The headwinds in Singapore’s realty market owing to the recently announced new cooling measures have started having its effects.
In a major development real estate, KOP has changed its planned redevelopment of Villa D’Este and now plans to go for smaller units.
The developers had bought this freehold site in District 10 Dalvey Road in the month of May 2018 in an en bloc sale for S$93 million.
It had paid S$1,898 psf for the site considering the existing GFA of 49,072 sq ft as was reported earlier.
The developers are now planning to develop 40 units as against the initial plan of 22 apartment units which is nearly double the figure planned earlier.
The company believes smaller-sized apartments are in demand in the current market.
Ong Chih Ching, Executive Chairman of the company said that while they had initially planned for large-sized apartments but with the new cooling measures they believe small-sized units would do better.
They have already submitted the new plans for approval to the Urban Redevelopment Authority.
As per its new plan apartment units will start at 650 sq ft and the largest one would be 3000 sq ft in size.
KOP had earlier planned for longer block, however this was against constrains for the site which falls under the Good Class Bungalow area.
According to the new plans the site would be turned into High End resort-style condominiums and the developer expects Singaporean wishing to upgrade their lifestyle to move into its new apartments which is likely to be launched within by the middle of 2019.
It may be recalled that the Government changed the Additional Buyer’s Stamp Duty (ABSD) rates in July and also made the Loan-to-Value (LTV) limits stricter in July for residential properties.
Singaporeans and Permanent Residents wanting to buy a second home or any subsequent property now have to shell out an additional 5% on ABSD though PRs and Singaporeans who’d buy their first property have been exempted from this additional tax burden.
Foreigners who are looking to buy a property have to pay 20% ABSD while the rates have been raised to 25% of any entity looking to invest in a residential property.
In terms of LTV limits financial institutions granting loans have to tighten it by 5% as per the recently announced measures. Market experts suggest that the new cooling measures are likely to hit demands and most buyers would opt for smaller and cheaper apartments or HDB apartments.
Ms Ong added that with the new cooling measures, developers are likely to see their profits come down.
Villa D’Este sits on a 55,480 sq ft plat and has at present 12 apartments units that are spread across two multi-storeyed blocks.
The site has been zoned for residential use under the 2014 Master Plan and has apartments ranging in size between 3,465 sq ft and 3,939 sq ft.
The freehold property was launched for en bloc sale in 2017 with a reserve price of S$96 million but no developer showed interest. It was launched again in January this year 2018 and the tender closed in March.
The property was first launched for en bloc sale in 2010 where it has a reserve price of S$115 million but failed to attract any bids.
It was then pick up by KOP Limited in May 2018 for S$93 million which at a land rate of S$1,898 psf ppr.