Projects completing between now and 2023: What to look out for
Covid-19 may have wreaked havoc on the construction sector last year, and disrupted property developers’ otherwise peerless track record with respect to completing their residential projects on time or even ahead of schedule. This year, about 21 private residential projects with close to 8,000 units are expected to be completed, with another 34 projects yielding over 7,900 units scheduled to be completed in 2022. In 2023, about 38 projects are due to complete, and they in turn will add another 16,000 new units to the inventory. This means a total of 93 projects with more than 32,000 units are scheduled for completion within the next three years (see Map on Pages EP10-11 and Tables on Pages EP12-13).
“Some developers have been informed by their contractors that the construction timelines have been delayed due to the Covid-19 disruptions,” says Norman Ho, corporate real estate senior partner at law firm Rajah & Tann Singapore. “As there is a backlog of construction [projects], purchasers can expect that the vacant possession and completion dates will be longer than usual for the upcoming launches.”
Temporary Covid-19 relief measures for property developers last year included a 12-month extension on the completion period for residential projects, as well as a sixmonth extension on the sales period for the disposal of units with regard to the remission of the additional buyer’s stamp duty (ABSD). Foreign developers were likewise granted a 12-month reprieve on the project completion period, and a six- month extension on the sell-by date under the Qualifying Certificate (QC) conditions.
“A good number of developers with unsold units in their existing projects have therefore extended the NVP [notice of vacant possession] and completion dates by 12 months,” says Ho of Rajah & Tann. “This gives them a buffer to complete the construction and mitigate the risk of having to pay liquidated damages.” Developers are contractually bound by the sales and purchase agreement (SPA) to deliver vacant possession of the property by the date stated in the Option to Purchase (OTP) and SPA, explains Ho.
Some developers remain concerned that the six-month extension in the sales period to a total of 5.5 years, with regard to the ABSD remission, may be insufficient, “especially for the more expensive projects”, points out Lee Liat Yeang, senior partner of corporate real estate at law firm Dentons Rodyk. “Indeed, developers are trying their best to expedite the completion of their projects in order to meet their various obligations,” he adds.
Completing soon
The Tapestry, at Tampines Street 86, by City Developments Ltd (CDL), was launched in March 2018. The 861-unit condo was completed in February this year and is fully sold. Likewise, Frasers Properties’ 841-unit Seaside Residences was launched in April 2017, completed in February, and is fully sold.
GuocoLand Singapore’s 450- unit Martin Modern is scheduled to be completed in 2Q2021. Located at Martin Place in prime District 9, the project was launched in July 2017. It is 94% sold to date at an average price of $2,474 psf, based on caveats lodged with URA Realis. “Projects like Martin Modern were already at an advanced stage of completion before Covid-19 struck,” says Alan Cheong, executive director of research at Savills Singapore. “For such projects, the contractors will just go ahead, complete them and move on.”
Most developers are motivated to complete their projects and sell the remaining units, continues Cheong. “Having an in situ show unit helps speed up sales of the remaining units as home buyers can see the actual space,” he says. “Many people like buying the fully-furnished show unit too — it helps reduce the lead time before they move in or rent it out.”
For projects where construction has yet to begin or is at an early stage, material, labour and construction costs would have to be renegotiated as these have increased, adds Cheong. The completion period for these projects is likely to be extended to 2024 and 2025.
Another project that is completing this quarter as well is The Garden Residences, a 613unit private condo by Singapore-listed Wing Tai Holdings and Keppel Land. Launched in June 2018, The Garden Residences is almost fully sold with only two units still available. Based on the 611 transactions recorded to date, the average price of the suburban (Outside Central Region or OCR) condo at Serangoon North is $1,576 psf.
Others that are completing in the second half of this year include Stirling Residences by Chinese developers and joint-venture partners, Nanshan Group and Logan Property. The 1,259-unit, 99-year leasehold condo on Stirling Road in the city fringe or Rest of Central Region (RCR) is 96.5% sold at an average price of $1,822 psf. The project was launched in July 2018, on the eve of the property cooling measures.
