North-east region may see glut of homes, says report

A Spate of project launches in the north-east has sparked concern that there will be an oversupply of homes in the coming years.

Sites that can yield more than 10,000 homes have been sold in Punggol, Buangkok and Sengkang alone since September 2009.

These have been developed into projects such as A Treasure Tampines Trove, Watertown, H2O Residences and The Luxurie.

If other north-east estates like Hougang, Seletar and parts of Upper Serangoon are included, almost 14,000 units on about 25 sites are on the cards. These units, which include executive condominiums (ECs), are expected to be ready from 2014 to 2016.

Three EC sites in Punggol that can yield about 1,415 homes are also up for grabs in the government land sales (GLS) programme for the current half of the year.

Factor in upcoming Housing Board (HDB) build-to-order launches as well - and you have a daunting set of numbers.

Experts say that while there remains demand from HDB upgraders for private and EC projects, the bumper supply of sites does look 'worrisome'.

Even if there is demand from the nearby Seletar Aerospace Park, competition for tenants will be fierce and investors might have to accept lower rents, and hence, lower rental yields.

The oversupply risk is also mitigated by the fact that 46 per cent of the upcoming flats in Punggol, Sengkang and Buangkok are ECs. This includes the EC sites to be sold in the later part of this year.

ECs have condo-like facilities and are an upmarket hybrid of public and private housing. They also have an MOP of five years and can then be sold only to Singaporeans and permanent residents.

This means it could take at least eight years - three years of construction and a five-year MOP - before they enter the secondary market. This staggered supply will reduce the chance of a glut.

Source: The Straits Times – 7 July 2012