Introduction
The
Design, Build and Sell Scheme (DBSS) have been suspended by the Housing and
Development Board (HDB) since July 2011. Pending the outcome of the review, where
do “wannabe” owners of a DBSS flat turn to now that the scheme is suspended? Do
they rush into the remaining DBSS projects, buy a resale HDB flat, wait for a
Build-to-Order (BTO) flat or an Executive Condominium (EC) unit? This article
examines the popularity behind DBSS flats and the likely flat options “wannabe”
owners of DBSS flats can consider.
Housing Stratums in Singapore Public
Housing
The
public housing market under the HDB has evolved over time to suit the aspiring
needs of home owners. From the very early days of providing a simple roof over
the head, public flats now come with better quality designs and finishes and
has taken the form of Premium Flats, Executive Flats, DBSS flats and EC units
to suit different classes of purchasers. The HDB has also upgraded some of the
older flats to enhance the living environment of the residents. DBSS flats sit
in between EC units and standard/premium flats.
The
idea of EC was proposed by then Prime Minister Goh Chok Tong in 1995 as a means
to shorten the queue for HDB executive flats and to meet Singaporeans' demand
for affordable, private property. EC are comparable in design and facilities to
private condominiums as they are developed and sold by the private developers
but they are subject to HDB’s eligibility conditions such as minimum occupation
period and income ceiling. Eastvale, located at Pasir Ris Drive 3 was among the
first EC development. The EC scheme was put on hold in 2004 and resumed in
2010. As of October 2011, a total of 35 EC sites have
been sold.
The
halt in sales of EC sites in 2004 left a void in the public housing market and
forced potential buyers of ECs to enter either the private condominium market
or HDB Build-to-Order (BTO)/resale market.
Even
so, there still exists a group of buyers who want condominium finishes but not
a condominium address hence the introduction of DBSS in 2005.
According
to the HDB, the DBSS was introduced to the public housing market to offer
greater choice and wider variety to meet the housing aspirations of higher
income flat buyers for better design and finishes. Under the DBSS, the
developer tenders for the land and enjoys flexibility in designing, pricing and
selling the flats subject to the relevant legislation and rules to preserve the
character of public housing and ensure building quality and safety.
Flats
sold under the DBSS come with a 99-year lease and will be offered to buyers
under similar HDB eligibility conditions like flats developed by the HDB. Upon
completion of the building, the developer will hand over the entire development
site to HDB for lease administration, and to the Town Council for maintenance
of the common areas and car parks.
Before
the suspension of the DBSS in July 2011, a total of 13 DBSS sites have been
sold.
Location and Pricing of DBSS Flats
When
the DBSS concept and site was first introduced, it was a relative untested product
and this was reflected in the cautious bids placed for the first site at
Tampines Avenue 6.
However
the 616-unit project was a sell-out success, receiving almost 6,000
applications within two weeks. This sent a strong signal to the market that
there is untapped demand for public housing projects with condominium finishes.
Subsequent
bids for DBSS sites improved, varying between $137 per sq ft per plot ratio
(psf ppr) and $281 psf ppr depending on the location of the sites and market
conditions. The last DBSS site sold before the scheme was suspended was at
Pasir Ris Central/Pasir Ris Drive 1 which is across the Pasir Ris MRT station.
Most
of the successful bidders for DBSS sites tend to be builders for HDB flats with
varying degrees of experience in condominium projects.
Of
the 13 DBSS sites sold, two developers, a Hoi Hup joint venture and Sim Lian
Land Pte Ltd account for almost half or six projects.
