SINGAPORE – The Lentor Hills estate is shaping up as a private residential enclave, with two more 99-year leasehold land parcels released by the Urban Redevelopment Authority (URA) on Wednesday.
However, developers’ interest in the estate has been on the decline and market experts are expecting cautious bidding amid an uncertain economic outlook.
The first private residential land parcel is a site at Lentor Central, launched for sale under the confirmed list of the Government Land Sales (GLS) programme for the first half of 2023.
The development, at around 158,263 sq ft, can be built up to five storeys and yield around 475 residential units. It is the sixth site launched under the GLS confirmed list.
The units are part of the 4,090 residential units to be made available under the GLS programme for the first half of 2023, which represents a 17 per cent increase from the 3,505 units released in the second half of 2022.
The tender for the Lentor Central site will close at 12pm on Sept 12.
The second land parcel is a residential site at Lentor Gardens, which is about 222,175 sq ft and can yield 500 units.
The site is only available for application by developers under the GLS reserve list, meaning it will be put up for tender only if the minimum price submitted by a developer is acceptable to the Government.
The two parcels are located within the new Lentor Hills estate near Lentor MRT Station along the Thomson-East Coast Line.
Also coming up in the area are retail outlets, a supermarket and childcare facilities within the nearby mixed-use development at Lentor Modern.
Huttons Asia senior director of research Lee Sze Teck said the number of bids has been declining, from nine for the site that is now Lentor Modern, sold in July 2021, to just one for a Lentor Gardens site launched in October 2022.
He attributed developers’ waning interest to the pipeline supply of almost 3,000 units in the area that will be completed over the next four to five years, if all six sites on the GLS confirmed list are sold.
Developers’ biggest risk is the additional buyer’s stamp duty rate, especially at a time when the economic outlook is uncertain, said Mr Lee.
Developers purchasing land to build residential projects are subject to 40 per cent additional buyer’s stamp duty, with 35 per cent remittable if they complete and sell everything within five years.
“Developers can better manage this risk if there was less competition, as they are facing higher construction costs and interest rates,” Mr Lee said.
Veteran real estate expert Nicholas Mak agreed that the potential glut of condominium projects in the area is one of the key reasons behind the low level of interest among developers for residential sites in the Lentor Hills estate.
Ms Wong Siew Ying, PropNex’s head of research and content, expects more conservative bids moving forward as developers will factor in the upcoming standardisation of gross floor area (GFA) definitions into their bid prices.
The new standardised definitions, which will take effect in June 2023, will see floor areas measured to the middle of the wall, with all strata areas such as air-con ledges to be included as GFA. All voids will be excluded from strata area.
This is likely to reduce the area that can be sold for the condominium project and may have an impact on land price and selling price, said Ms Wong.
She expects a lukewarm response for the Lentor Central site, with around one to two bidders and the top bid coming in between $980 and $1,030 per sq ft per plot ratio.
Given the cautious market sentiment and reduced risk appetite, all three analysts predict that the Lentor Gardens site under the reserve list is unlikely to be triggered for sale.
Correction note: An earlier version of this article said that developers have to pay 40 per cent additional buyer’s stamp duty upfront. Iras has clarified that while developers are subject to 40 per cent additional buyer’s stamp duty, 35 per cent may be remitted upfront subject to conditions.
