DBS Group Research analysts Rachel Tan and Derek Tan say they expect the residential property sector to remain buoyant, although the further “heating” up of the market will raise the risk of intervention from the Singapore government.

The analysts’ comments come as the top bidders for two government land sales (GLS) sites at One-North were revealed on Sept 28.

The winning bid prices stood over 20% more above the land cost for the recently-launched One-North Eden, which made One-North Eden’s homeowners “immediate winners”, say the analysts in their report on Sept 29.

See: IOI bid for Marina View White Site has ample buffers to make good returns: DBS

One-North Eden is located just opposite the Slim Barracks Rise land sites. It sold some 85% of units during the first weekend of its virtual launch in April.

The units were launched at $1,800 psf to $2,250 psf.

The land site for One-North Eden was awarded in 3Q2019 for $1,001 psf ppr.

According to the analysts, the strong showing at One-North Eden probably boosted sentiment for the One-North – Slim Barracks Rise site.

“Interest in suburban condominium sites have been robust year to date (y-t-d), probably boosted by an emerging hybrid work trend (i.e. “WFH”),” add the analysts. “The overall quantum for a unit is more ‘affordable’ to households, although new pricing trends will likely push that envelope.”

The location of both sites is also attractive to the developers given the increasing number of workers expected to be working around the area.

Sea Limited is said to be expanding its presence in One North, while Ho Bee Land is building a new mixed-use development nearby to attract firms in the biotech industry.

Based on the land prices, the analysts surmise that breakeven prices could be around the range of $1,800 to $1,900 psf, which is close to the lower end of the selling price of One-North Eden.

The estimated launch prices could be above $2,000 psf, they add.

For more stories about where the money flows, click here for our Capital section

On this, the analysts see a similarity to the last property upcycle that happened in 2017 and 2018, before the authorities introduced property tightening measures.

“During the last property upcycle, we saw land bids that were easily priced at breakeven prices equivalent to current residential selling prices or even higher.”

Photo of One North area: Samuel Isaac Chua/The Edge Singapore