The MRT premium for housing market

With concerns mounting that there will be an oversupply in the private home market, property developers will be increasingly selective about the sites for sale under the Government Land Sales programme in the second half of this year, analysts said.

They are likely to bid for the sites with the most attractive locations, such as those near MRT stations. Among these, the sites on Alexandra Road and Bishan Street 14 are likely to attract much interest.

The Alexandra Road plot is a short walk from the Redhill MRT station. With a gross plot ratio of 4.9 yielding 524,300 sq ft of gross floor area, the land’s minimum price is estimated at between S$420 million and S$445 million, or S$800 to S$850 per sq ft.

To yield a potential 545 units, it is slated for sale in October and is on the Confirmed List of the Government Land Sales (GLS) programme.

“This site could attract the bigger developers, and even the mid-sized ones will join forces to go in,” said Mr Nicholas Mak, executive director of research and consultancy at SLP International.

“Some of the newer condominiums around the Redhill MRT Station could be transacting at prices of S$1,300 to S$1,400 per sq ft, especially for the smaller units,” he noted.

Ascentia Sky, the property adjacent to the land parcel, is currently selling at an average of S$1,422 per sq ft and 299 out of the 373 units have been sold.

While there may be risks of oversupply, the GLS programme could be adjusted according to future demand, said analysts.

But for now, demand is robust, especially for sites near MRT stations, such as the Reserve List site on Bishan Street 14.

The Government will consider launching a Reserve List site for sale if more than one unrelated party submit minimum prices that are close to its reserve price within a reasonable period.

Analysts said it would not be a surprise if CapitaLand bids for the site.

“We have good location, good amenities in there, good shopping areas, good schools in the neighbourhood … We won’t dismiss the possibility of CapitaLand again looking very closely at the site, I believe. Since they have won the adjacent area, they may be looking at this as well to create a more continuous development,” said Dr Chua Yang Liang, head of South-east Asia research at Jones Lang LaSalle.

CapitaLand won the adjacent Bishan Street 14 site in February with a top price of S$550.1 million, beating the next highest bidder Keppel Land by 27 per cent.

The GLS sites at Punggol Central and Bartley Road are also attractive as they are located within walking distance to MRT stations, analysts said. With these choice locations, properties in such areas will be a hit with families and HDB upgraders, they added.

Source : Today – 11 Jun 2011

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