Substantially sold
Scheduled for completion in 4Q2021 is the 805-unit Park Colonial by listed conglomerate Chip Eng Corp’s property development and investment arm, CEL Development. Launched on the eve of the property cooling measures three years ago — on the same evening as Stirling Residences — the project is 98% sold
to date, with an average price at $1,755 psf.
Meanwhile, the 729-unit The Tre Ver (a redevelopment of the former Raintree Condo, a privatised HUDC estate) by UOL Group and its subsidiary United Industrial Corp, is expected to be ready in 4Q2021. Launched in August 2018, the project is already fully sold with average transacted price of $1,596 psf.
Two other projects that are completing in 4Q2021 are the 170-unit, freehold The Verandah Residences by Oxley Holdings and the 309-unit Margaret Ville by MCL Land. The Verandah Residences is a redevelopment of the former Lotus at Pasir Panjang and was fully sold within two months of its launch in April 2018. Meanwhile, Margaret Ville was launched in June 2018, and the project is fully sold at an average price of $1,834 psf.
A redevelopment of the former privatised HUDC estate Shunfu Ville, the 1,206- unit JadeScape by Qingjian Realty is 95.5% sold to date. Launched in September 2018, the city-fringe, 99-year leasehold condo is located near the Marymount MRT Station on the Circle Line. Average price of units sold is $1,701 psf, based on caveats lodged.
Another redevelopment of a privatised HUDC estate (the former Eunosville) is the 1,399-unit Parc Esta by MCL Land. The project is located just across the road from the Eunos MRT Station and bus interchange. Since its launch in November 2018, the project is over 99% sold, with only eight units still available. Average sale price achieved is $1,680 psf.
“Projects that have done well despite the pandemic are the ‘mega ones’ — with more than 1,000 units — such as Stirling Residences, Parc Esta and JadeScape,” says Han Huan Mei, List Sotheby’s International Realty director of research. “These projects have sold well over 90% of their units, notwithstanding their relatively high price points, due to their locations in the RCR.”
The strong sales momentum at new projects, which began in 2H2020 after the “circuit breaker” was lifted, has depleted the unsold inventory in developers’ stables, notes Han. The number of unsold stock declined from about 30,000 at the end of 2019 to 24,000 units at the end of 2020. “With fewer new project launches in RCR and Outside Central Region (OCR), buyers are likely to look to the resale market for alternative housing options,” she adds.
‘Ride it out’
At many of these projects — scheduled for completion in 2021 and 2022 — sales were slow initially, observes Savills’ Cheong. “However, with subsequent new projects in the same area launched at higher prices, these earlier projects suddenly look to be attractively priced by comparison,” he notes.
One such example is Malaysian giant SP Setia’s Daintree Residence. Launched less than a month after the July 2018 property cooling measures, sales at the 327-unit private condo on Toh Tuck Road was rather lacklustre initially.
However, Daintree Residence’s launch was followed by that of the neighbouring View at Kismis, by listed property developer Roxy-Pacific Holdings and TE2 Development, a year later. Last August saw the launch of Forett at Bukit TImah by a joint venture between Qingjian Realty and Perennial Holdings, followed by that of Verdale by CSC Land in September.
Sales at Daintree Residence picked up right after the circuit breaker was lifted, and it was the best-selling project on its first weekend in the third week of June. Today, Daintree Residence is 97% sold, with only 10 units still available. Average price of units sold is $1,683 psf. The project is expected to be completed in 2Q2022.
“Projects like Daintree Residence that are attractively priced, and in a popular residential estate like Upper Bukit Timah in District 21, have seen brisk sales over the past year,” says Cheong. “We see a similar trend in other parts of the island. For instance, Garden Residences at Serangoon North: when it was first launched, it looked expensive, but with the recent increase in sale prices at other new launches, the project looks attractive by comparison. So developers just have to ride out the market ups and downs.”
Cheong reckons this is a good time for home buyers to purchase units in a completed project, especially those who have immediate housing needs. “For upgraders, it means they can move into their new home without any downtime, after selling their existing property,” he says. “Buying a project with a longer lead time to completion means having to rent another property first after having sold the existing home.”
