COMMENTARY 25 May 2021
NicholasCommentary Mak | 25 May 2021 HeadLatest of Department, ResearchHDB & Consultancy BTO launch
ERA Singapore ERA– APACWhere Centre are the 5-room 450 Lorong 6 Toa Payoh Tel: (65) 6226 2000 Singaporeflats 319394 in HDBFax: (65) 6220 estates? 0066 Latest HDB BTO launch - Where are the 5- room flats in popular estates?
Introduction
The HDB launched 3,879 public housing flats under the latest Build-To-Order (BTO) exercise. These flats are located in the HDB towns of Tengah, Woodlands, Bukit Merah and Geylang. Although the HDB resale price index and the HDB resale transactions had risen 8.1% and 28.6% year-on-year in 1Q 2021 respectively, the supply of new flats in this exercise only increased by 3.7% compared to the February 2021 BTO exercise.
Table 1: Details on upcoming Build-To-Order (BTO) Launch in May 2021
Number of HDB flats
Location of BTO 2-room 3-room 4-room 5-room Total no. S/No. project Flexi flat flat flat of flats
1 Telok Blangah Drive 105 70 175 2 Circuit Road 216 156 1010 1,382 Tengah Garden Walk 3 266 265 251 782 / Tengah Central 4 Woodlands Ave 1 686 84 411 359 1,540 TOTAL 1,168 345 1,756 610 3,879 Source: HDB
Details of BTO projects in May 2021
In this BTO exercise, there are two BTO projects in the non-mature estates, namely in Tengah and Woodlands. The BTO project at Tengah is located near the Jurong Region Line MRT stations with a health and medical centre across the road from the site. There are 782 HDB flats in this BTO project that are quite evenly divided into 2- room flexi flats, 4-room and 5-room flats. The residents of this BTO development will be able to enjoy large green space with plenty of landscaped open spaces.
COMMENTARY Figure 1: Location of BTO project at Tengah
Source: HDB
The other BTO project in a non-mature town is located at Woodlands, a well- developed town with many amenities. This project with a total of 1,540 flats, is the biggest of the four BTO projects. Four types of flats are offered in this project, from 2-room flexi flats to 5-room flats. The residents of this BTO project can enjoy the convenience of nearby neighbourhood parks, shopping malls such as Causeway Point and Marsiling Mall and sports and swimming complex.
Figure 2: Location of BTO project at Woodlands
Source: HDB
Both the BTO projects in the mature towns are easily accessible by public transport. While the project at Bukit Merah is within walking distance to the Telok Blangah MRT Station, the one at Geylang is located next to the Macpherson MRT Station. The 1,382-unit BTO project at Macpherson would also include a 2-storey childcare centre and a resident’s network centre within the development.
COMMENTARY Figure 3: Location of BTO project at Geylang
Source: HDB
Please refer to the table below for the distance to nearest MRT station.
Table 2: Nearest MRT stations to May 2021 BTO projects
No. of Distance to stations to Town Project name Nearest MRT station nearest MRT CBD (Raffles station (m) Place MRT)
Telok Blangah Bukit Merah Telok Blangah (CC28) 326 4 Beacon MacPherson Macpherson Geylang 199 7 Weave (DT26/CC10) Garden Bloom @ Tengah Hong Kah 300 14 Tengah Woodgrove Woodlands Woodlands 632 12 Ascent (NS9/TE2) Source: HDB, various government sources, ERA Research & Consultancy
Which is the most attractive BTO project?
The 175-unit BTO project at Bukit Merah or Telok Blangah is the smallest of the four projects. It is likely to be among the most sought-after project due to a few reasons. Firstly, it is located less than 5-minute walk to the Telok Blangah MRT station. Secondly, the residents in this project will be served by a nearby wet market, a food centre a supermarket, HDB shops and clinics for residents’ daily needs. Thirdly, there is limited amount of vacant residential land in that area. Hence, there will be limited supply of new HDB flats in this location. COMMENTARY Figure 4: Location of BTO project at Bukit Merah
Source: HDB Moreover, the project is located at the southern part of Singapore. Residents living on the higher floors of this project would be able to enjoy good view of the sea and Sentosa Island from their homes.
