On 31 October, the Government released another two residential sites for sales under the 2H2013 government land sales (GLS). One of the sites is an EC (executive condominium) land plot that is released under the confirmed list; while the other is a 99-year tenure land parcel for private homes under the reserve list.
Confirmed-list lands are put up for bidding on the market regardless of interest, whereas reserve-list sites go on sale only if there is 1) An offer that is at least 85% of the Chief Valuer’s (CV) Estimated Market Value (EMV). The valuation will only be made after an offer is made; or 2) More than one offer within a reasonable period, by unrelated parties, that are close to EMV.
The EC site is at Westwood in Jurong West, and like for all EC sites, it is on a 99-year tenure. The private home site is at Lorong Lew Lian in Upper Serangoon Road. Together, these two sites can yield about 980 residential units.
However, market watchers are not expecting the Lorong Lew Lian site to be launched for sale until at least the second quarter of next year. Bids are estimated to be in the region of $430 and $490 psf ppr (per square foot per plot ratio) for the lower-end of the prediction, and $620-$720 psf ppr in the upper end.
The tepid demand for this site is attributed to the slowing property market which has been slapped with a string of property and mortgage curbs this year. The latest was on 29 June 2013 when on all property loans, loans secured against properties, and refinancing facilities have to meet the 60% total debt servicing ratio (TDSR).
Against this cooling market, demand is expected to be driven to the EC segment which offers non-landed homes that rival their private counterparts but at lower prices and with CPF grants.
Thus competition for the Westwood EC site is anticipated to be keen, even though the western part of the island is considered as a far-flung and heavily-industrialised area that is located away from the city. However this perception is eroding given the development of Jurong Gateway at Jurong East and the lakeside district into the biggest commercial hub outside the city.
Couple this fact with the dearth of new EC in Jurong West for over a decade and you can expect healthy demand. The only two ECs so far in the area are Summerdale and the Floravale which were completed in 2000.
In July this year, HDB released for sale an EC site inYuan Ching Road under the batched tender land sale which was designed to moderate bid prices by developers, but rather than dampening prices the site attracted an unprecedented high bid for an EC land plot. A consortium comprising Evia Real estate, BBR development Pte Ltd, CNH Investment Private Limited and OKP Land Pte Ltd submitted the top bid of $418 psf ppr.
The batched tender land sale was only introduced this year and it works by having land sites that share similar characteristics have the same tender closing date, but they are allowed to have different tender start dates. So far, they have been only two batched tender land sales with the first concluding with the opposite intended effect (bid prices remained sky-high for the three EC sites). The second involves a pair of adjacent private home sites along Upper Serangoon View, which will close for tender on 28 November.
Going by the bid price for the Yuan Ching Road EC site, we expect a reasonably high bid price for the Westwood EC site although it is not expected to reach the record level of the former, given its farther distance from the Jurong East and lakeside area.
Experts are foreseeing a top bid anywhere between $285 to $380 psf ppr.
Incidentally the Westwood EC site is adjacent to the Floravale EC which price range at the developer’s sale was $247 psf to $419 psf.
The tender for the Westwood site will close at noon on 7 January 2014. In 2014, there is a foreseeable shortage of EC launches given the January 2013 ruling that mandates developers to wait 15 months after the award of the site or after the physical completion of foundation works, whichever is earlier, to launch an EC. Therefore next year, only a few EC will be launched in the later end of the year, resulting in pent-up demand.
Hence the sale price for the Westwood EC can be relatively higher when it hits market in 2015.
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