24,000 empty apartments around Singapore as government reports over supply

Singapore—The large supply contrasted with the dwindling demand for housing has caused the government to reduce the supply of private residential housing from confirmed sites under the government land sales (GLS) programme for the latter half of this year.

At present, there are 24,000 private housing units that are empty. Additionally there are 44,000 private housing units in the pipeline, made up of 39,000 unsold units from GLS plus another 5,000 units from sites pending planning approval.

The Ministry of National Development (MND) made an announcement on June 6, Thursday, that five confirmed list sites and eight reserve list sites yielding around 6,430 private homes, 92,000 sq m gross floor area (GFA) of commercial space and 1,100 hotel rooms had been released.

While the first half of the year’s GLS programme had 2,025 units of private homes from confirmed list sites, for the second half there were only 1,715 units, which is a reduction of 15 percent.

Since property market cooling measures were introduced in July 2018, demand has continuously lessened. Similarly, transaction volume has also gone down for the third straight quarter and developers’ demand for land has also moderated.

The announcement from the MND said, “Given these factors, the Government has decided to reduce the supply of private residential units on the Confirmed List for the GLS Programme. Together with the supply in the pipeline, the supply for the 2H2019 GLS Programme will sufficiently cater to the housing needs of our population.  The Government will continue to monitor the property market closely and adjust the supply from future GLS Programmes, as necessary.”

The Straits Times reports JLL senior director for research & consultancy Ong Teck Hui as saying that the smaller number of new homes in the confirmed list is reflective of “concerns over the substantial supply of unsold units in the pipeline that resulted from the robust collective sales in 2017 and the first half of 2018 and… appropriate given the increasingly bearish economic and business outlook”.

He added, “The confirmed list supply of 2,875 private residential units for the whole of 2019, is the lowest annual quantum since 2014, after the total debt servicing ratio (TDSR) was imposed.”

In the five years prior, the supply of private homes per year under the confirmed list ranged from 3,095 units to 4,355 units.

ST reports that Leong Boon Hoe, chief operating officer of List Sotheby’s International Realty, Singapore, is of the opinion that an Irwell Bank road site may attract bids in the range of S$1,500 to S$1,800 per sq ft per plot ratio (psf ppr), based on the bid price of S$1,733 psf ppr for the site of nearby Riviere in Jiak Kim Street.

”Based on recent sales at Boulevard 88, 3 Cuscaden and Riviere, it seems that investors are mindful of the price levels and leaning more towards freehold residential projects. We expect bidders of Irwell Bank Road will be more circumspect in their bids.”

The senior manager of research for Cushman & Wakefield, Wong Xian Yang, said that a Kampong Bugis site on the reserve list is one to watch out for.

“There are only a few master developer projects in Singapore, such as Marina Bay Financial Centre and Suntec City. Nonetheless, given the current market headwinds and large cost of the development, there may be limited interest for this site for now. The total land cost for the entire site could exceed S$5 billion and would be prohibitive even for the big boys,” said Mr Wong. -/TISG

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