Table 1: Details of DBSS Sites Sold
Date Awarded
|
Location
|
Gross Floor Area (sq
ft)
|
Successful Tenderer
|
Tender Price
|
Project Name
|
June
2011
|
Pasir
Ris Central/Pasir Ris Drive 1
|
440,997
|
Singxpress Land (Pasir Ris) Pte Ltd and Kay
Lim Holdings Pte Ltd
|
$123,880,009
($281 psf ppr)
|
Pasir Ris One
|
March
2011
|
Clementi
Avenue 4
|
825,298
|
EL Development Pte Ltd
|
$224,000,000
($271 psf ppr)
|
Trivelis
|
January
2011
|
Yuan
Ching Road
|
684,574
|
Hoi Hup Realty Pte Ltd, Sunway Developments
Pte Ltd and SC Wong Holdings Pte Ltd
|
$131,600,000
($192 psf ppr)
|
Lake Vista @ Yuan Ching
|
December
2010
|
Upper
Serangoon Road
|
753,473
|
Kwan Hwee Investment Pte Ltd
|
$155,228,998
($206 psf ppr)
|
Parkland Residences
|
November
2010
|
Bedok
Reservoir Crescent
|
502,362
|
CEL Development Pte Ltd
|
$112,688,000
($224 psf ppr)
|
Belvia
|
August
2010
|
Tampines
Avenue 5/Tampines Central 8
|
682,379
|
Sim Lian Land Pte Ltd
|
$178,128,000
($261 psf ppr)
|
Centrale 8 @ Tampines
|
May
2010
|
Yishun
Avenue 11/Yishun Central
|
828,028
|
Guthrie (DBP) Pte Ltd and SK Land Pte Ltd
|
$148,888,888
($180 psf ppr)
|
Adora Green
|
August
2008
|
Lorong
1A Toa Payoh
|
1,242,322
|
Hoi Hup Realty Pte Ltd, Sunway Developments
Pte Ltd and Hoi Hup JV Development Pte Ltd
|
$198,822,000
($160 psf ppr)
|
The Peak @ Toa Payoh
|
June
2008
|
Simei
Road
|
380,327
|
Sim Lian Land Pte Ltd
|
$52,000,000
($137 psf ppr)
|
Parc Lumiere @ Simei
|
February
2008
|
Bishan
Street 24
|
573,336
|
Qingdao Construction Group Corporation
(Singapore Branch)
|
$135,888,777
($237 psf ppr)
|
Natura Loft @ Bishan
|
December
2007
|
Ang Mo
Kio Street 52
|
632,507
|
Greatearth Developments Pte Ltd
|
$134,180,000
($212 psf ppr)
|
Park Central @ AMK
|
June
2007
|
Boon
Keng Road
|
728,146
|
Hoi Hup Realty Pte Ltd, Sunway Concrete
Products (S) Pte Ltd and Oriental Worldwide Investments Inc
|
$170,200,000
($234 psf ppr)
|
City View @ Boon Keng
|
January
2006
|
Tampines
Avenue 6
|
723,334
|
Sim Lian Land Pte Ltd
|
$82,222,000
($114 psf ppr)
|
The Premiere @ Tampines
|
Based
on information released by DBSS developers, a potential buyer can expect to pay
between $374 and $728 psf[1] for a unit in a DBSS
project. According to developers of DBSS flats, the prices depend on a
combination of factors like location, finishes, design, resale HDB flats prices
and market conditions.
The
latest DBSS launches, Trivelis and Lake Vista @ Yuan Ching have an estimated
price range between $500 and $728 psf according to information provided by the
developers. The nearest comparables for these two DBSS projects would be the September
2011 BTO launch at Jurong East. Compared to the September 2011 BTO launch, a
DBSS unit can cost as much as $250 to $350 psf or 50% higher than a BTO unit, a
significant premium to pay for the location, design and finishes.
Table 2: Prices of DBSS Flats and Apartments/Condominiums
Project Name
|
Location
|
Estimated Price
Range
|
Jurong East BTO
Price Range*
|
Trivelis
|
Clementi
Avenue 4
|
$580 to $728 psf
|
$220 to $365 psf
|
Lake
Vista @ Yuan Ching
|
Yuan
Ching Road
|
$500 to $585 psf
|
* Prices of standard flats
From
Table 3, it is observed that some DBSS projects are priced very close to the
prices of ECs at the time of launch. Bearing in mind that a DBSS flat is not neither
an EC nor an apartment/condominium, developers have to be mindful not to encroach
onto the boundaries of private residential developments when pricing a DBSS
flat. In fact if a buyer does not mind buying resale ECs or apartments/condominiums,
good bargains can be found in the private resale market.
