Time to build up land banks


Land prices stabilising as they have reached their peak: Analysts

by Jo-Ann Huang Limin
05:55 AM Nov 26, 2010

SINGAPORE - The time is ripe for real estate developers to build up their land banks as land prices are stabilising, according to analysts.

According to Nomura's latest Singapore property report, the recent tender for the 13,000-sq-m Upper Serangoon View site attracted "very tight" bids.

The top bid, put in jointly by Frasers Centrepoint, Far East Civil Engineering and Japanese developers Sekisui House, was $156.8 million, or $320 per square foot (psf) per plot ratio (ppr).

The next highest bid, tendered by unlisted developer Centurion, was around $152.9 million - a difference of only 2.6 per cent.

"The bids received were among the tightest for government land sales tenders since August last year and this could suggest developers' expectations of land prices are approaching common ground," the Nomura report said.

The narrowing of bids came despite the relatively lukewarm response to the tender. The Upper Serangoon View site attracted four bids, compared with six for the 15,630-sq-m Hougang Avenue 7 site.

The highest bid for the Hougang Avenue 7 site was $160 million, or $340 psf ppr, by Sim Lian Land.

Land prices are stabilising as they have reached their peak, noted Mr Colin Tan, head of research and consultancy at Chesterton Suntec International. They have tapered off from mid-year levels of $450 to $600 psf to about $350 to $400 psf, analysts say.

Now that the Ministry of National Development has announced the Government Land Sales programme for the first half of next year, future tenders may also see fewer bids as developers "conserve their resources for the new sites", said Mr Nicholas Mak, executive director of research at SLP International.

On the other hand, competition for land could become more intense with the rising influx of foreign developers, analysts say.

Chinese developer MCC Land launched an executive condominium, The Canopy, in Yishun early last month.

Meanwhile, Japanese developers Sekisui House and Mitsui Fudosan have collaborated with local partners, a trend which will likely continue as this is the easiest way to break into a new market, analysts say.

"As foreign developers see less upside in their own home markets, they will be tempted to invest overseas," said Mr Tan.

The rising Singapore dollar is also an attraction, as it translates into higher capital values for Singapore properties.

Allowing foreign developers to bid for land could also benefit home buyers.

"They could bring in new ideas. Greater competition could produce better products or lower prices for consumers," said Mr Tan.

Source: www.todayonline.com

05:55 AM Sep 23, 2010
by Julie Quek

SINGAPORE - Property prices have remained at affordable levels for first-time home buyers despite the run up in the housing market here. The Government's recent announcement of cooling measures also had little impact on affordability.

In a statement, the Real Estate Developers' Association of Singapore (Redas) said this may help boost prospects in the local property market.

Currently, first-time buyers for private properties use about 36 per cent of their monthly take-home pay to service their housing loans every month. Redas said this is a healthy rate given that it is lower than the norm of 40 per cent.

Analysts agreed that a below-40-per-cent affordability ratio means housing prices are still affordable.

During the peak of the 1997 property boom, the affordability ratio went up to as high as 50 per cent.

This meant that almost half of a home owner's salary went into mortgage financing, making it difficult for Singaporeans to buy property.

"The level that we have right now of 30 to 40 per cent is pretty much in line with the market. So there's no sense of panic in today's market. Property is still fairly affordable," said Mr Donald Han, managing director, property consultancy Cushman and Wakefield.

Analysts believe the improved affordability may continue to prop up sentiment in the property market and boost sales and prices in the longer term.

They also predict that the local property sector will finish off strongly this year, with a total sale of 14,000 homes by December.

"I think 14,000 is definitely within the market's reach, because there's still a lot of liquidity in the market," said Chesterton Suntec International head of research and consultancy Colin Tan

Source: http://www.todayonline.com