PropNex Data Reveals Steady Increase in GLS EC Tender Land Rates Since 2016, with Otto Place Parcel B Driving Up Median Unit Prices to Record Highs
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The bid submission for the EC development on Plantation Close will conclude on Feb 1, 2024, and it will be combined with the Orchard Boulevard GLs site, which was put up for sale by URA in October. Additionally, the Otto Place Parcel B will also be incorporated into this project seamlessly.
In 2016, the median land rates for EC sites ranged from $278 to $302 per square foot per plot ratio. This is significantly lower than the $350 to $370 per square foot per plot ratio for private residential sites. However, over the years, the demand for ECs has been on the rise, leading to an increase in land rates. In 2017, the median land rate for EC sites rose to $331 per square foot per plot ratio, and in 2018, it increased further to $355 per square foot per plot ratio. This trend continued in 2019, with the median land rate reaching $372 per square foot per plot ratio.
The executive condominium (EC) market in Singapore has been gaining traction in recent years, with the introduction of new government policies and the increase in demand for affordable housing. According to data from property agency PropNex, the Government Land Sales (GLS) for EC sites have been steadily increasing since 2016, with the latest site, Otto Place Parcel B, driving up median unit prices to record highs. This signals a positive outlook for the EC market in the coming years.
The high land rate for Otto Place Parcel B can be attributed to several factors, such as its prime location in the upcoming Punggol Digital District, the increasing demand for ECs, and the limited supply of EC sites available. The site is also situated near water bodies, providing residents with a tranquil and peaceful living environment. Additionally, the site is within walking distance of Punggol MRT station and several amenities, making it an attractive location for potential homebuyers.
The GLS program is a system implemented by the Singapore government to release land for development in a controlled and transparent manner. These sites are usually sold to developers through a tender process, and the resulting developments are subject to certain restrictions, such as a five-year minimum occupation period before they can be sold on the open market.
The high median unit price for Otto Place Parcel B may raise concerns about the affordability of ECs for middle-income families. However, it is essential to note that the Government has implemented measures to ensure that ECs remain affordable for eligible buyers. For instance, the household income ceiling for EC buyers is capped at $14,000, and they are not allowed to own any private properties before purchasing an EC. These measures help to keep the demand for ECs in check and prevent the market from overheating.
In conclusion, the GLS EC tender land rates have been steadily increasing since 2016, with the latest site, Otto Place Parcel B, achieving record-breaking median land rates and unit prices. This is a positive sign for the EC market and reflects the strong demand for such affordable housing options in Singapore. With the continued implementation of government policies to ensure the affordability of ECs, we can expect the EC market to remain buoyant in the coming years.
Revised: Wong predicts that the Plantation Close EC development may attract six to eight offers, with the highest bid potentially ranging from $417 million to $429 million — resulting in a land rate of $690 psf ppr to $710 psf ppr. Despite the site’s location in a new neighbourhood and the expected supply of 495 units from the neighboring Plantation Close EC plot awarded in September 2023, Wong believes that this latest EC site will not surpass the record land rate set by the Tampines St 62 (Parcel B) plot, which is situated in a more established and developed area.
PropNex Realty’s data reveals a consistent increase in land rates for GLS EC tenders since 2016. This upward trend has also led to a rise in the median unit price of ECs, surpassing the $1,000-psf mark in 2Q2019 and reaching new highs, with sales from Altura EC contributing to this trend. According to Wong Siew Ying, head of research and content at PropNex, the recent land rate hike has resulted in a median unit price of $1,460 psf in 3Q2023.
The most recent GLS tender for an EC site at Sumang Walk in Punggol, also known as Otto Place Parcel B, saw a record-breaking median land rate of $578 per square foot per plot ratio. This is the highest land rate ever achieved for an EC site and is 55% higher than the previous record of $373 per square foot per plot ratio set in 2013 for the Westwood Residences site.
The record-breaking median land rate for Otto Place Parcel B has also resulted in record-breaking median unit prices for the development. According to PropNex, the median unit price for the Otto Place EC site is estimated to be around $1,100 per square foot. This is significantly higher than the previous record of $978 per square foot set by the Parc Life EC site in Sembawang. This translates to a potential selling price of around $1.1 million for a 1,000 square foot unit, making it the most expensive EC development in Singapore.