One of the biggest stories of the year in the Singapore property market unfolded in February with the sale of a land parcel in Punggol. The record making transaction was interesting for several reasons, none less so than exactly why it attracted so much interest, so much money, and so much buzz.
The parcel at Sumang Walk, earmarked for EC (Executive Condominium) housing, attracted 17 group of developers in total. Top of those bids was from a joint venture made up of CDL Constellation – a subsidiary of City Developments Limited – and TID Residential. That bid of S$509.37 million not only exceeded all expectations and forecasts, but when it is broken down by area (approximately S$583psf) it is the highest ever for an executive condo anywhere on the island.
The development is a leasehold and will have a land tenure of 99 years , and in all likelihood will be comprised of approximately 820 units split over 13 blocks, each of between 10 to 17 levels. So just why did this particular sale do so well? There are four reasons.
The first of those is the location. Punggol is on the up. More so than many who tend to focus solely on the south of the island realise. Its town centre is set to undergo dramatic transformation, making full use of its waterside location, something that has tended to have been neglected in the past. This transformation will see the area developed into a mixed-use district, with residential and commercial projects taking equal billing. There will also be a new business park created; it will be the location of the new SIT (Singapore Institute of Technology) campus, and the area as a whole will become Singapore’s digital district. Other planned developments include a new childcare centre and hawker centre.
The second reason is a more general one. Suddenly, the property market, and confidence in that market is on the upturn. 2017 saw a 1% increase in residential prices. The number of residential sales also shot up last year. After a tricky few years, developers are once again queuing up to get involved in the Singapore property market.
The situation for the residential property market as a whole is exaggerated even more when you look specifically at the EC market. Sales of EC units have risen sharply in recent years, with launches performing extremely well, selling over 70% of their units on their opening weekend. Because of the nature of EC’s and the fact that buyers are still eligible for CPF grants, it is seen as a less risky market for those developers who have yet to have full faith in the market’s recovery.
The final reason is that not only is the EC market currently very much undersupplied (there are fewer than a thousand EC units available, including ones coming onto the market in the near future), the development at Sumang Walk will be the only EC launch in 2019.
Put together, those four reasons create a perfect storm with an increase of demand coinciding with a paucity of product.
Nearby new launch condo