Developers shying away from once-popular EC sites on back of looming flat glut

Over 6,000 units will flood an already crowded market.

Developers’ robust appetite for Executive Condominium sites has been dampened by low sales take-up and a looming oversupply in the EC market.

Cautious developers entered distinctly low bids for the past two EC site tenders. A Woodlands Avenue 12 EC site launched yesterday attracted low bids from seven bidders, with Hao Yuan Investment Pte Ltd topping the list with a bid of $103.79 million or about $278 per sq ft per plot ratio.

Meanwhile, an Anchorvale Crescent land parcel launched in January attracted just three bids. Sim Lian Group won the tender with a bid of $280 per sq ft per plot ratio, representing the lowest price on a per sq ft per plot ratio basis that has been awarded for an EC site on the Government Land Sales (GLS) programme since July 2011.

According to Chia Siew Chuin, Director of Research & Advisory at Colliers International, developers have become more cautious on EC sites given the slow take-up for such units amid weakened demand from HDB upgraders a result of falling HDB resale prices.

“Nevertheless, there were seven bidders signalling that developers are still keen to participate in EC development despite the challenging environment. The rather unexpected high number of bidders that participated in today’s tender provides some glimmer of cheer in what many might consider a muted market. In the preceding two tenders for EC sites located in the north, the Anchorvale Crescent parcel received three bids, while the plot at Sembawang Road/Canberra Link garnered two bids,” she noted.

Desmond Sim, Head of CBRE Research for Singapore & South East Asia, adds that the tender for the Woodlands Avenue site closed against a backdrop of a growing stock of 2,400 launched and unsold EC units, and another 6,000 units in the pipeline.

“That could explain the reason for the relatively low bids, with the highest at $278 psf. This sentiment is shared among the top six bidders, with a 12 per cent margin between the first and the sixth bidder. The highest bidder may swing the launch embargo in its favour, to time the launch as and when the market conditions improve,” he said.

The Ministry of National Development (MND) had slashed the supply of EC sites in the Government Land Sales Programme for the first half of 2015. Sites in the confirmed and reserve lists of the 1H15 GLS Programme can yield a total of 1,010 EC units, down from 1,520 in the second half of 2014.