Is The Cost Of Land Too Expensive In Singapore Right Now?
No one wants government land anymore.
We’ve entered the Government Land Sales (GLS) winter. For the third time, with the Media Circle land plot, there have been no winning bids. For long-time market watchers, this is a bit disorienting – like turning up at a free ice-cream pop-up van and finding zero other people in line. It’s not bad news per se: new launch prices are in the stratosphere, and perhaps flooding the market with supply may help a bit.
But let’s take stock of the situation:
Developers have five years to complete and sell a property, so we should have something resembling a five-year cycle: a period when developers rush to buy land to build on, followed by five years of developer sales, followed by another land-buying rush, etc.
The last en-bloc rush was in 2017, so it was expected that developers would be buying up land by 2022.
Granted, Covid and rising interest rates caused a hiccup; so perhaps buying would be a bit more subdued or delayed. But it’s now 2024, and the en-bloc market is still deader than dinner conversations after my uncle brings up politics.
Also, it’s one thing for developers to be uninterested in collective sales of existing condos. But to be uninterested in GLS plots? These are the best ways to replenish their land banks, as it is a much more straightforward process (remember Chuan Park). Before the recent failed bids, there hadn’t been a failed attempt to sell a GLS plot since 2020 (and that was a special case involving a 30-year lease site, which shouldn’t count).
And yet sites like Marina Crescent, Jurong Lake, and Media Circle have failed to see much interest (which are far from undesirable). Plus the bids are so low, I almost think it’s some sort of developer message to the government:
The rejected bid for Media Circle was around 61 per cent lower than a neighbouring plot.
Things aren’t looking so great in the en-bloc market either
Developers aren’t too big on buying up and redeveloping resale condos right now. For starters, there’s too much economic uncertainty to take up big redevelopments – so unless it involves small developers and niche land plots, we wouldn’t count on any collective sales.
On the side of the sellers, the prices they need are also pushing developers away. Home prices are still up after Covid, and their replacement properties are expensive (which in turn means a demand for higher sale proceeds). The waiting period to buy a resale flat after selling (15 months) also excludes HDB as an option for some of these sellers and creates further resistance to en-bloc sales.
To some extent, the government’s push for long-stay service apartments is also to blame
The government has been pushing for long-stay service apartments (SA2), via its GLS offerings. This is to alleviate the pricey rental market, giving long-term tenants an option that doesn’t compete with short-term stayers. But the developers are clearly rejecting this, and sending a message that someone else needs to fix the problem this time.
Given the rising economic uncertainty, developers are disinclined to build service apartments and (indirectly through management firms) play the landlord. This is quite different from the standard business model of building a condo, selling it, and then being able to more or less forget about it forever. This is especially the case when the rental market is softening, and a war in Europe may have unpredictable results.
(Consider that in a big recession, corporations tend to cut housing allowances and bring in fewer expatriates; service apartments would bear the brunt of this first).
It may be reasonable to expect the government to start dangling more enticing rewards, to convince developers to take on the extra risk. Perhaps even – dare I say it – lower reserve prices for plots that must include these units.
Meanwhile in other property news…
- The October BTO launch sites are up till the 23rd of this month, so check them out fast and take your shot. Good luck!
- Do you want a big condo plot in 2024, with a lot of square feet per resident? Well, then I’d like a yacht that flies! We all have some unrealistic dreams 😀 Still, these ones may come close.
- The price per square foot should get lower as the condo gets bigger. But not always, for some of these units. I like to joke that they get tired as they build more, so the price goes up. But no homebuyer has ever found that funny.
- Check out this huge (four-bedder) unit for $2.4 million at The Arden, a new project in peaceful Bukit Panjang.
Weekly Sales Roundup (07 October – 13 October)
Top 5 Most Expensive New Sales (By Project)
| PROJECT NAME | PRICE S$ | AREA (SQFT) | $PSF | TENURE |
| PINETREE HILL | $3,834,000 | 1464 | $2,619 | 99 yrs (2022) |
| TEMBUSU GRAND | $3,583,000 | 1432 | $2,503 | 99 yrs (2022) |
| MEYER BLUE | $3,551,000 | 1141 | $3,112 | FH |
| 19 NASSIM | $3,458,000 | 969 | $3,570 | 99 yrs (2019) |
| THE CONTINUUM | $3,445,000 | 1227 | $2,807 | FH |
Top 5 Cheapest New Sales (By Project)
| PROJECT NAME | PRICE S$ | AREA (SQFT) | $PSF | TENURE |
| PINETREE HILL | $1,406,000 | 538 | $2,612 | 99 yrs (2022) |
| ONE BERNAM | $1,479,000 | 441 | $3,351 | 99 yrs (2019) |
| HILLHAVEN | $1,532,505 | 700 | $2,190 | 99 yrs (2023) |
| GEMS VILLE | $1,550,000 | 797 | $1,946 | FH |
| THE LAKEGARDEN RESIDENCES | $1,677,300 | 732 | $2,292 | 99 yrs (2023) |
Top 5 Most Expensive Resale
| PROJECT NAME | PRICE S$ | AREA (SQFT) | $PSF | TENURE |
| CORALS AT KEPPEL BAY | $8,537,400 | 3348 | $2,550 | 99 yrs (2007) |
| SKY@ELEVEN | $5,888,000 | 2820 | $2,088 | FH |
| GOODWOOD RESIDENCE | $5,500,000 | 1970 | $2,792 | FH |
| THE MEYERISE | $4,500,000 | 2056 | $2,189 | FH |
| SCOTTS SQUARE | $4,050,000 | 1227 | $3,300 | FH |
Top 5 Cheapest Resale
| PROJECT NAME | PRICE S$ | AREA (SQFT) | $PSF | TENURE |
| DOUBLE BAY RESIDENCES | $740,000 | 538 | $1,375 | 99 yrs (2008) |
| SEASTRAND | $750,000 | 592 | $1,267 | 99 yrs (2011) |
| THE GLADES | $795,000 | 452 | $1,759 | 99 yrs (2013) |
| ESCADA VIEW | $800,000 | 775 | $1,032 | FH |
| THE TENNERY | $808,000 | 614 | $1,317 | 99 yrs (2010) |
Top 5 Biggest Winners
| PROJECT NAME | PRICE S$ | AREA (SQFT) | $PSF | RETURNS | HOLDING PERIOD |
| THE MARBELLA | $3,650,000 | 1582 | $2,307 | $2,512,000 | 20 Years |
| PARKSHORE | $3,320,000 | 1647 | $2,016 | $2,232,000 | 18 Years |
| FLAME TREE PARK | $3,178,800 | 1765 | $1,801 | $2,150,800 | 29 Years |
| TIARA | $3,270,000 | 1346 | $2,430 | $2,030,000 | 23 Years |
| COTE D’AZUR | $3,200,000 | 2357 | $1,357 | $2,009,840 | 22 Years |
Top 5 Biggest Losers
| PROJECT NAME | PRICE S$ | AREA (SQFT) | $PSF | RETURNS | HOLDING PERIOD |
| SCOTTS SQUARE | $4,050,000 | 1227 | $3,300 | -$649,410 | 17 Years |
| OUE TWIN PEAKS | $3,210,000 | 1399 | $2,294 | -$407,280 | 8 Years |
| THE CLIFT | $1,028,000 | 527 | $1,949 | -$152,000 | 13 Years |
| WATERSCAPE AT CAVENAGH | $1,245,000 | 700 | $1,779 | -$77,000 | 15 Years |
| E MAISON | $1,010,000 | 829 | $1,219 | -$74,332 | 7 Years |
Transaction Breakdown
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