Suburban property launches 'to cross $1,200 psf': Analyst

Launch of J Gateway on June 28, 2013. Land prices have shot up sharply in recent months as developers remain bullish on the property market despite several rounds of cooling measures. ST FILE PHOTO: DIOS VINCOY JR  
Launch of J Gateway on June 28, 2013. Land prices have shot up sharply in recent months as developers remain bullish on the property market despite several rounds of cooling measures. ST FILE PHOTO: DIOS VINCOY JR  

Recently sold govt land sites give indication of likely launch prices

Most upcoming suburban condominium launches are likely to breach the $1,200 per sq ft (psf) price threshold, based on an analysis of recently sold government land sites.

Land prices have shot up sharply in recent months as developers remain bullish on the property market despite several rounds of cooling measures.

Out of the 10 99-year leasehold suburban residential sites that have been sold under the Government Land Sales programme since the start of last year but have not been officially launched yet, six are expected to go on the market at above $1,200 psf, according to data compiled by consultancy CBRE.

Two have already started marketing activities over the National Day weekend - Thomson Three in Bright Hill Drive and Skywoods in Dairy Farm Road - with some units going for above $1,200 psf, according to property agents.

Of the rest, only one site, at Sengkang West Way, is expected to launch close to $1,000 psf.

On the other end of the spectrum, the most expensive suburban launches are expected to be at New Upper Changi Road, Ang Mo Kio Avenue 2 and Yishun Ring Road, all of which are likely to launch at above $1,400 psf.

This follows a trend of recent suburban launches at above $1,200 psf on average, including J Gateway in Jurong that launched at a median price of $1,486 psf in late June and Urban Vista in Tanah Merah, which launched at a median $1,503 psf in March.

Office professional Jamie Tay, 48, said the $1,200 psf level was already "a bit expensive" for suburban condos, given their distance from the city centre.

However, analysts said the market is likely to be able to stomach launch prices of up to $1,500 psf before it baulks, as long as total prices stay relatively affordable.

"Tightening credit may put a dent on sales volumes in the medium-term. However, suburban condominium prices should remain at an affordable price of up to $1.5 million," said CBRE executive director of residential Joseph Tan.

OrangeTee research head Christine Li also pointed out that developers have been building ever smaller units with higher psf prices, which keeps total prices from shooting up significantly.

Ms Li noted that most demand for suburban condos comes from buyers upgrading from Housing Board flats, some of whom have made a pretty penny from reselling their HDB flat.

She said the next psychologically significant level would be around the $1,500 psf mark for suburban condos, at which point buyer demand could drop.

The rise in suburban condo prices has helped to boost the popularity of executive condos (ECs), which remain significantly cheaper than suburban condos, market watchers said. But even EC prices are set to go above $800 psf soon.

melissat@sph.com.sg