More sites for private homes may be released

The Government is preparing for its next land sales exercise against a backdrop of bullish bids for sites and a declining stock of unsold private homes.

This could nudge it to release more plots in this exercise – after a spell of trimming supply to a muted market, analysts said.

Land tenders this year have mostly been competitive, with some developers tabling aggressive bids to replenish their land banks.

“In order to keep land prices from over-escalating, in particular for executive condominiums (ECs) and private homes, the Government could release more sites for the first half of 2017,” said Ms Alice Tan, head of consultancy and research at Knight Frank.

The Ministry of National Development, which has cut land supply over the past two years, is expected to announce later this month what sites will be available in the first half of next year.

Four plots able to yield 2,170 private residential units were placed on the confirmed list in this half of the year; these are launched for sale according to schedule. Analysts say this could go up to anything from 2,500 to 3,200 units in the upcoming land sales exercise.

But these potential units are not likely to be in places with significant launched and unsold apartments, like the Redhill and Commonwealth areas, said Mr Nicholas Mak, head of research and consultancy at SLP International Property Consultants.

The stable demand for new homes – at around 7,000 annually in recent years – and the record low number of unsold uncompleted units also support a marginal uptick in the confirmed list supply.

“Given an estimated three-year development period, the buffer level for unsold stock is likely to hover at around 21,000,” said Mr Desmond Sim, CBRE Research head for Singapore and South-east Asia.

There were 20,577 unsold uncompleted private residential units (excluding ECs) as at Sept 30 – an all-time low – down from 22,456 a year ago and a peak of 43,473 in the second quarter of 2008.

Not only were there more bidders for sites, analysts said, but some developers also submitted “opportunistic bids”. The latest tender for a Margaret Drive site saw the top bid coming in at $997.85 per sq ft per plot ratio (psf ppr), higher than the land cost for the nearby Queens Peak – the site was sold in June last year at $871 psf ppr.

Consultancy Colliers International said the competitive bidding reflected developers’ hunger for land as well as their “more bullish medium-term view” of the market.

Meanwhile, there were 11 sites on the reserve list for this half of the year, with analysts tipping that there could be 10 to 15 listed for the first six months of next year. These plots go on sale only after a developer lodges an acceptable bid.

A mixed-use reserve-list site in Holland Road that has yet to be triggered for sale could go on the confirmed list next year “as part of the Government’s moves to develop the area to support one-north”, noted Chesterton Singapore managing director Donald Han.