First EC tender under new rules draws record-high bid from developers

SINGAPORE: The first executive condominium (EC) Government Land Sales (GLS) tender under the new rules has drawn a record-high bid. Analysts had expected the site at Canberra Drive , released by the Housing and Development Board (HDB) in May, to attract more conservative bids in light of the new rules. These include the doubling of the minimum occupation period to 10 years, the removal of the Deferred Payment Scheme, and the increased quota and priority period for first-time buyers. Canberra Drive is also the first EC tender to close after the monthly household income ceiling was raised in August to S$18,000 (US$14,060). The 11,535 sq m site, which is expected to yield about 185 units, drew 13 bids after the tender closed on Thursday (Oct 1). According to the provisional results released by HDB on Thursday night, the top bid was a joint bid from SNC3 Realty, HS Invesco and Kay Lim Realty for S$163,903,000. This translates to a record S$825 per square foot per plot ratio (psf ppr), higher than the previous record of S$794 psf ppr that Sim Lian Group submitted for a Woodlands Drive 17 EC plot in January this year. The number of bids received for the Canberra plot is the highest since 17 bids were received for a plot in Sumang Walk, Punggol, in 2017.

ECs were introduced in 1995 to provide an option for higher-income Singaporeans who aspire to own private housing. They are developed and sold by private developers, with design features and facilities similar to private condominiums. The new rules, announced in May, are part of efforts to help first-time home buyers secure a unit. National Development Minister Chee Hong Tat said during the announcement that he had hoped the new measures would “result in developers reducing their bids and the prices for their ECs”. The median prices of new EC units have soared in recent years, with recent launches going at record prices.

WIDE RANGE OF BIDS PropNex’s head of research and content Wong Siew Ying said it appeared that the new EC measures did not deter developers. “The number of bids and top bid price for the Canberra Drive EC plot have far exceeded our expectations,” she added. “We think it is possible that the tender drew livelier participation because the new EC measures were expected to make bidding more cautious, giving developers reason to take part on the chance that a more moderate bid might succeed.” If the site is awarded to the top bidders, Ms Wong said it is projecting that the average selling price of this EC project may be around S$1,900 psf. The top few bids were clustered tightly. The second highest bid was S$803 psf ppr from Intrepid Investments and TID Residential, and the third was S$798 psf ppr from an Apex Asia-led consortium. When the tender was launched, PropNex had expected a top bid of around S$620 psf ppr to S$660 psf ppr. ERA Singapore’s key executive officer Eugene Lim said the broad field of 13 bidders showed that developers’ enthusiasm for EC land “remains unabated”, as they navigate through “unchartered territory” with the new EC rules and greater first-timer eligibility. “Despite the strong turnout, the sizeable spread of 128.5 per cent between the highest and lowest bids is revealing of vastly differing outlooks for future EC reception,” he added. “While optimistic bidders likely saw upside in an expanded pool of eligible first-timers, more conservative players could have factored in greater price sensitivity from this buyer group, especially without the cushion of the Deferred Payment Scheme.”

ATTRACTIVE SITE Mr Lim noted that the site was roughly a 10-minute walk from Canberra MRT station, offering a “strong selling point”. The land is also close to several key neighbourhood amenities, such as Sembawang Shopping Centre, Canberra Plaza, Sembawang Primary School and the Bukit Canberra integrated hub. Although the site was small, developers may have viewed this “positively”, hedging it against market uncertainty, he added.

Deputy Group CEO of Realion (OrangeTee & ETC) Group Justin Quek said that of the sites launched for tender in Sembawang recently, this can be considered “the most attractive”. This site was closest to the MRT Station, and with a longer minimum occupation period of 10 years taking effect in this project, location may have become a decisive factor for buyers. “Moreover, the recent revision of the income ceiling to S$18,000 may also result in stronger demand when the project launches as more couples become eligible to purchase an EC,” he added. “We expect the EC project to garner keen buying interest when it launches in the future.” Another EC plot in Admiralty Walk has been launched for tender and will close on Dec 17. The results from that tender will “give a second reading” on how developers are valuing EC land under the new measures, said Ms Wong.