Thursday, May 26, 2011

More developers may target EC sites

THE impending move to raise the income ceiling for public housing could prompt more developers to target sites zoned for executive condominiums (ECs) and Design, Build and Sell Scheme projects, say industry experts.

The Government has said that it may increase the income ceiling from $8,000, which would allow households with a higher combined income to buy a Housing Board (HDB) flat.

If that happens, analysts expect the income ceiling for ECs - now at $10,000 - to be raised correspondingly.

Market experts say that developers who focus more on private residential projects may also bid for government land tenders to tap into this increased pool of buyers.

However, the increased buyer pool for HDB homes could also depress private property market prices.

Mr Png Poh Soon, head of consultancy and research at Knight Frank, said: 'Buyers who are looking to purchase mass-market homes might be lured to buy executive condominiums and public housing now that they might qualify for it.

'Some developers believe that potentially, mass-market home prices could become cheaper as other players adapt more competitive strategies to attract buyers in the same income bracket.'

Mr Png said that the market will be keen on the increased supply of land expected to flow from the second half of this year's Government Land Sales programme.

'We've seen strong sales figures in April and in the absence of any new cooling measures, there's no reason why developers should shy away from tenders,' he added.

Last month, developers sold 1,788 residential units, the highest monthy volume since November last year.

But Mr Png added that the injection of land will put pressure on companies that already have a lot of government sites in their landbanks.

He said that such developers might decide to roll out their projects earlier to reduce their risk and ensure a better cash flow.

'But companies with fewer government sites may be more aggressive when bidding, especially when well-located plots with good amenities nearby come up for sale.'

Knight Frank released an analysis yesterday detailing the holdings by developers of government land stock.

The survey was based on sites launched from last year to the present. It recorded the number of units being developed on a site, any unsold flats or in the case of undeveloped land, estimated number of units each site could support.

The Sim Lian Group topped the list with 2,781 units, City Developments was next with 1,271 and United Engineers third with 1,101.

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