While homes sales have been on the uptrend, some developers are expected to focus on smaller residential developments at the H2 2017 Government Land Sales (GLS), revealed an Edmund Tie & Company report.
This comes as developers try to mitigate the risk of incurring Additional Buyers Stamp Duties (ABSD), given that the external environment remains unstable.
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The H2 GLS programme has four land parcels that offer less than 200 units each and about six land parcels offering at least 700 units each.
Citing the Urban Redevelopment Authority (URA), Edmund Tie & Company said around 2,035 private non-landed residential developments in Singapore have less than 200 units, while a mere 274 non-landed residential developments feature more than 300 units.
“Smaller developments are less risky to the developers given the uncertain external environment and the “five-year time period” stipulated under the ABSD to sell all units of the development,” said the report.
Buyers acquiring for investment, on the other hand, will face less competition in leasing their project upon completion.
Smaller developments also provide new-to-market developers a platform to showcase their products. With fewer residents sharing the facilities, the project becomes more exclusive.
However, economies of scale are harder to achieve in smaller projects, said Edmund Tie & Company.
With higher site coverage ratio, larger projects allow developers to introduce new concepts and offer a greater mix of units to lure buyers.
Meanwhile, buyers purchasing units in bigger projects can “enjoy more facilities and amenities in the development while paying a lower maintenance fee due to a larger resident base”.
This article was edited by Denise Djong.