- A new executive condominium (“EC”) site is award to Sim Lian for a record S$721psf, implying prices to launch cross S$1,500 psf
- Robust 9 bids received, ECs are a “low risk” land-banking option for developers given its history of robust sales (>90% sold within 1 month)
- Positive response expected for City Development Limited (“CDL”) upcoming EC in Bukit Batok Ave 5 to be launched in 1Q24.
What has happened.
Sim Lian has been awarded a 99-LH executive condominium (“EC”) site at Tampines Street 62 for S$543.3m, implying a land rate of S$721 psf ppr. This is noted to be one of the highest land bid received for a EC site. Sim Lian’s bid for this proposed 700-unit is noted to be 2.5% higher than the S$703psf awarded for an EC site at Plantation Close (in Tengah new town in the Western part of Singapore) which was awarded to Hoi Hup Realty and Sunway Development. The robust bid could be due to the site being nestled within a mature HDB estate and in the medium term, can leverage on HDB’s upgrader demand. It is also within proximity to the upcoming mixed-use development awarded to a consortium between UOL-Singland-CapitaLand at Tampines Avenue 11 (awarded at S$884psf). Based on our estimates, Sim Lian’s breakeven is close to S$1,350 psf – S$1,400 psf, implying that EC’s will likely see pricing cross S$1,500 psf when launched sometime in 2025.
Watching how land bids for EC sites are heading, especially when this is a product that is catered to the sandwich asset class is noteworthy in our view. The higher number of bids (9 bids received) and pricing implies that developer’s interest in the EC space remains strong and understandable given that there is “lower exposure risk” in our view. Sim Lian’s bid will ride on strong sales momentum seen at another EC site, The Tenet (c.93% sold at S$1,380 psf). We note that EC launches typically are fully sold within a year of launch with most recent launches near Tengah, Copen Grand (620 units, 100% sold in 1 month at c.S$1,350psf) The Altura (360 units 90% sold in 1 month at c.S$1,450psf). The robust land price achieved for EC land sites is positive for CDL (BUY, TP S$10.50) which will be looking to launch a new EC in Bukit Batok Avenue 5 (awarded at S$621psf, launch price of c.S$1,400-S$1,450psf) which we expect positive response during launch.