RESIDENTIAL MARKET
Expected to still sell: ECs benefit from bigger buyer pool
The many executive condominiums (ECs) heading to the market can be absorbed thanks to the expanded pool of buyers generated by changes to the income ceiling.
The Government increased the monthly household income ceiling from $10,000 to $12,000 in August last year so it is unlikely an oversupply will arise.
Figures from the 2010 Census show how this policy change has expanded the buying pool.
There were 72,065 households in Housing Board (HDB) four-room flats or larger earning between $8,000 and $10,000 in 2010.
This segment used to be the target market for buyers of ECs as the income ceiling for HDB flats was $8,000 then.
Department of Statistics figures, also from 2010, show that there were around 46,000 households in HDB four-room flats or larger that earned between $10,000 and $12,000.
The increased income ceiling means these 46,000 households are also eligible for ECs.
This enlarged pool of buyers can soak up the supply from the string of new launches since the EC segment was reintroduced in 2010, say experts.
There were about 6,500 EC units in the pipeline as at Sept 30 with an additional 3,100 potentially in the mix from sites that could be sold in the land sales programme for the first half of next year.
There had been concerns that the bumper supply of EC plots pushed out by the Government to cater to the so-called "sandwiched class" might lead to a glut.
But even Punggol and Sengkang, where almost half of the EC units in the pipeline are in, face little oversupply risk.
This is because the ratio of private homes to public ones in these two areas is still expected to be lower than the islandwide average in 2016 when the projects are completed.
There is no price difference between an EC and condo in the resale market if both have similar location and quality attributes.
That makes economic sense for buyers to get a new EC as the price gap will close when the initial restrictions are lifted five years after completion.
Competition for EC sites has become more aggressive recently.
If land costs keep rising, units in new EC projects will be more expensive, although mortgages will remain affordable.
The mortgage repayment only becomes more taxing for units priced above $1.45 million if interest rates rise to 4 per cent eventually.
ECs combine elements of private and public housing and often have premium furnishings and facilities but are subject to HDB rules that specify a monthly household income cap of $12,000.
They are subject to a minimum occupation period of five years. They can then be sold only to Singaporeans and permanent residents. They become private property after 10 years and can be sold to foreigners.
Source: The Straits Times –20 December 2012
COMMERCIAL MARKET
Two commercial sites in Jurong, Cecil St released
The government has released the final two commercial sites for the second half 2012 Government Land Sales (GLS) programme.
One is a confirmed list site near Jurong East MRT Station that has been launched for sale by public tender, while the other is a plot at Cecil Street/Telok Ayer Street that is available for application for sale under the reserve list.
The Urban Redevelopment Authority (URA) said yesterday that the bulk of the space developed on both sites has to be set aside for office use. In addition, it is allowing strata sub-division of offices for the Jurong plot but not for the Cecil Street site.
On Venture Avenue in Jurong East, URA's 1.1-hectare confirmed list plot will be the site of the third major office development in the Jurong Gateway location to be released since 2010. This is part of URA's plan to create the biggest commercial hub outside the CBD.
The latest site can yield a 25-storey project with a maximum gross floor area of 694,939 square feet, of which at least 90 per cent must be for office use.
Property consultants expect the site to draw five to eight bids.
In June 2010, LendLease clinched a nearby white site for $650 psf ppr on which it is now developing Jem. In May 2011, CapitaMalls Asia (CMA), CapitaMalls Trust and CapitaLand teamed up to bag another white site nearby for $1,012 psf ppr, on which it is developing the Westgate project. Both projects are mixed office and retail developments.
For the Westgate and Jem sites, URA specified minimum office components of 40 per cent and 30 per cent, respectively.
URA said the latest site will contribute to the development of more affordable office spaces in Jurong to cater to users who do not need a central business district location.
However, market watchers expect moderate demand for the subject site owing to its less-than-optimum location and high quantum for commercial space.
A URA spokesman said the planning authority is allowing the flexibility to strata sub-divide for sale the future development on the Venture Avenue site to ensure there is a variety of office space available outside the CBD to meet different business needs.
"This will provide SMEs the opportunity to purchase their own office space to better manage operating costs," URA said.
It said that while there is no minimum office unit size control for the Venture Avenue site, the proposed office layout will be evaluated to ensure that it is in line with the typical quality office layout that meets the needs of genuine office end users at the development application stage.
URA also noted that the two earlier developments in the Jurong Gateway area, Jem and Westgate, will provide office space that will cater mainly to tenants with large space requirements.
However, URA is not allowing strata sub-division of individual units within the future project at the Cecil Street site.
Noting that the site is zoned for commercial and open space use, URA said a single owner can better integrate and manage the future commercial building with the public open space fronting the prominent Cecil Street/Telok Ayer Street junction.
The 0.8-ha plot, which can generate a 50-storey development with a maximum GFA of 830,510 sq ft, is situated just across the road from SBF Center (formerly known as The Index), which was sold in September 2011 for $882 psf ppr.
Within the CBD, an estimated 7.6 million sq ft of office space is expected to be completed from 2013 to 2017, she pointed out. M+S Pte Ltd, a consortium of Khazanah Nasional and Temasek Holdings, has committed to developing some 2.9 million sq ft of office space in Marina One (situated in Marina Way/Straits View) and Duo 2 (located in Ophir Road/Rochor Road), which are envisaged to be ready by H1 2017.
Source: Business Times –20 December 2012
INDUSTRIAL MARKET
Tighter building rules on sites for industrial use
Tighter development measures are being introduced for certain industrial sites, even as the government rolls out more land in an attempt to moderate industrial land prices.
Specifically, successful bidders of selected sites will be required to build a minimum number of large factory units to cater to the needs of SMEs who need larger industrial spaces, said the Ministry of Trade and Industry (MTI).
This announcement came on the back of MTI announcing that a total of 22 sites - comprising 13 sites on the confirmed list and nine sites on the reserve list - with total site area of 24.84 hectares has been set aside for industrialists.
This is comparable to the 19 sites - 16 sites on the confirmed list and three on the reserve list which totalled 23.72 ha - released in the second half of this year. In 2012, a total of 47.69 ha of industrial land was released; this is about 1.4 times than that released last year.
Of the 13 plots on the confirmed list, eight are less than 1.0 ha; six small sites (each less than 0.5 ha with a plot ratio of 1.0 and land tenure of 22 years) in Tuas South have also been released.
Tenders for this type of land plot in the last six months have attracted five-19 bids per site. Specifically, plots 9 and 11 in Tuas South Street 8 were sold between $35 and $44 psf ppr in September. The top bid rose to $68-78 psf ppr for Plots 8 and 18 on the same street by December.
There are nine sites on the reserve list. Notably, five small sites (on Tuas South Street 6 and Street 8) have debut on the reserve list.
Source: Business Times –20 December 2012
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