Property Insights

On subdued housing land bids

Condo resale volumes in July jumped 32 per cent from the previous month, according to flash estimates from SRX and 99.co. Analysts attributed the rise to a lower base in June due to the school holiday season.

Might some buyers in the private homes market be drawn to resale units because of the large gap in price per square foot (psf) between new and resale units? As it stands, sales of new homes excluding executive condos (ECs) in H1 were 44 per cent less than in the corresponding period last year.

I argue in The Level Ground that the biggest worry facing housing developers is uncertain demand. If sales at new condo launches hover in the 20 per cent plus region, this can spell trouble for developers. For example, developers will see financing costs rise and face being hit with clawback in Additional Buyer’s Stamp Duty, which was remitted upfront, for failing to sell all housing inventory in a project within the prescribed timeline.

New condo launches have taken a hiatus during the Chinese Hungry Ghost month, which runs from early August to early September. All eyes will be trained on how a flurry of new condo launches after the Hungry Ghost month fare. Should sales be tepid, expect continued subdued bidding for private housing sites.

A segment where housing land bids are relatively stronger is that for EC plots. Last week, an EC site in Tampines Street 95, which can yield some 560 homes, was put up for sale by the Housing and Development Board (HDB). Market watchers expect around four to eight bids for this site, with estimates ranging between S$650 and S$750 psf per plot ratio.

One area of possible weakness in the new homes market could be that of the popular suburban condo segment, where prices have surged since the Covid-pandemic.

In a commentary on the recent tightening of the loan-to-value limit on HDB loans, I opine that some fizz will come off the high-flying HDB resale flat market. After all, the buying power of some HDB resale flat buyers will be curtailed. In turn, owners of HDB homes looking to sell their flats to fund the purchase of suburban condos could see their buying power affected too.

A serviced residences deal brewing

Elsewhere in the housing market, the Tanglin Hill bungalow of convicted Hin Leong founder Lim Oon Kuin, also known as OK Lim, has been sold for S$39.2 million, or S$2,507 psf on the freehold land area of 15,636 square feet.

My colleague Kalpana Rashiwala reported that a major serviced residences deal is brewing. Asset manager BlackRock is close to buying the 299-unit Citadines Raffles Place, which is within the CapitaSpring building on Market Street, for S$300 million or slightly over S$1 million per unit. The serviced residences are on levels nine to 16 of the 51-storey building, which sits on a site with over 56 years of land lease outstanding.

A group led by KKR and one of Japan’s largest real estate companies reportedly put in a US$2 billion bid to acquire Shiodome City Center, a 43-storey office tower in Tokyo, Japan, owned by Singapore sovereign wealth fund GIC.

Earlier this month, a deal was announced involving investment firm EQT Private Capital Asia buying New York-listed PropertyGuru Group, which started as an online property listings portal, for US$1.1 billion and taking the latter private.

My colleague Joan Ng argues that amid the loss-making PropertyGuru reporting improving financials, EQT could continue to cut expenses, find efficiencies or add more businesses to PropertyGuru’s portfolio.