Even mega projects scheduled to be completed in 2023 are already substantially sold: Most notable is the 2,203-unit Treasure at Tampines by Sim Lian Group. Launched in February 2019, the project is 82% sold. Another standout project is the 1,074-unit Avenue South Residence by UOL Group, UIC and Kheng Leong, located at Silat Avenue, off Kampong Bahru Road, and perched at the gateway of the upcoming Greater Southern Waterfront. Since its launch in August 2019, the project is more than 61% sold, with prices hitting an average of $1,991 psf.
Smaller projects may fall under the radar of most mainstream home buyers, but they have their own appeal. One example is Oxley Holdings’ 1953, a boutique development at the junction of Tessensohn Road and Balestier Road. Designed by Park+Associates, the design was inspired by the song “Bohemian Rhapsody” by British rock band Queen. The project is located in an area that is undergoing rejuvenation. Since its launch in March 2019, about 60% of the 58 residential units at 1953 has been sold at an average price of $1,875 psf. The project has another 14 strata retail units.
CDL’s 188-unit Haus on Handy is another example. Located on Handy Road, just across the road from Plaza Singapura shopping centre and the Dhoby Ghaut MRT Interchange Station, the project appeals to those who want to live in the vicinity of lifestyle, shopping as well as the arts and cultural centres. The project is located in prime District 9.
Warning shots
Government ministers have been firing warning shots across the bows of home buyers since the start of the year. The latest came from Monetary Authority of Singapore (MAS) chairman and Senior Minister Tharman Shanmugaratnam, who warned home buyers: “The risk of rising interest rates is a reminder that everyone should continue to exercise caution in their property purchase decisions.” He said this in response to a parliamentary question on Monday on the impact of rapidly rising US long-term interest rates on the city-state.
Singapore’s economy is expected to grow between 4% and 6% in 2021, after contracting 5.4% in 2020 due to the Covid-19 pandemic. Meanwhile, private home prices in Singapore rose 2.9% in the first quarter of 2021, according to URA flash estimates on April 1. This follows a 2.1% increase in 4Q2020, and 2.2% rise for the whole of last year. HDB resale prices rose 2.8% in 1Q2021, according to HDB flash estimates on April 1. In 4Q2020, HDB resale prices rose 3.1%, bringing the total increase for the year to 4.8%.
“Most people see real estate as a good hedge against asset price inflation,” says Savills’ Cheong. “If you’re more adventurous, you could invest in US stocks.”
Fear of more cooling measures may have prompted some developers to act swiftly to move sales. For instance, over 70 units at RV Altitude were sold in February and March following special discounts for these units offered by the developer, points out List Sotheby’s Han.
“The government has always maintained its stance in ensuring a stable property market which does not run ahead of the underlying economic fundamentals,” says Han. “It is clear that the government is monitoring the property market closely and will step in when necessary.”
There is likely to be a supply crunch in the short term, based on the current situation. However, developers can source for development sites via collective sales route or apply for the release of the sites on the government’s reserve list, Han notes. There is a possibility that the government might step up the government land sales (GLS) programme for 2H2021 and thereafter, she adds.
Michael Ng, CEL Development’s executive director, agrees. “We should look at stabilising the market by releasing more GLS sites instead of limiting prices by artificial means,” he says. Ng believes more development stock will have a multiplier effect on related industries and services, such as architects, engineers and consultants, some of whom have been struggling to secure jobs due to Covid.
Fever pitch
Speculation about impending property cooling measures, and the form they will take, has reached fever pitch. Will it be in the form of a wealth tax, capital gains tax, lower borrowing limit or a tweak in the total debt servicing ratio?
“I don’t think the government should implement any more property cooling measures for now, as this might divert citizens’ money into riskier investments,” cautions Lee of Dentons Rodyk.
Any cooling measures should not be a kneejerk reaction, “especially in this economic uncertainty”, adds Ho of Rajah & Tann. “My personal take is that any measure should not be broad-based and should be calibrated and targeted based on affordability both in items of payment for the property purchase and stamp duties. Wealth tax and capital gains tax may erode the competitiveness of Singapore being a hub for private wealth and family offices.”
In fact, it was just last year that the Global Investor Programme was revised to include next-generation business owners, founders of fast-growth companies and family office principals.
“For Singapore to be an attractive private banking or wealth management hub and to attract family offices, real estate has to be included as an asset class,” says Savills’ Cheong.
E