EC sites command higher bids

Land prices of executive condominium (EC) sites have grown at a faster pace compared with private residential plots in the last three years.

SLP International Property Consultants says the cost of 99-year leasehold mass-market sites rose 40 percent, slower than the 50 percent increase in land prices EC sites sold under the Government Land Sales (GLS) programme.

EVIA Real Estate, one of the consortium partners that clinched the EC site at Yuan Ching Road in Jurong, said the various rounds of cooling measures have been effective in keeping home prices in check.

They have also made land banking nearly impossible for developers, who will have to pay additional taxes if they are unable to sell all the units at a site within 5 years.

EVIA Real Estate managing partner, Leslie Lim, said: “You no longer have the option of buying land and wait for the overall appreciation of the market.

“This is no different from EC market, the mid- or high-end.

“GLS land prices should be relatively stable, I don’t expect them to appreciate very much from today’s (prices).

“The policies from the government are very clear. I think no developer would go in to bid up land prices 10-15% more than what it is today.”

But Mr Lim said developers are still willing to pay a premium for choice sites.

This was what EVIA and its partners did when they forked out a record bid of S$272.8 million for the Yuan Ching plot.

That works out to about $419 per square foot per plot ratio.

However, some analysts expect the bid prices for the five EC sites to be sold later this year to moderate.

These sites are located in Westwood Avenue, Canberra Drive, Anchorvale Crescent and Choa Chu Kang Grove.

SLP International Property Consultants’ executive director Nicholas Mak said: “They are in a more average kind of location and so the bids that they will attract will also probably be below S$400 per square foot.”

Looking ahead, analysts expect developers to be more cautious with their land bids as the demand for new homes has slowed since the introduction of the Total Debt Servicing Ratio framework towards the end of June.

However, some market watchers say the batched tender of two pairs of sites at Upper Serangoon View and Choa Chu Kang Grove could throw up some surprises.

SLP International Property Consultants’ Mr Mak said: “Quite likely they will be launched on the same day and their tenders could close on the same day, this could produce interesting results.

“For example, a developer who wants to acquire both sites may bid very aggressively for both sites if they can muster the financial power to do so.

“So, by batching together the land tenders and these land tenders are located adjacent to each other, it may not necessarily moderate the land price tender.”

The government has set aside 10 residential sites, including five EC sites, for sale under the Confirmed List in the second half of 2013.

They are expected to yield about 6,000 private homes, including 2,800 EC units.

Source : Channel NewsAsia – 12 Aug 2013

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