{"id":7642,"date":"2016-11-07T03:54:55","date_gmt":"2016-11-06T19:54:55","guid":{"rendered":"https:\/\/www.99.co\/blog\/singapore\/?p=7642"},"modified":"2022-07-01T04:04:31","modified_gmt":"2022-06-30T20:04:31","slug":"government-land-sales-2017","status":"publish","type":"post","link":"https:\/\/www.99.co\/singapore\/insider\/government-land-sales-2017\/","title":{"rendered":"What can we expect in the Government Land Sales H1 2017?"},"content":{"rendered":"<div id=\"bsf_rt_marker\"><\/div><figure id=\"attachment_7643\" aria-describedby=\"caption-attachment-7643\" style=\"width: 800px\" class=\"wp-caption alignnone\"><img decoding=\"async\" class=\"wp-image-7643\" src=\"https:\/\/www.99.co\/singapore\/insider\/wp-content\/uploads\/2016\/11\/GLS.jpg\" alt=\"What will the government land sales exercise in H1 2017 yield for developers?\" width=\"800\" height=\"496\" \/><figcaption id=\"caption-attachment-7643\" class=\"wp-caption-text\">What will the government land sales exercise in H1 2017 yield for developers?<\/figcaption><\/figure>\n<p>W<span style=\"font-weight: 400;\">e\u2019ve almost come to the end of the year, so it\u2019s timely for us to look into 2017. In addition to general forecasts and expectations on the private residential property market, it will be interesting to have a closer look at the supply of private residential homes that will be rolled out in H1 2017. After all, supply is a critical underpinning (together with demand as a fundamental) for property prices and rents.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In H2 2016 itself, the government increased the supply of private residential homes that can be developed. This was in response to developers\u2019 continued hunger for developing private residential properties, as their land inventory was running low. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Nevertheless, the government had to ensure the affordability of property prices and have to conscientiously ensure that future home supply is kept at a moderate level. What this means is that on one hand, there cannot be an undersupply (in turn, driving prices up). On the other hand, they have to be mindful of oversupply (resulting in a rapid price fall).<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So, what is in store for the Government Land Sales (GLS) of private residential sites moving forward? Here are our preliminary estimates and perspectives:<\/span><\/p>\n<h3><b>Supply of Private Residential Homes (non-EC)<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">We can expect that in H1 2017\u2019s government land sales, the private residential sites which are included in the Confirm List will be slightly higher than that in H2 2016. At present, the Confirm List yielded about 2,170 private homes in total. In H1 2017, we can be expect to see a slight bump of 8 &#8211; 10 percent (an estimated 2300 units) that can potentially be rolled out via the Confirm List in 2017. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">A handful of sites introduced under GLS H1 2017 (either existing in Reserve List or totally new sites <\/span><span style=\"font-weight: 400;\">added to GLS H2 2016) will likely be in localities which are recently rejuvenated or in newly established residential enclaves. Developers will have to factor in possibility of over-saturation of private homes in these specific locality.\u00a0This is because buyers will remain cautious so long as the cooling measures are still in place. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">On top of the Confirm list, we can expect the Bartley Road sites from the Reserve List of GLS H2 2016 to be transferred to the Confirm List of GLS H1 2017. The Stirling Road site (next to\u00a0<a href=\"https:\/\/www.99.co\/singapore\/sale\/condos-apartments\/the-anchorage\">The Anchorage<\/a>) is actually very attractive too, but due to its large site (can yield about 1,100 units), it is unlikely to see it being transferred to Confirm List. This is because the government will not want to introduce excessive housing supply via the Confirm List and given this is a very large site, it that will carry higher risks for developer who wins the bid. A large site may also not see high bidding interest from developers. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Even as developers were seen to be aggressively tendering for land in 2015 and 2016, there are still lingering private residential headwinds and it will be most prudent to downplay risks by avoiding bidding for large development sites. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Overall, for private residential this round, will see that the government will maintain the level of private homes released in the government land sale via the confirm list. For the reserve list, it will be quite similar to that in GLS H2 2016.