Tag Archives: Hong Leong Holdings

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 , , , , , , , , , , , , , , , , , , , , , , , , , ,

New high at Watermark @ Robertson Quay

Posted on 16 May 2011 | Comments Off on New high at Watermark @ Robertson Quay

Prices of units at Watermark@Robertson Quay hit a high of $1,879 psf last month as the three-year old condominium played catch-up with neighbouring projects overlooking the Singapore River. From April 12 to 19, there were three transactions at Watermark, with prices ranging from $1,647 to $1,879 psf.

Keith Tan, an agent with APRO Realtors, says there has been increased interest in Watermark, owing to the lower average price psf compared with other newer condo projects. For instance, just next door to Watermark on Rodyk Street is the recently completed boutique condo 8 Rodyk, where units are being marketed at about $2,000 psf, notes Tan. The 50-unit condo was developed by New Century Real Estate.

Watermark, developed by Hong Leong Holdings and completed in 2008, is a freehold condo comprising about 200 units in four 10-storey blocks sitting on top of a row of conserved warehouses and directly overlooking the Singapore River. There is a mix of two-bedroom lofts and three- and four- bedroom units at the project.

Tan says buyers at Watermark are mostly investors who are attracted by the healthy rental yield because of the lower average and absolute prices.

For instance, a two-bedroom unit can be purchased for $1.6 million, while buyers need to pay at least $2 million for a unit at Tribeca and River Gate, points out Tan. Two-bedroom units start from 882 sq ft at Watermark, while those at Tribeca and River Gate start from 1,033 and 1,000 sq ft, respectively. In terms of asking rents, a typical two-bedroom unit at Watermark commands a rental of $5,400 a month, compared with $6,000 at Tribeca and $6,800 at River Gate, according to agents’ listings on propertyguru.com.

Investors who bought units at Watermark in early 2005, when Hong Leong Holdings first launched the project at prices averaging $800 psf, would have seen the capital value of their properties more than double, and are probably getting rental yields in the 7% range.

For example, a 926 sq ft, two-bedroom unit on the sixth floor was sold for $1.6 million ($1,728 psf) recently, according to a caveat lodged with URA on April 19. The seller would have enjoyed a capital gain of 111%, based on the original purchase price of $756,976 ($818 psf) at launch in 2005.

Meanwhile, on the ninth floor of the same block at Watermark, a two-bedroom-plus- study apartment of 1,076 sqft was sold for $1.77 million ($1,647 psf). The seller had purchased the unit in November 2005 for slightly more than $1 million ($934 psf), translating into a 76% price appreciation.

The owner of a 957 sq ft, two-bedroom unit on the eighth floor of another block at Watermark managed to sell it recently for $1.8 million ($1,879 psf), compared with the original purchase price of $863,696 ($902 psf) in 2005.

Condos in the Robertson Quay area are popular with both expatriates and locals, owing to their proximity to the Central Business District and Great World City on Kim Seng Road. They are also a short drive from Orchard Road. Great World City also offers a free shuttle bus service to bring shoppers to Orchard Road at regular intervals.

Along Kim Seng Road, on the other side of the Singapore River, units of the newly completed The Trillium by Lippo Group have seen prices cross $2,200 psf in March, while most recently, on April 18, a 1,377 sq ft unit on the 22nd floor of Tribeca was sold for $2.5 million ($1,810 psf). The two-year old 175-unit freehold condo was developed by City Developments Ltd (CDL), which is part of the Hong Leong Group.

One street away is the 545-unit River Gate, which was completed two years ago. Units at the freehold project, developed by CapitaLand and Hwa Hong Corp, have crossed $2,000 psf. The 43-storey River Gate is the only high-rise condo along the Singapore River. Most recently, a 1,044 sq ft unit on the 31st floor of one of the three towers was sold for $2.26 million ($2,165 psf), according to a caveat lodged with URA on April 19.

Meanwhile, at Marina Bay, at the 428-unit, 55- storey Marina Bay Residences, a new record average price was set when a 2,368 sq ft, four-bedroom apartment on the 46th floor was sold for $10.3 million, or a whopping $4,368 psf, on April 15. Prior to this, the unit had changed hands for $8.3 million ($3,500 psf) in March last year and $6.1 million ($2,580 psf) in August 2009.

The 99-year leasehold residential tower, developed by the consortium of Hongkong Land, Keppel Land and Cheung Kong (Holdings), was completed last year.

Source : The Edge – 9 May 2011

Comments Off on New high at Watermark @ Robertson Quay

Posted in Property Market / Real Estate, Property Price

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