2 EC sites for sale in Choa Chu Kang, developers likely cautious

Developers will likely moderate their bids for the two executive condominium (EC) sites in Choa Chu Kang Grove that were released for sale yesterday, as recent changes to the rules governing the hybrid private-public housing scheme are expected to hit demand from upgraders.

The adjacent sites with identical areas of 177,120 sq feet, released under the Confirmed List of the Government Land Sales Programme, have a plot ratio of 3.5 to yield an estimated 1,239,840 sq ft of total gross floor area (GFA). This can be developed into about 1,150 EC units, said the Housing and Development Board (HDB) and Urban Redevelopment Authority (URA) in a joint statement. The tenders for both sites will close on Feb 25.

Analysts said the changes to the EC scheme amid a weakening HDB resale market will act as a “dampener” on the EC market.

Under the new rules announced on Dec 9, EC buyers will be subject to the mortgage servicing ratio (MSR) of 30 per cent of their gross monthly income, while second-time applicants who buy directly from developers will have to pay a resale levy.

“HDB upgraders to ECs may feel the pinch from COVs (cash over valuation) coming down, meaning that by the time they collect their keys to the ECs, they may have to sell their four- or five-room HDB (flats) at a lower price than today. With that expectation, they will want to buy ECs at a more affordable price,” said Century 21 Singapore CEO Ku Swee Yong.

Despite this, developers will try to win both plots as that would allow them to control launch phases and prices without worrying about competition, he said.

Mr Nicholas Mak, Executive Director of Research and Consultancy at SLP International Property Consultants, said the resale levy will increase the overall cost of upgrading to ECs. For example, owners of four- or five-room HDB flats have to pay an additional S$40,000 to S$45,000 when upgrading to ECs.

While analysts expect developers to be more cautious, they said it would be difficult to estimate the top bids as the market is in a “price-discovery period” after the new measures.

“It’s the million-dollar question. The new measures will likely reduce demand, but the market is still in search of the new equilibrium price,” said Mr Mak, who expects four to eight bidders for each of the tenders.

Besides the two EC plots, three condominium sites were also released for sale yesterday. The plot in Geylang East Ave 1, sitting on 67,146 sq ft with a GFA of 188,013 sq ft, can yield 215 homes; the site in Yishun Ave 9, occupying 221,239 sq ft with a GFA of 619,473 sq ft, can yield 685 units; while the one in Sims Drive, covering 257,257 sq ft with a GFA of 771,771 sq ft, can be developed into 900 homes.

Analysts singled out the Geylang site, released from the Reserve List, as the most attractive due to its smaller size and proximity to key amenities.

“It is relatively small and could attract more bidders, including small developers who have no appetite for the big land parcel in Sims Drive,” said Mr Mak, who expects seven to 12 bids for the Geylang site, with the top one at S$109 to S$122 million.

Source : Today – 17 Dec 2013

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