<Alert> Singapore Property: New launches in Western Singapore to hit S$2,000 psf
- Wingtai comes up tops in the collective sale of Lakeside Apartments for S$273.9m, 14% above reserve price
- Lakeside Apartments site on a 99-LH site with 54 years left on the lease, located on the edge of Jurong Lake Gardens
- Wingtai to redevelop the site into a residential development with > 300 units with unobstructed views of Jurong Lake Gardens and the vicinity.
- All-in land rate at S$1,200 psf, with prospective launch prices to hit S$2,000 psf
- Developers looking to raise launch prices given robust take-ups.
What has happened
- Wingtai announced that the group is a successful tenderer for the collective sale of Lakeside Apartments at 9E & 9F Yuan Ching Road for c. S$273.9m.
- Lakeside Apartments is located at the edge of Jurong Lake Gardens, spanning a land area of c.134,177 sqft with a plot ratio of 2.1.
- Lakeside Apartments sits on a 99-LH from March 1977 (54 years left).
- Wingtai plans to developer the site into an residential development of more than 300 units, with views of Jurong Lake.
- We note that the tender price is c.14% above the reserve price of S$240m and based on our estimates, translates to a land rate of S$972psf. After taking into account development charges and lease top-up premium, the all-in land rate translates to clos to $1,200 psf .
Our thought and Implications
Residential price hitting a new paradigm. We are not surprised that Wingtai has cast an eye on the collective sales market for enbloc opportunities given that the group has been unsuccessful in its recent attempts to landbank in recent government land sales (“GLS”) tenders, after its projects on its books (Gardens Residences and The M) are substantially sold.
Based on our estimates, breakeven for this project is expected to be close to S$1,700 psf – S$1,800 psf, meaning that launch prices in the future for the site may hit S$2,000psf. This S$2,000 psf appears to be the next psychological level that the property market appear to be testing given that recent launches (Piccadilly Grand & Liv@MB) in the RCR / OCR region have cleared c.75%-80% of units within launch weekend at prices > S$2,000 psf. It was also reported that developers are expecting to hike new launch prices by up to c.5% given the robust take-up in units.
We watch for the upcoming launch of AMO Residences from UOL (BUY, TP S$8.40) and Lentor Modern from Guocoland (S$2.30) in 2Q/3Q for further signs of the next clearing levels for the residential market. CDL (BUIY, TP S$10.50) has also a robust pipeline of residential units (Tengah EC site, Jalan Tembusu site) for launch in 2H22-2023
Government measures not a worry for now. We believe that it maybe too early to consider further tightening given the expected rise in mortgage rates, which we see could be a natural cooling measure in the midst of higher cost of living for households.
We note that Propnex (HOLD, TP S$1.71) is the marketing agent for the collective sale of Lakeside Apartments.
Source: Googlemap, DBS Bank