Uptick in land supply may be insufficient to meet developers’ demand for sites: Analysts

SINGAPORE – The Government has ramped up supply of development sites in the wake of bullish bids for plots and a declining stock of unsold private homes.

But analysts say the slight increase in land supply for the next six months may not be enough to meet developer demand.

There are 16 sites on the Government Land Sales programme for the second half of the year. They could accommodate up to 8,125 private homes, up from the 7,465 units offered in this half, the Ministry of National Development (MND) said on Thursday (June 29).

Six of the sites are on the confirmed list. Four are for residential – in Chong Kuo Road near Sembawang, Handy Road in the city, Hillview Rise and Sumang Walk, which is for an executive condominium.

There are also two mixed use sites, in Holland Road and Sengkang Central

All up, they could yield 2,840 private residential units and 26,800 sq m gross floor area of commercial space.

The reserve list has 10 sites – nine private residential and one commercial. They can accommodate 5,285 private homes and 56,790 sq m gross floor area of commercial space, mostly for office use.

Market watchers described the new allocation as “conservative” and “measured”, but possibly insufficient to satisfy developers.

“Given the demand crunch for residential sites, developers could be steered towards triggering sites on the reserve list as well as sourcing from the collective sales market,” said Mr Ong Teck Hui, national director for research and consultancy at JLL.

Stiff competition and bullish bidding is expected for plum sites on the confirmed List such as in Handy Road, Holland Road and Sengkang Central.

“There is still much capital in the market and we are likely to see more joint ventures between developers and funds. This is especially so for sites that includes a retail component,” noted Dr Lee Nai Jia, head of research at Edmund Tie & Co.

Confirmed-list sites are put on sale regardless of interest, while those on the reserve list are launched only when a developer commits to a bid deemed acceptable.

Analysts say the Jiak Kim Street Forth Avenue and Cuscaden Road sites, which are on the reserve list, are most likely to interest developers owing to their prime locations.

“These offer very palatable quantums and are expected to set new benchmarks,” noted Mr Desmond Sim, head of CBRE Research for Singapore and South-east Asia.

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