In 2019, the Singapore residential market faced challenges like cooling measures and a decade-low economic growth of 0.7%, mainly due to deteriorating global conditions that arose from the US-China trade war. Nevertheless, mega residential projects achieved encouraging sales and outperformed their smaller counterparts in the country.
Defined as having more than 1,000 apartment/condominium units, mega-projects are located on large sites. Developers bought these sites through collective sales or government land sales, mostly between late 2016 and the first half of 2018 when the market was still recovering.
However, escalating prices prompted the government to tighten cooling measures in July 2018. These included higher Additional Buyer’s Stamp Duties (ABSD) and reduced borrowing limits for home buyers. Developers too have to pay a hefty 25% ABSD (increased from 15%) on failing to develop their projects and sell all units within five years of site acquisition. An additional non-remittable 5% ABSD was also imposed as a new measure.
These cooling measures contributed to a market slowdown while the earlier massive land purchases led to an oversupply. Against this challenging backdrop, developers raced against time to launch their projects, to beat the ABSD deadline. This led to a highly competitive primary market in 2019, as developers tussled to lure buyers to their projects. The pressure faced by developers of mega-projects was more acute, as the large number of units posed a higher marketing risk.
While this seems to be an adversity, mega-projects are not without advantages. They offer a wide variety of units for buyers to choose from, provide a comprehensive range of facilities surpassing those of smaller projects and give buyers the unrivalled spaciousness of living in a big estate. Most importantly, the large number of units and the pressure of the ABSD deadline compelled pricing to be realistic so as to sell well.
Attesting to their popularity, eight out of the top ten best-selling projects in 2019 were mega-projects as shown in the table below. Mega-projects located in the suburban sub-market enjoyed broad-based demand support from the Housing & Development Board (public housing) upgraders as well as first-timers. However, the demand for those in the city fringe is due to their proximity to the city.
Top ten best-selling private residential projects in Singapore in 2019
Source: URA/JLL Research
*Based on non-landed caveats in URA Realis downloaded on 29 February 2020
The top-selling project in 2019 was Treasure at Tampines. Once completed, it will be the largest condominium in Singapore with 2,203 units. Located in Tampines Town in eastern Singapore, it is close to amenities, just off the Pan Island Expressway and a reasonable distance from MRT stations.
The 1,399-unit Parc Esta is located less than 100 metres from Eunos MRT station, and just six train stops to the city. Its proximity to the town is the main draw for buyers. Situated in Hougang Town in north-eastern Singapore, The Florence Residences with 1,410 units, is also surrounded by amenities and is reasonably accessible from MRT stations. The other top-selling mega-projects too have positive attributes that enhance their salability.
As Singaporeans are used to living in big public housing estates, they are comfortable buying into mega private residential projects, provided the price is right.
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