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Cushman & Wakefield Comments on H2 2023 Government Land Sales (GLS) Programme

Xian Yang Wong • 21/06/2023

The Government today announced the Government Land Sales (GLS) Programme for the second half of 2023, which comprises eight Confirmed List sites and nine Reserve List sites.

The sites on the Confirmed List are estimated to yield approximately 5,160 homes (including executive condominiums (EC)), the highest since 2H2013, which could yield 5,960 units. This is around 26% or 1,070 units more than the 4,090 units released from the 1H2023 Confirmed List and the sixth consecutive semi-annual increase in private home supply. In absolute terms, this is the highest hoh increase in residential units since 2H2010. The ramp up in housing supply is in response to resilient market demand and private residential prices despite a weaker economic outlook and consecutive waves of cooling measures.
The ramp-up in new supply may not have an immediate impact on prices, as these potential new launches would only come to market in 2025. Nonetheless, the continued ramp up of supply in the Confirmed List signals the government’s intent to cool price growth. Barring an unexpected deterioration in economic conditions, we can expect another increase in GLS Confirmed List supply in 2024 as well. Historically, the highest supply yielded in the Confirmed List was 8,135 units in 2H2010.

While the private residential prices are buoyed by tailwinds such as a resilient jobs market and rising resale HDB prices, downside risks would build as more housing supply are released. Buyers are advised to buy within their means and have long-term holding power in the event of an unexpected economic crisis.

The ramp-up in supply from the GLS Confirmed List would compete with the en bloc market. Assuming sites with similar attributes, developers prefer to acquire from the GLS programme as it is more straightforward. However, 7 out of 8 sites in the H2 2023 confirmed list are mid to large sized sites (>500 units) and may be out of reach for smaller developers. Developers looking for smaller projects would still look towards the en bloc market to landbank.

Of the eight sites in the Confirmed List, we anticipate high interest for the Clementi Avenue 1 Site and the Lorong 1 Toa Payoh sites. Both of these projects are located in popular residential precincts, ie Clementi and Toa Payoh, and is underpinned by strong underlying buying demand. For example, the Clavon, which was the latest new launch, in the vicinity of the Clementi Avenue 1 site, is fully sold. Likewise, the Gem Residences, which is just across the road from the Lorong 1 Toa Payoh site is fully sold as well. In the current landscape where developers face heightened development risks, they are likely to prefer markets with a strong demand track record.

Under the Reserve List, it can yield 3,430 private residential units (including 855 EC units) and around 1 million sf of commercial space. Out of the 6 residential sites under the Reserve List, 4 of them are newly introduced sites including Holland Drive, De Souza Avenue and Zion Road (Parcel B). We opine that the Tampines Street 95 (Executive Condo) site could see the highest probability of being triggered from the reserve list. EC demand in the east region of Singapore remains strong, as evidenced by the strong take up of Tenet which reportedly sold 72% of units on launch in December 2022 and is already almost sold out. Given the rise in private residential prices over the past few quarters and an uncertain market outlook, ECs can be a sweet spot for owner-occupiers looking for a condo lifestyle at more affordable prices. 

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