Although the market outlook for ECs are not very good considering that there are still many unsold EC units in the West side of Singapore such as Sol Acres EC and Westwood Residences EC, the latest tender of Choa Chu Kang site proved to be counter-intuitive as the government receive a huge number of bids, In particular, there were a total of 11 bids lodged for the plum side next to Brickland Road even though experts only expect 3 to 7 bids.
The plot of land is slated to be a Executive Condominium that is a hybrid of private and public housing by private developers. The recent number of bids seems to surprise analyst given the weak sentiment in the current EC market where there are many units that appear to be unsold.
Choa Chu Kang Ave 5 Tender
Real Estate analyst attribute that this surprise increase in the number of bids could be due to the fact that there are now more developers who are capable and financially more sound to be able to take on such a project and many are looking to shore up their land banks. Also, it is noted that there are now less EC land available for sale and therefore there is now more number of bids per plot of land as the number of developers remain more or less the same.
Although the highest bid submitted by Qingjian Realty is 7% more than the highest bidder, analyst still think that developers are bullish about the plot of land as there were 3 developers who submitted more than $S$250 per square foot per plot ratio (psf ppr). This would mean a selling price of slightly less than $800psf and analyst note that this price should be what buyers are expecting for a EC market.
Tender for Site near Brickland Road
Given that there is an adjustment now in the income ceiling for EC buyers from the recent $12,000 to $14,000, there is much to rejoice as the new income ceiling would mean that buyers would be more open to ECs and a price of $800psf would somewhat seen to be acceptable for this new affluent class. Moreover, there might be a backlog of EC buyers as this plot of land is nearer to Bukit Batok than Choa Chu Kang considering that it is near to Brickland Road.
However, some analyst were quick to point out that the location of Sol Acres and Wandervale were much better and this explains that the bidding price for the plot of land was higher compared to Inz Residence EC.
Despite more ECs are available in the west, developer Qingjian Realty sees great potential in this development as there is a 15 month bar period whereby the developer can sell the units to potential buyers. Since there is a reduction in the number of land available already for ECs and there is no new land in the West available for ECs, Qingjian Realty sees this plot of land as a good investment and buyers will be interested in Inz Residence EC when it is available for launch 15 months later.
Qingjian Realty EC Tender Inz Residence EC
Analysts are divided on the starting selling price for the development. Some think that since the developer has bought the land at a lower price, the selling price should be around $700psf which is quite attractive. Others think that the selling price should be kept at $800psf given that this is the rough selling price for ECs in the west and there are not much ECs as well in the west part of Singapore.
Given that the Singapore real estate environment is currently not in its rosiest period, developers are hoping that the government will remove or at least remove some of the limiting measures for EC purchases. In particular, one of the most damping measures is to keep the Mortgage Service Ratio (MSR) to 30%. This would mean that for every $10,000 the household income is, only $3,000 can go to the mortgage payment for Qingjian Realty’s condo launch. Many buyers think this unnecessary considering that private properties are holding at 60% which is a more reasonable ratio.