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No takers for Punggol EC site

Source: The Straits Times
11 Nov 08 (Tue)

By Joyce Teo, Property Correspondent

IN THE latest sign of a weakening property market, a tender for an executive condominium (EC) site in Punggol closed yesterday with no bids received.

Property consultants attributed the dearth of interest in the entry-level condo site to still-high construction costs and a lacklustre property market which is expected to trend lower.

This is the fourth EC site the Government has put on the market this year and the only one it kept for confirmed sale for the rest of this year.

Due to the poorer outlook for Singapore's economy and property market, the Government recently transferred all remaining confirmed sites for sale - apart from the Punggol EC site - onto a 'reserve list' where sites are put up for sale only if there is interest.

The 242,159 sq ft Punggol site can accommodate a development of about 16 storeys housing about 600 units.

It is a 99-year leasehold site at the junction of Punggol Field and Punggol Road and near the Punggol MRT station.

While property consultants consider the location to be fairly attractive, they also say the market is not.

They said that high construction costs are probably a key factor deterring developers from bidding.

'Right now, construction costs have not come down yet so developers will still have to build at high construction costs. As a result, they do not have a lot of price flexibility,' said Knight Frank's director of research and consultancy, Mr Nicholas Mak.

'They will end up with a case where some resale 99-year leasehold condo units cost the same or less than EC units,' he said.

'With construction costs still high, the numbers are just not attractive. If you're going into a market that is trending down, there's no point taking this risk,' Savills Singapore's director of marketing and business development Ku Swee Yong said of developers.

Besides, not all developers can get attractive financing terms in today's market. The weaker ones have trouble raising any funds at all, he said.

Mr Ku also thinks the demand for an EC in Punggol may not be strong. 'The market is not big in Punggol as many had bought in 2000 when prices were quite high so they haven't made a profit yet.'

Applicants for EC homes are subject to a household income ceiling of $10,000.

Upgrading may not be a top priority for residents in Punggol as it is a fairly new town, he added.

According to the Housing Board, the fate of the site will be known by next month, when the National Development Ministry puts out its land sales list for the first half of next year.

Related post: Punggol EC site fails to draw any bid


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