Oxley, China developer lead Singapore land bank race - for now

An Oxley-led project at former HUDC site Rio Casa is likely to be launched in May. PHOTO: ST FILE

SINGAPORE (BUSINESS TIMES) - SINGAPORE-LISTED developer Oxley Holdings is enjoying a sweet homecoming after a flurry of overseas ventures - it now holds the largest residential land bank in the Republic by the number of dwelling units.

Estimates by The Business Times show that close to 4,000 units could be generated from Oxley's land bank, of which over 2,300 homes are based on its equity stakes in the sites acquired.

A close runner-up turns out to be a new market entrant, Logan Property Holdings, a Hong Kong-listed Chinese developer whose share in two large land parcels acquired last year - one from a government land sale (GLS) and another from a collective sale - puts it in second place with above 2,000 units.

Other China developers that rank high in residential land bank here after ramping up their exposure last year include Kingsford Development, Qingjian Realty and SingHaiyi Group.

SingHaiyi's majority shareholders Gordon Tang and his wife have exposure to substantial residential land bank here (above 1,800 units) via the companies they control - namely SingHaiyi, Haiyi Wealth and Huajiang International Corporation.

MCL Land, Allgreen and Frasers Centrepoint Ltd - which have been operating in Singapore for a long time but deemed foreign by virtue of their controlling shareholding - have also bumped up their residential land bank significantly last year. Allgreen, which is run by property tycoon Robert Kuok, scooped up three sites in December for a total S$1.2 billion after a six-year hiatus.

In terms of value, however, some analysts believe Singapore's City Developments Ltd (CDL) may still emerge top. DBS Group Research estimates that CDL's inventory has the highest gross development value of about S$4 billion by virtue of the number of luxury projects it has on its books.

But with the overall land bank of developers believed to be at its lowest since 2007, market watchers expect developers to continue replenishing their land inventory, albeit more selectively in view of the over-22,000 new units that could hit the market in 2018-2019 across more than 40 sites.

Savills Singapore senior director of investment sales Suzie Mok noted that developers are still scouring for sites but they are not aggressively accumulating land bank due to the five-year timeline to finish building and selling their units under the additional buyer's stamp duty regime, and potential competition from the upcoming supply of new units from recently sold sites.

Ms Mok noted that land plots with digestible quantums and in prime locations are more attractive because of the narrowing price gap between suburban projects and prime projects.

Then, there are also developers which have not managed to acquire any site and are still on the lookout. CapitaLand, Far East Organization, Ho Bee Land, and Wheelock Properties are among those that took part in land tenders but have not secured a site in the past two years.

As the residential upcycle enters its nascent phase, listed developers are "faced with a conundrum", JPMorgan property analyst Brandon Lee observed. "While they acknowledge their declining land banks and are cognisant of a price recovery, most are unwilling to be too aggressive on pure residential sites in view of subdued single-digit margins, their inability to differentiate the end-product unlike integrated or mixed-use projects, and higher internal hurdle rates," he added.

DBS Group Research analysts also said in a recent note that they expect developers to remain hungry for land given their constant need to re-stock dwindling inventory on their books. "Developers will continue to look for opportunities, albeit more selectively in the pipeline of reportedly 40 more en-bloc prospects as well as various sites available through the GLS. We believe that smaller freehold sites nearer the city centre will remain more attractive."

Based on the Urban Redevelopment Authority's latest quarterly figures, developers' inventory of 17,421 units with planning approvals as of the third quarter is near the historical low in the second quarter of 2017, and only 39 per cent of the record level of 44,784 units in the first quarter of 2001.

The first residential project to have come onstream this year is CDL's New Futura, a high-end freehold development at Leonie Hill in District 9, which began sales last Thursday. It has moved 24 units at an average selling price of S$3,200 per square foot (psf), according to agents.

CDL is also looking to launch its 861-unit suburban condominium in Tampines Avenue 10 in the first quarter and is preparing for a soft launch of South Beach Residence (190 units) in the first half of 2018.

JPMorgan's Mr Lee noted that CDL's acquisition of collective sale site Amber Park last September represents the first acquisition since the appointment of new CEO Sherman Kwek, and may signify CDL's renewed focus on Singapore given the market's improved fundamentals.

An Oxley-led project at former HUDC site Rio Casa is likely to be launched in May; in the meantime, Oxley may roll out its other smaller projects first. Executive chairman and CEO Ching Chiat Kwong told BT that Singapore remains a good market for Oxley because of its market stability, citing the various measures in place to ensure that improved prices and transaction volumes are sustainable over the long term.

After acquiring huge former HUDC sites Rio Casa and Serangoon Ville through a consortium last year, Oxley went on to snap up two other sizeable en bloc sites Mayfair Gardens and Vista Park, as well as smaller plots Toho Green and Apartment 8.

Mr Ching said Oxley's average land cost is relatively cheaper than its peers as the sites were selectively acquired in good locations, which will allow Oxley to sell "relatively more affordable apartments". "Hence, we remain optimistic for the next two years," he added. "Furthermore, with so many en bloc deals going on, residents will need to buy houses as well when they surrender their properties."

Based on Credit Suisse estimates, another 50-60 potential en bloc deals reported in various media could remove 10,097 units from the existing housing stock, while adding up to 26,495 units in future.

The wide plethora of launched and pending en-bloc sites at various stages of the collective sale process represents a key source of land bank for developers, alleviating their land-bank concerns and potentially easing upward pressures on land prices, its analysts said.

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