What Makes Sengkang A Hotspot for Executive Condos
Sengkang has been an attractive location for EC developers
The current month has brought in a lot of the unexpected for the industry, a prime example of which is Sengkang’s Anchorvale Lane EC developer land sale. Initially expected to draw in minor interest due to the oversupply of Executive Condos relative to the market downturn, the land sale brought in a total of 16 bids. Even more surprising is the top bid amount of $241 million.
About the Anchorvale
Anchorvale Lane is a 226,199 square foot plot that was put up for sale in June this year intended to be developed for Executive Condominiums (EC). With a capacity for 635 EC units, the Anchorvale Lane EC plot is overlooking the Sungei-Punggol riverbanks. The area is in close proximity to the Tongkang LRT station and the Anchor Green Primary School, and is only about 30 minutes away from the city centre.
Due to the number of existing ECs in the surrounding areas, the plot wasn’t expected to attract that much attention. The nearby ECs such as Bellewaters, Treasure Crest, and The Vales have around 296 unsold units between them, underlying an uncomfortable level of existing supply. Zooming out to the bigger picture, there are a total of 5,471 unsold Executive Condos in Singapore as the month of June ended. With these conditions, developers naturally get cautious about buying land as closing sales at sustainable prices are logically expected to be a challenge.
In this light, the response to the Anchorvale Land EC plot sale, with its 635 units to be sold, is considered to be an outlier.
Examining the high demand for the Anchorvale Land EC plot
The plot attracted a total of 16 bids, jointly topped by Hoi Hup Realty and Sunway Developments, and yielded a winning bid of $241 million or over $355 per square foot. During an interview with TODAY, SLP International Property Consultants’ Head of Research and Consultancy Mr Nicholas Mak estimated that the development needs to sell at the price of at least $820 per square foot.
This figure is remarkably an ambitious one considering that the nearby Bellewaters sold at an average of $720.40 psf. Consider as well that The Vales, located close to the site as well, averaged at $802 psf. It would seem that the property developers might have known something that the rest of the industry doesn’t when they submitted their bid.
What made the developers interested that much in this site?
Let’s put forth some possible reasons:
- This is the only EC plot available for this year
The high interest level can be attributed partly to the fact that this is the only Executive Condo plot for 2016. In addition, confidence in new launch EC demand is still high even with the ongoing market slump as ECs are basically private condos after their 10th year, which can be purchased with subsidies from the government. This fact makes Executive Condos a good deal for all. Thus, the Anchorvale Lane EC plot is essentially one of the few opportunities available to build this highly desired type of property.
- Market recovery expectations for 2017 to 2018
Developers hold expectations for the market to recover in around 15 to 18 months from now, which is around the same time when the launch for the Anchorvale Lane EC is set. Signs of home prices reaching low figures are apparent even with cooling measures in place, and forecasts set the same scenario by late 2017 or middle of 2018, which is the projected launch time for this condo.
Currently, the unsold ECs are steadily declining. As mentioned earlier, the month of June saw 5,471 unsold units. This is something to consider as there were 6,520 units unsold during the first quarter.
- Punggol Creative Cluster and Learning Corridor
A development’s prospects depend on the URA Master Plan which is in consultation between developers and investors. Generally, property values will increase or decrease based on how the given area will be developed according to the URA.
In the case of this land plot, the Punggol Creative Cluster and Learning Corridor is in the development plans. With this, the development provides space for start-ups and research institutes, meaning offices and educational facilities will be built. On top of that, there are plans as well to have a “Market Village”, placing leisure and retail facilities along the Waterfront.
While the dates haven’t been confirmed yet, these plans are expected to be enough to generate interest among those who have long term purchasing plans.
EC sales of Treasure Crest
Anchorvale Crescent’s Treasure Crest is among Singapore’s ECs with the highest number of sales. In July 2016, this development already sold 72 percent of its available units in a span of one weekend. This EC’s sales performance possibly boosted developer confidence with regard to this location and its possibilities.
Treasure Crest, a 99-years leasehold Executive Condo, is located at Anchorvale Crescent in District 19.
It must be noted though that Treasure Crest units sold at an average of $742 psf and is closer to the Sengkang MRT station.
Aggressive developer performance in midst of property slump
What might explain why developers have been aggressive is they could just be manifesting calm and foresight at the corporate level. While at a personal level the market seems bad, business entities such as developers have the resources to weather storms. An example is the 2008 to 2009 Global Financial Crisis wherein members of the industry have rebounded come 2011.
This could also explain why the government has not been swayed from its cooling measures – developers’ confidence level is high as reflected by their aggressive moves even while the market is by most indications, faring badly.