Government bumps up supply of private homes, office space for H1 2023

IN THE face of resilient private housing demand and tight office supply, the government is bumping up land supply for these two segments in the confirmed list for the first half of 2023.

The Ministry of National Development (MND) will release sites on the confirmed list that can yield about 4,090 private homes (including 700 executive condo or EC units). ECs are a public-private housing hybrid.

This is 16.7 per cent higher than the supply of 3,505 private homes (including 495 EC units) in the current, second-half 2022 Government Land Sales (GLS) programme. The latest figure is also the highest level since the 4,630 units in the H1 2014 confirmed list.

Sites on the GLS programme’s confirmed list are launched for sale according to schedule, regardless of demand.

The government will also kick-start the next phase of development in Jurong Lake District by releasing, via the H1 2023 confirmed list, a 6.8-hectare white site in the precinct for sale to a master developer. This comprises three plots of land linking the Jurong East MRT interchange station and the future Jurong Lake District station of the Cross Island Line.

“The intention is for a single developer to comprehensively master-plan the site and use district-level urban solutions (such as a district cooling system) that will be integrated within the mixed-use development,” MND said on Thursday (Dec 8).

A NEWSLETTER FOR YOU

Tuesday, 12 pm

Property Insights

Get an exclusive analysis of real estate and property news in Singapore and beyond.

Sign Up

The mega development can be built up to a total gross floor area (GFA) of 375,000 square metres (sq m), including offices, private homes and complementary purposes such as retail, hotel or community uses. The project will be built progressively over the next five to 10 years.

However, as part of the first phase of the development, the successful bidder will be required to build at least 70,000 sq m GFA of office space and 600 private housing units – though it will have some flexibility to phase out the remaining supply according to market demand.

Inclusive of this project, the confirmed list for the next half is estimated to generate 106,400 sq m of commercial space, up from 14,750 sq m in H2 2022.

The reserve list is where sites are launched only upon successful application by a developer or when there is sufficient market interest. On this list, MND will release land for 3,625 private homes (including 855 EC units) in H1 2023, slightly lower than the supply of 3,805 private housing units (including 1,000 EC units) in the H2 2022 GLS programme.

The reserve list of the H1 2023 GLS programme will also offer a supply of 93,350 sq m GFA of commercial space and 530 hotel rooms. This compares with a supply of 80,000 sq m of commercial space and 530 hotel rooms in the H2 2022 GLS programme.

The next half’s reserve list will include a plot next to Punggol MRT station to be sold on 30-year lease tenure; it can potentially yield about 8,400 sq m of office space. This is part of the government’s efforts to support decentralisation and cater to demand for workspaces near homes.

“The release of such sites on shorter lease allows our land uses to be refreshed in shorter cycles to support businesses in adapting their operations more nimbly to changing economic trends,” MND said.

The ministry also said the government will continue to monitor economic and property market conditions and adjust the supply of future GLS programmes as necessary, to help meet demand and promote market stability.

“Over the past two years, the government has progressively ramped up the supply of private housing on the confirmed list of the GLS programme to cater to strong demand from homebuyers,” it added.

The increased confirmed list supply for H1 2023 will add to the existing pipeline supply to meet the housing needs of the population. It will bring the total pipeline supply of private housing (including ECs) to about 65,000 units, comprising 55,100 units with planning approval and 9,900 units from GLS sites and awarded en-bloc sale sites that have not been granted planning approval yet. Of these, about 33,600 units will be completed in the next two years, significantly higher than the 11,500 units completed since 2021.

“These housing completions will help meet owner-occupier and rental demand in the near term,” MND said.

Desmond Sim, chief executive officer of Edmund Tie & Company (SEA), said: “Generally speaking, through the latest GLS announcement, MND is hoping to quell some of the exuberance in the market with the stable introduction of residential sites spread across the island to address any locational pent-up demand.”

The confirmed-list housing sites are in areas such as Jalan Tembusu, Woodlands, Portsdown Road, Marina South and Jurong Lake District.

Sim said that while continuing to provide residential sites, MND has also specifically highlighted the total pipeline supply and completion timeline to “possibly ease the rental demand spike witnessed over the past two quarters”.

ERA Singapore’s head of research and consultancy, Nicholas Mak, said that the 16.7 per cent increase in private housing (including EC) supply in the H1 2023 confirmed list over H2 2022 marks a slower pace of increase compared with the half-on-half increases of 25.9 per cent in H2 2022 and 39.3 per cent increase in H1 2022.

“A possible reason for the slower rate of growth in potential housing supply is that the government wants to strike a balance between increasing the private housing supply, while being mindful of the potential economic slowdown in 2023.”

PropNex Realty CEO Ismail Gafoor said he had hoped for more suburban private housing sites to be offered under the confirmed list as this submarket faces a sharper supply and demand imbalance.

“Given the limited private residential project launches this year, we expect there will be some pent-up demand for new launches in 2023 and this fresh slate of GLS sites will allow developers to top up their land inventory,” he added.