CBRE's comments on 1H 2021 Government Land Sales announcement

By Mr Desmond Sim (沈振伦), Head of Research, Southeast Asia, CBRE
 
Careful calibration of supply

Just two new residential sites were added to the Confirmed List, with the Lentor Central and Tampines Street 62 sites moved from the Reserve List to the Confirmed List. The two new sites are along Slim Barracks Rise. On the Reserve List, a site at Jalan Tembusu site has been added. With the next tender closing only in March 2021, this will give developers a five-month breather to re-strategise their land banking.

With the continued uncertainties in economic and labour conditions, the government has moderated the supply on the Confirmed List, but yet provided developers with a good selection of sites in the Reserve List should there be stronger demand.

Residential

The number of residential units introduced on the Confirmed List has increased to 1,605 units from a five year low of 1,370 units in 2H 2020. The increase in residential units introduced will help to provide a much-needed boost for developers to shore up their land inventory, given that supply from previous GLS sites has been relatively limited. With healthy demand from the new sale and resale market, coupled with the declining number of unsold units (28,727 units in Q3 2020, down from 29,876 units in the previous quarter), CBRE Research believes that these sites are likely to attract a healthy level of bidding activity, as evidenced by the tenders of the previous two sites (Tanah Merah Kechil Link and Yishun Ave 9).

Out of the four sites, three of them have commercial components, which could help add vibrancy and convenience to the new estates. The Slim Barracks Rise sites could be especially appealing to developers, as they are situated near a transport node, surrounded by the one-north biomedical hub. Further, as the last site sold in the vicinity was at one-north gateway in Sep 2019, these two sites can offer more residential options to the working population in the area. Notably, the Slim Barracks Rise sites offered are in smaller parcels (with 265 units for Parcel A and 140 units for Parcel B) which tends to be more palatable and manageable for developers.

Similar to the H2 2020 GLS programme, key sites have also been made available around new stations along the Thomson-East Coast Line. The Lentor site not only provides more residential units in this enclave, but it aims to be a new commercial centre on top of a transport node to serve the vicinity.

Commercial

White/Hotel Sites

As none of the commercial sites were triggered from the 2H 2020 Reserve List, the same sites have been rolled over to 1H 2021, with no commercial sites introduced in the Confirmed List. 

CBRE Research Views

The GLS Programme is a retrospective programme for the future needs of developers, revised twice every year. At the same time, the sites introduced have provided indications on new development nodes which may develop from future infrastructure completions (e.g. the Lentor Central site which is next to the upcoming Lentor MRT station on the Thomson-East Coast Line).

Overall, the calibrated supply in the 1H 2021 GLS Programme is not surprising given the macroeconomic uncertainties arising from the COVID-19 outbreak. Nevertheless, there are still choice sites on offer in both the Confirmed and Reserve Lists to prevent the market from overheating.

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