Like everyone else in the world, the pandemic caused quite a stir in the real estate market in Singapore. The continued economic growth Singapore enjoyed was paralleled by its growth in population. What Covid changed was virtually putting a complete halt to the supply; lockdowns and restrictions of people-movement on the island meant no construction work continued. Therefore, creating a gulf between the Supply and Demand in Real Estate.
Consecutive record Price-highs for Real Estate has reached almost untenable and unhealthy levels in Singapore. There was a certain urgency to keep in check prices because a complete runaway would have had far reaching consequences to Singapore’s economy.
The government is committed to making housing accessible and affordable for all. Hence, the Singapore property cooling measures were introduced to control the price hike. But the cooling measures was quite ineffective and had no significant or sustainable effect.
And now, to help alleviate the situation, Increase Land Supply
Demand And Supply Issues In The Singapore Real Estate
The pandemic might not have impacted the growth in demand for real estate. It has played a critical role in impacting the supply in the real estate market. There were several problems, including lack of labour and supply of raw material, along with health and security concerns. So, it slowed down the construction process. Eventually, with the ease of lockdown restrictions and an increase in supply, the construction market picked up the game. However, it can be easily accessed that they will take some time to be completely back in the game.
More and more people are either looking to book their first private property in Singapore, an executive condominium, or an HBD flat. The recent launch of Piccadilly Grand saw 77% of the released units sold in the first weekend where 100% of the buyers were first time buyers. The combination of this rise in demand and the supply shortage has resulted in an increase in real estate in the market.
The introduction of cooling measures in December 2021 played a role in limiting the demand in the private residential market. However, it did little to control the increasing prices and demand for HBD flats.
Working Out The Solution For Increasing Demand In Singapore
There are several factors that developers need to consider before opting to build up more units and have more property available for sale. These factors include geopolitical uncertainties, slower economic conditions, rising interest rates, and higher construction costs. However, according to the government land sales program, six confirmed sites for private residential properties are expected to be yielded in the second half of 2022. These sites include the following
It is also interesting to note that the GLS programme has announced 8 reserved sites along with the six confirmed sites for the second half of 2022. The solution to satiate demand lies in increasing the supply. Hence, in close work with the developers, the government is making and executing plans promptly to ensure that demand is being met.
Plans To Ensure An Increase In The Supply Of Private Homes
The government land Sales programme has good news for people looking to buy their first private property. It has been reported that the Tampines lines parcel will yield 1,190 private homes. Subsequently, the project will also have a 14,000 square floor area for commercial use. The housing and board development of Singapore has plans to launch an executive condominium project soon as well. All these measures indicate that the government is doing its utmost best to satiate demand for Singapore Real Estate.
The Tampines area is an interesting location, given that it is a mega plot. Another feather in its hat is the fact that it will be a comfortable walking distance from the future MRT North Tampines Station. However, this mega-site would be of interest to large developers only as the land cost can go to and beyond one billion dollars.
The addition of amenities and a retail market are other factors that can play a vital role in increasing the attraction of this site. Subsequently, it has also been estimated that this place will attract footfall from the nearby housing board projects.
An Increase In Demand From HBD Upgraders
The Singapore real estate consists of private property Singapore that comes under the Urban development authority as well as the Housing and Board Development. The housing and board development primarily works to create affordable housing and doesn’t have profits as its main goal. They’re there to provide affordable housing to people who can’t afford the high-end private properties.
Hill view Rise site and Lentor Gardens site are among the six properties that will be yielded in the second half of 2022. These two sites should see strong demand from HBD upgraders. Lentor Gardens and Marina Gardens will also have exclusive spaces for childcare centres. It highlights that the government is looking forward to making these properties conducive for young families.
The rising prices in the real estate market benefit people selling their HBD flats and looking for upgrades. Even after the adjustment of increasing prices with inflation, the sellers have a great opportunity to get a great price for their property. Add in betterment in the socio-economic status and an increase in people earning in a single household – they’re all ready for an upgrade.
Government’s Plan To Overcome Supply Shortages In The Second Half Of 2022
The government land sales programme is directed to increase the housing supply for the second half of 2022. The six confirmed sites will generate a total of 3,505 private homes, and that’s a 25.9% increase from H1 2022. A larger supply will be created to deal with the demand issues and provide adequate housing to the people.
The combination of confirmed and reserved sites will generate a total of 7,310 private residential properties. The ministry of national development is continuously working to deal with the robust demand for housing. Additionally, the ministry might give the green light to one or more projects on the reserve list, given that there is a sufficient increase in demand along with market interest.
It is interesting to note that the list of the confirmed sites isn’t only limited to private residential properties. It will also include an executive condominium project that will yield 495 EC units. Subsequently, 14,750 sq. of space will be allocated for commercial use. The reserve list has a combination of private residential projects along with executive condominium projects, 1 white site, and 1 hotel site.
JLL’s senior director of research and consultancy, Ong Teck Hui, said, “The URA recognizes the low inventory of unsold private housing and has increased land supply in the H2 2022 GLS Programme.” Several experts have also claimed that the increase in supply in the confirmed list may not prove sufficient to cool down the residential market. So, it can be easily expected that the demand will remain strong. Hence, the government will have to come up with more sites. It will address the issue of increasing demand and will also play a role in moderating the rising land price level.
A Comprehensive Plan To Deal With The Increasing Land Demands In Singapore Real Estate
An evident proof of the government’s effort is the fact that the land supply for private homes has hit the highest level in 8 years. The buyers are resilient in their demand, and the government is going to extreme ends to ensure their demands are being met.
The bigger focus of the supply initiative from the government is based on private residential properties. So, it leaves the people looking for executive condominiums in a tight place. There is just one executive condominium planned in the initial six reserved sites with a total of 400+ ECs. It can fuel the demand further as the supply won’t be enough.
Subsequently, the combination of confirmed and reserved sites has three new EC launches in the pipeline. It should be noted that these EC launches would be spread over a period of 18 months. Hence, tight supply in the market for people looking for executive condominiums.
Analysts predict the Marina Garden Lane site to be the most popular one. It will yield 795 residential units. It is the first site that will go into the construction of the confirmed six sites. So, it can be speculated that the developer will have and enjoy a first-mover’s experience.
The combination of confirmed and reserved sites totals 14 sites, and it is higher than the sites reserved in H1 2022 or prior years. Another interesting factor that perfectly complements it is the multi-year record low level of unsold inventory at the end of the first quarter. So, one can hope that all of these efforts under the GLS umbrella will yield sufficient results in satiating the demand for land by the public
With the lowest supply of unsold units in the market for the last 20 years, The government has indeed stepped up to increase the supply of land for development to meet the demand. The only hope now is that whilst Post-covid situation has almost regained some normalcy, the real question remains is how fast can construction begin and meaningfully satiate Singapore’s constant growing demand for real estate.