<\/span><\/p>\n<h3><b>Supply of Executive Condos (ECs)\u00a0<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">In H2 2016, no EC sites were included in the Confirm List, due to lingering concerns of oversupply for ECs. H1 2017 will see the government continuing this cautious approach in releasing sites for EC development &#8211; perhaps only offering one site under the Confirm List and another in the Reserve List in the government land sales exercise in H1 2017. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">We have come to very interesting stage for ECs.\u00a0In H2 2015, appropriate price strategies where new launches were an average $750-$780 psf,\u00a0 bolstered demand for new ECs.\u00a0That said, it is unlikely that EC with units priced more than $800 psf will receive strong demand in 2017.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Another reason which accounted for improved sales was the revision of the in<\/span><span style=\"font-weight: 400;\">come ceiling for buying new executive condos. <\/span><span style=\"font-weight: 400;\">This new policy was implemented in Aug 2015, but it took a while for buyers to adjust to it before jumping onto the opportunity of owning a new EC.\u00a0<\/span><\/p>\n<h3>Why it is unlikely for private residential supply to increase<\/h3>\n<p><span style=\"font-weight: 400;\">While developers may be seen to be quite aggressively snapping up sites recently and are generally running low in their land inventory, it is unlikely there will be a drastic change in this coming GLS H1 2017. There are stronger policy considerations in the providing of land for property development. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">The main priority for releasing private residential development sites is to ensure there are sufficient homes to meet buyers\u2019 requirements. Also, it has been seen that in 2010-2013 where there were substantially more residential sites released, demand has not been able to meet supply, resulting in an excess of completed homes from 2014 onwards. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Even if condo projects receive strong buyers\u2019 interest when launched, <\/span>there is also a worry of buyers\u2019 over consumption and over-investing<span style=\"font-weight: 400;\"> in private homes. This can be seen through instances where investors had difficulty in finding tenants and rising vacancy rates. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Developers may be very much in need of sites to shore up land inventory. However, in the government\u2019s release of private residential sites via GLS, there is a higher priority for the government to carefully calibrate supply and demand dynamics to achieve longer term\u00a0 sustainability of the property market. Often, releasing more sites to offer substantially more new homes can have longer term repercussions, such as limited leasing demand and lower resale potential after they are built.<\/span><\/p>\n<p><img decoding=\"async\" class=\"alignnone wp-image-7607\" src=\"https:\/\/www.99.co\/singapore\/insider\/wp-content\/uploads\/2016\/11\/oks-pic.jpg\" alt=\"oks-pic\" width=\"150\" height=\"193\" srcset=\"https:\/\/www.99.co\/singapore\/insider\/wp-content\/uploads\/2016\/11\/oks-pic.jpg 1260w, https:\/\/www.99.co\/singapore\/insider\/wp-content\/uploads\/2016\/11\/oks-pic-940x1209.jpg 940w\" sizes=\"(max-width: 150px) 100vw, 150px\" \/><\/p>\n<p><em>This article was written by Ong Kah Seng, Director of R\u2019ST Research on behalf of <a href=\"http:\/\/99.co\/\" target=\"_blank\" data-saferedirecturl=\"https:\/\/www.google.com\/url?hl=en&amp;q=http:\/\/99.co&amp;source=gmail&amp;ust=1471405734733000&amp;usg=AFQjCNHAn9khGSt4Yxv0twxEG6RWJv_ICg\" rel=\"noopener\">99.co<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>We\u2019ve almost come to the end of the year, so it\u2019s timely for us to look into 2017. In addition to general forecasts and expectations on the private residential property market, it will be interesting to have a closer look at the supply of private residential homes that will be rolled out in H1 2017.&hellip;<\/p>\n","protected":false},"author":17,"featured_media":54507,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"","_relevanssi_noindex_reason":"","_lmt_disableupdate":"","_lmt_disable":"","_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[53593,53589,57131],"tags":[],"persona":[],"class_list":{"2":"type-post","10":"entry","11":"has-post-thumbnail"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v25.7.1 (Yoast SEO v25.7) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What can we expect in the Government Land Sales H1 2017?<\/title>\n<meta name=\"description\" content=\"We\u2019ve come to the end of the year, so it\u2019s timely to look ahead. 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