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Developers’ landbanks depleted by robust sales

ROBUST sales of new private homes have depleted the landbanks of most developers, amid a period of intense competition for new sites. This is the result of a open economy unknowingly benefiting from the wall of rescue monies meant for woes in their home countries. HK and London and presumably other countries/cities with stable political and economic environment are probably victims of the post GFC environment.

A survey shows that 16 of the 27 major builders have a smaller store of development land now, compared with January last year. The fall in developers’ landbanks comes despite the bumper supply of sites released by the Government over the past year.


Moreover, 19 developers had fewer than 1,000 apartments left in their landbanks as of the end of last month, according to the survey by DTZ Research. A further seven developers had between 1,000 and 2,000 units.

The developers’ landbank numbers do not take into account strong home sales this month, which should deplete landbanks even more.

A developer’s landbank comprises unsold units – including executive condominiums – from projects with planning approval and estimated number of units from sites yet to obtain approval.

Units in projects that have obtained their certificate of statutory completion, and redevelopment projects without planning permission, are excluded.

Developers’ landbank competition

City Developments and its parent company Hong Leong Group have the biggest stock, with 6,383 homes – made up of land parcels in Sengkang and projects like D’nest and Bartley Ridge that are being built.

Most other have fewer than 2,000 units in their developers’ landbanks.

Second-placed CapitaLand has 1,699 units, and Hongkong Land and its subsidiary MCL Land have 1,605 units.

IOI Corporation, Allgreen Properties, Wheelock Properties and Frasers Centrepoint all have fewer than 1,000 units each.

Experts note that many developers’ landbanks have been eroded by roaring home sales over the past year.

Privately held Far East Organization fell from second to fifth spot within a year, with its landbank down from 2,592 units to 1,498.

Frasers’ landbank fell from 1,951 units and third position in January last year to just 632 and 12th spot in the rankings.

CapitaLand, Keppel Land and Wheelock have moved up the league table after securing Government Land Sales (GLS) sites in the past 12 months.

At least two foreign players have also bucked the trend, gaining a larger market share by acquiring GLS parcels.

Chinese company MCC Land and Hao Yuan Investment have 1,484 units in total in their landbanks. This puts them in sixth position, up from 13th place last time.

While they are unrelated parties, their developers’ landbanks have been seen as one as they often work together on projects, DTZ noted.

MCL Land and Hongkong Land climbed from 13th spot to third this year.

DTZ’s head of Singapore research Lee Lay Keng noted that the GLS programme was the main source of growth for developers that expanded their landbanks, while those that missed out on many sites went down the rankings.

Developers’ landbank and future property price trends

As a result, most units in developers’ landbanks are in suburban areas, where most GLS sites are.

“In general, a developer should have a few projects on hand, but the number of units that constitute a ‘healthy landbank’ depends on the scale of these projects and the size of the developers, their business models and risk appetites,” noted Ms Lee.

Experts add that listed developers often face pressures to replenish their landbanks to bring in returns for shareholders, but high land prices and an increase in the number of bidders for GLS sites have thrown up challenges.

Tuan Sing Holdings chief financial officer Chong Chou Yuen noted that smaller contractors and groups of investors making their foray into development have made it more difficult to secure a site.

“Apart from GLS sites, one other area we might consider could be en bloc sites instead,” he added.

12-way battle for plum Jurong West site


A PLUM Jurong West residential site sparked a 12-way battle among developers although the tough new property curbs seem to have kept bids from going through the roof.

Experts had expected the top bid to range from $540 to $680 per sq ft per plot ratio (psf ppr) when the Jurong West site tender was launched last November, but that was before the cooling measures hit a few weeks ago.

MCL Land submitted the top bid of $438.9 million – or $651 psf ppr – for the 99-year leasehold residential site on Jurong West Street 41.

That was at the upper end of the range but MCL Land chief executive Koh Teck Chuan told The Straits Times that the measures did have a dampening effect on the bids.

“Given the last few tenders, we would probably have seen bids above $700 psf ppr without the measures. Developers have taken into account the cooling measures and are taking a more measured approach, but they are not bearish,” he added.

The MCL bid was just 3 per cent more than the $424.9 million – or $631 psf ppr – offered by UOL Group unit Secure Development.

