Back in 2011, more than 30 private residential sites were put up on tender by the Singapore Government back in 2011 (and this was excluding those parcels meant for executive condominums!). Fast forward to 2016, it was a shadow of what was released in 2011 because there wasn’t even 10 private residential sites being sold – and this is the reason developers are hungry for for land albeit the influx of foreign developers are also in town trying to lay their hands on lands as well, resulting in even stiffer competition!
We have seen bullish bids with many new residential sites since the start of 2016 and GuocoLand’s bid for Martin Place tops them all. Singaporean list company, Guocoland, put up a top bid of $1,239 per square foot per plot ration for the land parcel released in 2016 at Martin Place, this is the highest ever transacted record for a land price sold in Singapore by the Government under the Government Land Sales Programme. It is therefore expected that the future project of this parcel will sell at over $2,000 per square foot!
Three months right after the sale of the land parcel at Martin Place, there was another private residential land parcel at Fernvale Road which was topped by Wee Hur and Sing Development at a bid of $517 per square foot per plot ration (psf ppr). This price obtained was more than 15 percent higher that its neighbour with is the site for High Park Residences. The land that High Park Residences sits on was sold for $443 per square foot per plot ratio back in August 2014. The new residential site at Fernvale Road will be forecasted to breakeven around $1,000 per square foot and therefore the likely selling price will be over $1,100 per square foot.
The Trend Continues
Then moving on to the end of 2016 in December, another property big boy – MCL Land, took the land parcel at Margaret Drive for $998 per square foot per plot ratio which was more than 15 percent higher compared to the residential site that Queens Peak will be sitting on. It was also over 13% higher over Hong Leong’s Commonwealth Towers as its neighbour. The latest land tender headlines with China Construction taking over a site at West Coast Vale for over $592 per square foot per plot ratio – a 7 percent increment over its neighbours Parc Riviera of which EL Developments paid $551 per square foot per plot ratio for it.
Comparing the bids from 2016 to 2015, the overall sentiment by the developers was very much weaker. A good example would be the site for Grandeur Park Residences, it was sold for $761 per square foot per plot ratio, shockingly lower than its neighour, The Glades. This was also true for MCC Land, which took the site for Alps Residences in May 2015 at a 14 percent lower price than what it paid to take the site at The Santorini at Tampines.
Recent land sales paint a rosier picture for the Singapore residential market after more than three years of declining prices. The bullish bids would mean that the average development cost will be elevated and, under normal circumstances, this would translate into higher selling prices for new launches. Any upside in price, however, is likely to be modest as buyers remain price-sensitive, and the impact on the overall market may be limited as it is just one of the many variables in the equation.