SINGAPORE: Future homes on the Canberra Crescent site could sell for under S$2,000 per square foot (psf), according to DBS.
This comes after lower-than-expected bids for the three recently tendered sites, Canberra Crescent, De Souza Avenue and Zion Road (Parcel B), which could lead to lower-than-usual prices.
Singapore Business Review reported that DBS Group Research has noted that developers who secured these sites might use “flattish pricing” strategies for their upcoming projects. This is due to the low land rates and rising construction costs.
One of the cheapest bids was for the Canberra Crescent site, where the top bid was S$793 psf per plot ratio (ppr).
If this bid is awarded, DBS estimates that future homes on this site could be priced below S$2,000 psf. With a breakeven cost estimated between S$1,500 and S$1,600 psf.
Given the low land rate, DBS mentioned that developers would likely target the upgrader class of buyers.
Another site of interest is De Souza Avenue, where the top bid was S$841 psf ppr. According to DBS, the future project on this site could have launch prices near the S$2,000 psf mark or possibly even lower.
The breakeven cost here is estimated between S$1,650 and S$1,750 psf.
The third site, Zion Road (Parcel B), had a land cost of S$1,304 psf ppr. This higher land cost suggests that future homes on this site could be priced between S$2,600 and S$2,800 psf.
While this is higher than Canberra Crescent and De Souza Avenue, the developer can still achieve comfortable profit margins. /TISG
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