.05 million ($1,998 psf) on May 9, representing a 44% gain over the last transacted price of $727,000 ($1,378 psf) in 2007. Prior to that, the unit sold for $577,786 ($1,095 psf) in 2006.

View PDF Version Done Deals

Source : TheEdge – 2 Jun 2011

Comments Off on Unit at The Sail @ Marina Bay hits $2,999 psf

Posted in Luxury Property, Property Market / Real Estate, Property Price, Property Transactions

Tagged , , , , , , , , , , , , , , , , , , , ,