This was seen through the record-breaking top bids for EC site Sumang Walk.
Executive condo (EC) are sites in the limelight given lack of supply. This was seen through Sumang Walk's recent tender which attracted 17 bidders and closed off with a record price of $509.37m. The site is slated for EC housing development.
DBS Equity Research analyst Derek Tan noted that all 17 bids were among the highest seen for EC sites in recent years, implying developers’ bullish stance towards land-banking in this space where there is limited supply in the near term. "This means that this site will be somewhat of a 'limelight' given that it will be the only EC that will be launched in 2019. Whilst we note that a further three EC sites are available in the 1H2018 GLS, launches at these sites are only expected to be in 2020," he added.
Moreover, the strong sales in recent EC sites bolstered developers’ confidence. Tan said, "Robust sales momentum at Hundred Palms (sold out in a weekend) and the anticipated strong demand to the upcoming launch of Rivercove Residences (Developer Hoi Hup Sunway, rumoured to be launching at around $1,000 psf) in March 2018 has boosted developers’ confidence that ECs will continue to attract a strong buyer pool, satisfying the aspirational needs for Singapore households (younger professional couples buying their first home or upgraders)."
The estimated launch price of $1,100 psf – $1,150psf will represent a new record for an EC site in the Punggol area. DBS Equity Research noted that whilst its estimates are bullish, the average sales quantum per unit is $1.15m based on an average unit size of 1,000 psf. "Whilst it appears to be a harrowing experience for young couples to pay for a 'million dollar property', the sales quantum per unit is within the 30% Mortgage Service Ratio (MSR) limit for a household earning at least $11,000-$14,000 per month," Tan added.
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