UOL has a good bet on the best 99-year leasehold projects

The residents of suburban condominiums have access to a variety of facilities, including public transportation, shopping, healthcare, educational and recreational amenities, as well as nearby amenities such as education, healthcare and recreation.
In the wake of the Covid-19 pandemic and the subsequent rise in home prices, suburban condominiums dominated the non-landed housing market.

According to data from the Urban Redevelopment Authority, non-landed home price in the Outside Central Region, or suburbs, and Rest of Central Region, or city fringe, increased by 40% and 38% respectively between Q4 2018 and Q1 2019. Non-landed home prices have increased by 14 percent in the Core Central Region, which includes prime districts 9, 10, and 11, Downtown Core, and Sentosa.

The latest hike in the Additional Buyer’s Stamp Duties (ABSD) for home purchases will take effect at the end of April 2023. Singaporeans and permanent residents who purchase second or subsequent homes, pay higher ABSD rates, while foreigners not PRs buying any home, are charged a rate that doubles from 30% to 60%.

Citizens and PRs purchasing their first home are not affected by the ABSD changes. They pay no ABSD or ABSD of 5% respectively.

Demand in this segment is down because non-PR foreigners have historically been active in CCR condominiums.

Land costs are the largest cost in private housing projects today. The cost of construction is high and the financing costs have increased due to rising interest rates.

Demand can also be unpredictable, as buyers become more selective due to economic uncertainty, rising mortgage rates, and a greater variety of products on the market. Developers are also liable for huge amounts of clawback if they fail to sell their entire housing stock within the prescribed timeframes.

Housing developers would be wise to either slow down their development activities, or to focus on projects that are primarily aimed at local first-time home buyers.

UOL Group, U14 0% listed on the stock exchange has nevertheless stepped up to purchase non-landed CCR Housing Sites.

A joint venture of 80:20 between UOL, its subsidiary Singapore Land Group, and U06 0%, secured in February a 99-year leasehold Government Land Sale site in District 10 zoned for private homes. The bid was S$428.3 millions or approximately S$1,617 psf per plot ratio.

Last week, the GLS private housing site in District 10 at Holland Drive was awarded to a consortium consisting of UOL (35%), CapitaLand Development (35%), Singapore Land (20%) and Kheng Leong (10) for S$805.4million, or approximately S$1,285 per square foot per person per year.

The land prices of these two sites are much lower than those of sites nearby that were sold through state tenders during 2018.

Sora Condo Showflat Location is not on the actual site. Reach us now for an exclusive appointment and special pricing.

UOL and partners are still betting that the demand for prime 99-year leasehold condominiums will be strong.

UOL’s optimism about prime condos may be fuelled by its strong sales performance in the District 11 Watten House Condo project, which was developed by UOL and Singapore Land. According to URA data, this project was first launched in November of last year. As of April, 78 percent of the units have been sold.

UOL’s contrarian bets may have paid off. The condos are located in prime areas, close to MRT stations.

The price difference between CCR and OCR for new non-landed homes is narrowing. This could lead buyers to consider the relative value of CCR’s higher priced homes.

Orchard Boulevard condos and Holland Drive condos may sell at S$3,200 per square foot and S$2,800 per square foot respectively. This is about 27 to 45 percent more than the S$2,200 per sq.ft. price of a new condo in Lentor near Lentor MRT Station, District 26.

A buyer could pay S$3,500 per square foot for a terrace near Lucky Plaza, in the vicinity of Orchard Road, as opposed to S$1,900 for a house near Lentor MRT Station – an 84 percent premium.

Second, although the Orchard Boulevard housing site and Holland Road housing site are not within 1 km from a popular primary school in the area, unlike Watten House, or some suburban condominiums, it need not deter buyers.

A child’s chances to get into a particular primary school are significantly increased if they live within 1 km. Homeowners are looking for homes that are near schools because this can boost the value of their home at resale and attract a larger pool of buyers.

Even so, lifestyle factors could influence a growing number of singles or childless couples who choose to live in prime districts that aren’t close to popular primary school.

Expect well-heeled foreigners who are purchasing their first home in the US to be focused on high-end condos.

It can be difficult for PRs to buy landed properties in Singapore, as they must first get approval. This is not the case with condos. If Singapore continues to attract wealthy PRs with high incomes, this could lead to a large number of new potential prime condo buyers.

Four, although some buyers prefer freehold condos in prime districts, the supply of freehold prime condominiums is limited. People looking for new condominiums in prime districts may have to consider 99-year leasehold developments.

Developers often buy older housing developments on the en-bloc market in order to build freehold condominiums. It can be difficult to get support for en-bloc sales in existing developments with a high proportion of non-PR units. This is because non-PRs who reinvest the proceeds from an en-bloc sale into another property will have to pay hefty ABSD.

Fifth, wealthy buyers of condos in prime districts may be able to cope better with economic weakening as they have sufficient savings that will help them get through any rough economic patches.

Expect well-off residents to pay more for the one house they can purchase without having to pay hefty transaction tax.

Many developers would have been unnerved by the recent price reductions at Cuscaden Reserve near Orchard Boulevard.

Cuscaden Reserve offers many units with one or two bedrooms, each measuring less than 1,000 square feet. Would condo buyers prefer to buy larger units in the most sought-after districts?

UOL and partners may be able to reap the benefits of their 99-year leasehold projects if they build the right product.

Book an Appointment

Kindly Fill up the form to Enjoy Direct Developer Price & EXCLUSIVE Showroom Viewing!

Please enable JavaScript in your browser to complete this form.
Agreement Terms
error: Content is protected !!