Developers paying 29% more for land
Developers have been paying substantial premiums for government land sites recently amid healthy private home sales.
There has been aggressive bidding at public land tenders this year with developers paying an average of 29 per cent more for residential plots over comparable sites sold over the past five years.
That was higher than the 13 per cent average premium in the second half of last year, a Cushman & Wakefield report noted yesterday.
It said it showed developers' greater confidence in the residential market, buoyed by positive response in new project launches recently.
Sales of new homes in the first four months this year were brisk - at 4,696 units - driven by projects such as The Clement Canopy.
This was more than double the 2,220 new units sold in the same period last year. The lift was partly due to the easing of cooling measures in March and more projects being put on the market.
Cushman & Wakefield said developers were more "bearish" in the first half of last year and second half of 2015 - when they bought land at a lower price compared to sites sold previously.
Apart from land costs, the number of bidders at each tender has also shot up, from an average of 8.25 in the second half of 2015 to 13.3 in the first four months of this year.
The tender for a non-landed private residential site in Toh Tuck Road attracted a record 24 bids, with Malaysian developer S P Setia clinching the plot for $265 million.
"Interest from foreign players have also intensified, with two out of four land tenders awarded to foreign bidders" so far this year, said Cushman & Wakefield.
Analysts expect tenders to be keenly contested for the rest of the year as land hungry developers fight over a limited supply of sites.