Other bidders for the 22,357 sq m plot included a joint bid by Frasers Centrepoint, Far East Orchard and Sekisui House, Low Keng Huat and Mezzo Development, which lodged the lowest bid of $243.8 million – or $362 psf ppr.

MCL’s Mr Koh said the project will have 650 to 700 units of one- to four-bedroom apartments.

Experts said the strong showing in the tender indicates that developers still want good sites.

The Jurong West site plot is 450m from the Lakeside MRT station, which will eventually be linked to the Jurong Region Line, and there will be clear views of Jurong Lake, noted CBRE’s executive director of residential, Mr Joseph Tan.

“The keen interest from developers resulted in bids coming in very close. The top six bids were within 10 per cent of each other,” he added.

“This shows that developers are still on the hunt for sites with good location attributes and demonstrates their confidence that the market will respond positively to the project.”

Based on the competitive number of bids and high land prices submitted in the tender, it seems that some developers do not expect private home prices to fall in the next one year or so despite the latest measures, added Mr Nicholas Mak, head of research at property consultancy SLP International.

Colliers International’s director of research and advisory services, Ms Chia Siew Chuin, said that “there appears to be no loss of optimism from developers” for the first tender of a pure residential site after the punitive cooling measures were unveiled on Jan 11.

“Buyer demand should come from professionals working in the industries in the Jurong and Tuas areas as well as upgrader demand from the Housing Board estates in Jurong East and Jurong West,” she added.

Mr Ong Teck Hui, Jones Lang LaSalle’s national director of research and consultancy, expects average selling prices for the launch to be close to $1,200 psf or higher.

Mr Lee Sze Teck, senior manager for training, research and consultancy at Dennis Wee Group, notes that while Jurong East will be the biggest commercial hub outside the central business district, it has limited land parcels for residential development.

Those who want to live near the hub might have to look to Jurong West instead. The Canadian International School next to the Jurong West site also provides a good catchment of tenants, he added.

Sengkang Square site attracts top bid of S$383.3m

A WELL-SITED residential plot in Sengkang Square has attracted five bids – weaker interest than industry experts had expected. EL Development put in the top bid of $383.3 million, or $527.65 per sq ft per plot ratio (psf ppr).

White Haven Properties came in second with a pitch of $348 million, or $479.02 psf ppr. The lowest bid, from Singland Development and UOL Venture Investments, was $301.8 million, or $415.42 psf ppr.

Put up for tender on 16 April and slated for condo or flat development, the Sengkang Square/Compassvale Drive site measures 22,497.6 sq m and could yield around 710 units. With prior approval, the 99-year leasehold site may also be developed into a combination of flats and strata landed houses.

The successful developer can build condominiums or flats on the 22,498 sq m site, or seek approval for a combination of flats and strata-landed homes. Credo Real Estate executive director Ong Teck Hui had expected the site to draw eight to 12 bids, given its proximity to Sengkang MRT station and Compass Point.

In addition, he noted: ‘It’s a firm top bid… surpassing that for The Luxurie site next door which was sold in March 2011 for $502 psf ppr.’

Chia Siew Chuin, Director of Research & Advisory at Colliers International, noted that response for the site was “relatively lukewarm” compared to the 12 bids received for a residential site at Boon Lay Way (Jurong Gateway) on Tuesday. Colliers said this was due to the availability of many well-located condominium sites whereby the tenders will close next month.

“Nevertheless, EL Development Pte Ltd put in an optimistic bid, topping the five-way tender at S$383.33 million or S$527.65 psf per plot.”

CBRE executive director (residential) Joseph Tan said ‘the quantum of the bids signifies developers’ confidence in mass-market housing and in sites that are located near MRT stations’. He noted that the top bid ‘translates to a break-even cost of $900 psf to $950 psf’.

Sengkang Square Site |

EL Development managing director Lim Yew Soon said potential buyers can expect a condo comprising 14 blocks of 15 storeys each. He added that the selling price would be around $1,000 psf to $1,050 psf on average.

Meanwhile, the Urban Redevelopment Authority (URA) has announced the final tender results for the Boon Lay Way (Jurong Gateway) siteMCL Land Limited won the tender after offering a top bid of S$369.388 million, which works out to around S$705.10 psf ppr. The 99-year leasehold site is estimated to yield 590 units.