UOL best bet in 99-year leasehold apartment projects

Condominium residents can enjoy a range of amenities including shopping, public transport, healthcare services, education, and recreation nearby.
Following the Covid-19 pandemic in Japan, prices of private homes here have surged. In terms of non-landed home types, suburban condos lead the way.

In the Outside Central Region or suburbs of the City, the non-landed property prices rose by 38 and 40 percent between Q4 of 2019 to Q1 of 2024, according to the Urban Redevelopment Authority. While non-landed house prices in the Core Central Region increased by 14.5%, this includes the districts 9, 10 & 11, Downtown Core & Sentosa.

Singapore citizens who buy second homes and permanent residences (PRs) will pay more ABSD. Foreigners that are not PRs and purchase any home will see their ABSD doubled to 60%.

Citizens and PRs buying a first home will not be affected by recent ABSD changes.

CCR condos were traditionally popular with non-PR international buyers. This has led to a decline in demand.

The majority of the costs for a private housing development are accounted for by land costs. Financing costs and construction costs are both increasing because of higher interest rates.

In addition, the demand is uncertain because buyers tend to be more discerning due to increased mortgage rates and market competition. The developers will have to pay massive sums of money in clawbacks for ABSD remissions, if they are unable to sell all the housing stock by the deadline.

Therefore, it may be prudent for housing developers slow down development activities or focus mainly on projects catering to local first-time purchasers such as suburban condos or executive condos.

UOL Group U14,0 % has nonetheless stepped in to buy non landed CCR housing site.

In February, UOL’s 80/20 joint venture with its Singapore Land Group subsidiary, U06 0%, successfully secured a 99year leasehold Government Land Sale, which was zoned to build private homes. It is located at Orchard Boulevard within District 10, and the bid price was S$428.3million, or S$1,617/square foot per plot rate (psf/ppr).

Last week, UOL, CapitaLand Development, Singapore Land, and Kheng Leong, each with 35 per cent, were awarded a 99 year leasehold GLS Private Housing Site at Holland Drive District 10 in Singapore for S$805.4 Million, or S$1,285 PSF ppr.

Land costs for these two sites were lower than other nearby sites that had been sold via state tenders.

UOL is betting, as are its partners, that demand for these new 99 year leasehold condos will remain strong.

UOL might be encouraged to sell prime condos by the success of the Watten House project in District 11 developed by UOL with Singapore Land. This project launched for sale last November and had sold 78 percent as of April according to URA sales data.

UOL may be able to make money on its big bets.

Tampines Ave 11 Condo Launch is expected to be in Q3 of 2024. Book your appointment now to get priority viewing queue.

First, a narrowing of the price gap between CCR and OCR new non-landed housing prices could encourage buyers who are looking for relative value to choose more expensive CCR properties.

Orchard Boulevard’s condos are likely to sell for S$3,200/sf, while condos on Holland Drive may be S$2,800/sf, which is approximately 27-45 percent higher than a S$2,200/sf condo near Lentor MRT, located in District 26.

The difference between a S$3,500 land price per square feet for a home near Lucky Plaza near Orchard Road and S$1,900 per square feet for a home near Lentor MRT is 84 percent.

Unlike Watten House or certain suburban condos and housing developments, Orchard Boulevard & Holland Road are located more than 1 km away from popular local primary schools. However, this may not be a major deterrent to some buyers.

It is possible to increase a child’s chances of admission by living within 1 km from a primary-school. The proximity of schools to a buyer’s home can help increase a property’s value and bring in more buyers.

However, lifestyle attributes may influence an increasing number of singles to choose homes in a prime district that aren’t near the most popular primary schools.

Third, look for well-off foreigners to buy their first homes in prime condos.

In contrast to condos, it can be difficult for foreigners to purchase landed properties here as they have approval required. Singapore may continue to attract PRs who are wealthy and have high incomes. They could provide a wealth of potential buyers for prime condominiums.

Fourth, even though some buyers of prime district condos prefer freehold, the number of new prime freehold condos available is limited. The 99-year leasing option may be the best choice for people searching for new condos.

Developers typically buy older housing estates in the enbloc market to construct new freehold condos. In existing developments, where nonPR foreigners have a significant share of units owned by them, en bloc sales may be difficult.

Fifthly, those who buy condos in a prime district may be able cope with any economic weaknesses better because they might have saved enough to see them through.

Moreover, well-off residents are likely to be okay with paying more money for that one home which they can afford without paying heavy transaction taxes.

Undoubtedly, the recent sharp price cut to spur sales at Cuscaden Reserve on 99-year Leasehold near Orchard Boulevard has unnerved a lot of developers.

Cuscaden Reserve contains many units of less than 1000 square feet. Could condo buyers prefer larger apartments in prime areas?

UOL’s prime 99-year housing projects can be very profitable if UOL’s partners are able to build a quality 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 !!