Release of 1H2019 Government Land Sales (GLS) Programme
The Government today announced the first half 2019 (1H2019) Government Land Sales (GLS) Programme, which comprises eleven Residential Sites, two White Sites and one Hotel Site. Apart from the five residential sites that are under the Confirmed List, the remaining nine sites are under Reserve List.
The five residential sites under the 1H2019 Confirmed List are in Central Region (3 Sites), West Region and North Region. These insights will provide a guide to how the supply of private housing will pan out in the absence of any en bloc deals for the coming year.
Under the Government Land Sales Reserve List, it is noted that supply for private housing is catered to Central Region, North Region and West Region. The only supply for North-East is an Executive Condominium site which is limited to household with at least one Singaporean. This could be an effect from the several successful large en bloc deal in the North-East region during 2017 which have built up a good pipeline supply.
The estimated maximum yield from these government land auctions are 6,475 private housing units, 86,000 sqm gross floor area (GFA) of commercial space and 1,115 hotel rooms. The commercial space is largely contributed from the Woodlands Avenue 2 White Site at 78,000 sqm.
The five Confirmed List sites are private housing sites including a Executive Condominium (EC) site which can produce about 2,025 private housing units and 4,000 sqm GFA of commercial space.
The nine Reserve List sites can yield about 4,450 private residential units, 1,115 hotel rooms and 82,000 sqm GFA of commercial space.
Supply of Private Housing for 1H2019 GLS
Confirmed List – Residential Sites
Clementi Avenue 1
Planning Region: West Region
Planning Area: Clementi
Planning Subzone: Clementi Woods
Tan Quee Lan Street
Planning Region: Central Region
Planning Area: Downtown Core
Planning Subzone: Bugis
One-North Gateway
Planning Region: Central Region
Planning Area: Queenstown
Planning Subzone: One North
Bernam Street
Planning Region: Central Region
Planning Area: Downtown Core
Planning Subzone: Anson
Canberra Link (EC)
Planning Region: North Region
Planning Area: Sembawang
Planning Subzone: Sembawang East
Reserve List – Residential Sites
Bartley Road / Jalan Bunga Rampai
Planning Region: Central Region
Planning Area: Toa Payoh
Planning Subzone: Joo Seng
Canberra Drive
Planning Region: North Region
Planning Area: Sembawang
Planning Subzone: Sembawang Springs
Dairy Farm Walk
Planning Region: West Region
Planning Area: Bukit Panjang
Planning Subzone: Dairy Farm
Fernvale Lane (EC)
Planning Region: North-East Region
Planning Area: Sengkang
Planning Subzone: Fernvale
Dunman Lane
Planning Region: Central Region
Planning Area: Marine Parade
Planning Subzone: Mountbatten
Hillview Rise
Planning Region: West Region
Planning Area: Bukit Batok
Planning Subzone: Hillview
The number of private housing units in the pipeline has increased substantially in recent times due to strong volume contributed from en bloc sale sites. The current pipeline stands at 45,000 units which are made up of 31,000 unsold units from GLS and en bloc sale sites with planning approval and 14,000 units from newer sites that are awaiting for planning approval. In addition, the is an estimated 28,000 existing private residential units that remain vacant.
In consideration of the recent cooling measures in July, the property market has seen moderation in demand as investors reconsider their options. The decline of transaction volumes in homebuyers and developers have been noticeably moderate since the cooling measures in July.
Based on the existing conditions, the Government has reduced the total supply of private residential units by almost 20% for the 1H2019 Government Land Sales programme. The 1H2019 GLS supply of residential units is 6,475 compared to the 8,040 residential units in 2H2018 GLS.
July Cooling Measures Impact On Private Housing
The Government has raised the Additional Buyer Stamp Duty by a further 5% on all purchase for second and third Private Housing for Singaporeans (SC) and Singapore Permanent Residents (SPR). The ABSD was increased by 5% for all properties purchase by Foreigners.
These additional cost have negative effect on cashflow as most purchasers will need to pay the ABSD in either Cash or CPF (applicable for SC and SPR).
On top of that, the Government has tightened the Loan-to-Value from 80% to 75%. This means that purchasers will need to prepare more cash for their properties.
A Singaporean Citizen who is planning to purchase a first property at $1 million with 70% bank loan will need to prepare about 33% (30%+3%+0%) for initial down-payment and stamp duties. That is $330,000 without legal fees and cost of renovation.
A Singapore Permanent Resident who is planning to purchase a first property at $1 million with 70% bank loan will need to prepare about 38% (30%+3%+5%) for initial down-payment and stamp duties. That is $580,000 without legal fees and cost of renovation.
A foreigner who is planning to purchase any residential property in Singapore with a 70% bank loan will need to prepare almost 53% for the initial down-payment and stamp duties (30%+3%+20%). That is $530,000 without considering the legal fees and cost of renovation.
Furthermore, any entities such as property developers will attract a 30% ABSD, of which 5% is labelled as non-remissible. Property developers may only qualify for ABSD remission if they fulfil the several conditions such as completion and sale of development within 60 months.
Due to the slowdown in economic fundamentals and high supply pipeline, more developers are becoming cautious in their bid for land. The government has also released fewer land in view of the decrease in demand.
The Effect of Macro Factors on Private Housing
Beside facing increased taxation, the property developers are also weighing their business risk as interest rate has been rising steadily. The level of interest rate has a direct impact towards homebuyers mortgage instalments and a higher mortgage payment will dampen the confidence of homebuyers for larger properties.
The slower growth in project GDP has also impacted the homebuyers interest as they begin to worry about job prospect and wage increment if the economic fundamentals are poorer.
Alongside a rise in vacancy amongst the completed residential properties, the existing homeowners face challenges to rent out their properties at previous levels and longer vacancy period between leases. This situation has not been helped by the large supply pipeline that will come onto the market in 3-4 years’ time.
Supply of Commercial Space for 1H2019 GLS
White Site – Woodlands Avenue 2
Planning Region: North Region
Planning Area: Woodlands
Planning Subzone: Woodlands Regional Centre
The Woodlands Avenue 2 White Site adjacent to the Woodlands MRT Station is designated for as mixed-use development. The release of the white site will provide continued momentum in developing Woodlands into one of the three key regional centres outside the city. The objective is to attract more companies to setup their operations in the regional centres and create employment closer to homes. The reduction in travelling time is likely to contribute to increased productivity and reduction of cost in business operations due to lower lease rates.
Supply of Hotel Rooms for 1H2019 GLS
White Site – Marina View
Planning Region: Central Region
Planning Area: Downtown Core
Planning Subzone: Central Subzone
Hotel – Sims Avenue
Planning Region: Central Region
Planning Area: Geylang
Planning Subzone: Geylang East
As there are few old commercial buildings for sale in Central Region, the Marina View White Site has been carried forward from the previous 2H2018 GLS.The government has prepared two sites for the 1H2019 Reserve List, including a new hotel site at Sims Avenue with a potential 575 hotel rooms. Under this 1H2019 Government Land Sales, there is a total of 6,475 private housing, 1,115 hotel rooms and 86,000 sqm of commercial space.