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DBS: Singapore Residential – Bukit Sembawang, CityDev, Ho Bee, Tuan Sing, UOL

Singapore Property: Will S$2,000 psf for suburban private homes be the new norm?

What has happened
 

The close of the tenders of 2 sites under the Government Land Sales (“GLS”) Programme saw participation from a more selective group of developers. The good location and sizeable price points for both the Dunman Road and Pine Grove (Parcel A) sites meant that a smaller but well capitalised group of developers contested for the sites. The Dunman Road site drew 2 bids with Sing-Haiyi coming out top with a bid of S$1.28bn while UOL-Singland outbid 4 other developers for Pine Grove (Parcel A) with a top bid of S$671.5m. 

The pricing imply that launch prices could exceed S$2,000 per square foot (psf), especially with these land bids touching S$1,300 psf on average and construction costs remaining sticky. 

Dunman Road site – Mega-project with close to 1,000 units at launch price of at least S$2,300psf

Sing-Haiyi Group’s top bid of S$1.28bn for the 0.95m sqft site at Dunman Road was 20% higher than the next bidder, a City Development Limited (“CDL”)-led consortium. Sing-Haiyi’s bid translates to a land rate of S$1,350 psf per plot ratio. The site can potentially yield up to 1,040 units and is nestled within a landed home enclave and new public housing (“HDB”) flats currently being built nearby. The site’s proximity to Dakota MRT station (walking distance) and good primary and secondary schools were likely factors for Sing-Haiyi’s robust bid. We note that the last new development in the location was Waterbank at Dakota, a 99-year leasehold project, back in 2010, and recent transactions were in the S$1,600-1,700 psf range. Based on our estimates, Sing-Haiyi Group’s breakeven cost should be in the range of S$2,000 – S$2,050 psf, implying launch prices of S$2,300 psf – S$2,350 psf. 

Pine Grove (Parcel A) – Winning by a whisker! 
What a difference S$800 makes! UOL-Singland’s winning bid of S$671.5m for Pine Grove (Parcel A) was just S$800 higher than the second bid from Allgreen, making this one of the thinnest winning margins we have seen in recent years. The 3 other developers for the site were also within 6%-15% of the top bid, implying the attractiveness of this site. Pine Grove (Parcel A) is expected to yield up to 520 units and is located next to another GLS site – Pine Grove (Parcel B) which is currently on the reserve list. We believe the plus point of this site is its vicinity to popular schools – Henry Park and Pei Tong which are within 1km away. In the vicinity are older HDB and private housing flats which imply that there could be upgrader demand for the units when launched. Based on our estimates, the breakeven for UOL-Singland is close to S$1,950-S$2,000 psf, implying that new launch prices may also hit S$2,300 psf.

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