Fifthly, some people might also prefer this location due to its favourable Fengshui, with a hill (Mount Faber) behind their homes and the sea in the front of their homes.
The other popular BTO project would be Macpherson Weave, which is next to the MacPherson MRT Station, which is also an MRT interchange of two MRT lines, namely the Downtown Line and Circle Line.
Longer waiting time for flats in mature estates
While the waiting time for BTO projects in non-mature towns is relatively shorter at 46 months, buyers who are interested in the BTO projects in mature estates might need to wait up to 64 months to get their flats, as in the case for the Telok Blangah BTO project. It appears that the government is trying to direct more homebuyers to the non-mature estates. Taken another way, the buyers of BTO flats in mature estates appears to be penalized for their choices.
Given the ever-evolving Covid-19 situation, the waiting time for new HDB flats could be even longer. This has pushed many young couples who are in urgent need of HDB flats to look into the Sales of Balance Flats or the HDB resale market. Hence, the demand and prices of HDB resale flats will likely continue to rise.
COMMENTARY Where are the 5-room flats in popular projects?
In the recent BTO exercises, there was an absence of 5-room flats in the popular BTO projects located in mature estates, such as the BTO project in Bishan, and in the current BTO projects in Telok Blangah and MacPherson.
One possible reason is that the authorities do not want to attract criticism among homebuyers that the BTO flats in the popular mature estate are getting too expensive. The 5-room flats are the largest flats in most BTO projects and hence, are usually the most expensive among the BTO flats. Therefore, the government hopes to bring down the upper limit of the price range of the BTO flats by not offering 5- room BTO flats in the popular estates.
Another reason could be that if there are new 5-room flats in the popular estate, there would be higher chances of more million-dollar HDB resale flats in the near future, when these 5-room flats are sold in the resale market. However, such policy is short-sighted. Firstly, there is a rising desire and demand for larger homes, given that the work-from-home (WFH) practice will be with us for quite some time. Secondly, with the average household income rising in Singapore, especially among the working professionals whose jobs and income are less affected by the pandemic, more household will be willing and able to pay more for the larger choice flats.
By limiting the supply of 5-room flats in the popular estates, the existing stock of 5-room flats in these locations would become relatively rarer and even more valuable. Hence, the owners of these existing larger flats will have a higher chance of selling their flats at even higher prices, potentially leading to more million-dollar flats.
COMMENTARY Disclaimer
The information contained in this document is for general information purposes only and does not have regard to the specific investment objectives, financial situation and the particular needs of any recipient hereof. This report is prepared by Research & Consultancy Department of ERA Realty Network Pte Ltd (“ERA”). This report may not be published, circulated, reproduced or distributed in whole or in part by any recipient of this report to any other person or parties without the prior written permission of ERA.
The information, views or opinions contained in this document (“Information”) has been obtained or derived from sources believed by ERA to be reliable. However, ERA is not responsible for and makes no representation as to the accuracy or completeness of such sources or the Information and ERA accepts no liability whatsoever for any loss or damage arising from the use of or reliance in whole or in part on the Information. ERA and its connected persons may have issued other reports expressing views different from the Information and all views expressed in all reports of ERA and its connected persons are subject to change without notice. ERA reserves the right to act upon or use the Information at any time, including before its publication herein.
The recipient should not treat the contents of this document as advice relating to legal, taxation or investment matters. Any person or party interested in further pursuing the matters contained herein are advised to make their own independent investigations and verification of the Information and any other information such persons or parties may consider to be relevant or appropriate in the circumstances.
This document does not, nor is it intended to, constitute an offer or a solicitation to purchase or sell any asset or property, or to enter into any legal relations, nor an advice or a recommendation with respect to such asset or property.