Table 3: Prices of DBSS Flats, ECs and Apartments/Condominiums
Project Name
|
Location
|
Type
|
Estimated Price
Range
|
Release Date
|
Median Price of EC
in Vicinity at Time of DBSS Launch
|
Median Price of
Leasehold Apartments/Condominiums in Vicinity at Time of DBSS Launch
|
Pasir Ris One
|
Pasir
Ris Central/Pasir Ris Drive 1
|
3-, 4- and 5-room
|
$389,000 to $760,000
($556 to $672 psf)
|
April 2012
|
$697 psf
|
$902 psf
|
Trivelis
|
Clementi
Avenue 4
|
3-, 4- and 5-room
|
$375,000 to $770,000
($580 to $728 psf)
|
October 2011
|
No Comparables
|
$893 psf
|
Lake
Vista @ Yuan Ching
|
Yuan
Ching Road
|
3-, 4- and 5-room
|
$360,500 to $680,400
($500 to $585 psf)
|
October 2011
|
$673 psf
|
$942 psf
|
Parkland
Residences
|
Upper
Serangoon Road
|
3-, 4- and 5-room
|
$359,000 to $738,000
($498 to $612 psf)
|
January 2012
|
No Comparables
|
$887 psf
|
Belvia
|
Bedok
Reservoir Crescent
|
3-, 4- and 5-room
|
$395,000 to $670,000
($549 to $593 psf)
|
October 2011
|
No Comparables
|
$960 psf
|
Centrale
8 @ Tampines
|
Tampines
Avenue 5/Tampines Central 8
|
3-, 4- and 5-room
|
$389,000 to $778,000
($592 to $667 psf)
|
June 2011
|
$631 psf
|
$877 psf
|
Adora
Green
|
Yishun
Avenue 11/Yishun Central
|
3-, 4- and 5-room
|
$310,000 to $650,000
($430 to $541 psf)
|
April 2011
|
$651 psf
|
$655 psf
|
The
Peak @ Toa Payoh
|
Lorong
1A Toa Payoh
|
3-, 4- and 5-room
|
$355,000 to $722,000
($471 to $573 psf)
|
April 2009
|
No Comparables
|
$647 psf
|
Parc
Lumiere @ Simei
|
Simei
Road
|
4- and 5-room
|
$378,000 to $575,000
($374 to $482 psf)
|
April 2009
|
$497 psf
|
$657 psf
|
Natura
Loft @ Bishan
|
Bishan
Street 24
|
4- and 5-room
|
$490,000 to $739,000
($479 to $572 psf)
|
October 2009
|
$682 psf
|
$715 psf
|
Park
Central @ AMK
|
Ang Mo
Kio Street 52
|
4- and 5-room
|
$433,000 to $689,000
($447 to $534 psf)
|
July 2008
|
$490 psf*
|
$693 psf
|
City
View @ Boon Keng
|
Boon
Keng Road
|
3-, 4- and 5-room
|
$349,000 to $727,000
($477 to $568 psf)
|
December 2007
|
No Comparables
|
$520 psf
|
The
Premiere @ Tampines
|
Tampines
Avenue 6
|
2-, 4- and 5-room
|
$138,000 to $450,000
($256 to $367 psf)
|
October 2006
|
$345 psf
|
$442 psf
|
* Only 1 transaction
Why DBSS and not BTO, Resale or EC?
Given
that DBSS flats are much more expensive than a BTO flat and comparable in
prices to some resale HDB flats, EC and private apartment/condominium units at
the time of launch, one cannot help but wonder what the reasons for buying a
DBSS flat are.
Broadly
speaking, the key differences between a DBSS unit and a BTO flat would be the location,
price, design and finishes. In fact these are oft mentioned reasons by buyers
of DBSS flats, with location coming up tops.
Looking
at the location of the DBSS sites, most of them are less than 1km away or
within 10 minutes’ walk to the nearest MRT station. Also most of the DBSS sites
are in mature HDB estates, meaning the necessary infrastructure and amenities
are already present providing added convenience to the buyers.
The
recent strong interest in the Sales of Balance Flats by HDB where applications
outnumbered the number of flats by 6:1 serves to highlight the fact that buyers
prefer mature estates. Comparatively a BTO exercise in the same period saw only
a subscription rate of 1.6 as most of the BTO flats will be built in new towns
such as Sengkang and Punggol.
Table 4: Location of DBSS Flats
Project Name/Location
|
Tender Price
|
Estimated Price
Range
|
Estimated Distance
to Nearest MRT (m)
|
Nearest MRT
|
Pasir Ris One
|
$281 psf ppr
|
$556 to $672 psf
|
100
|
Pasir Ris
|
Trivelis
|
$271 psf ppr
|
$580 to $728 psf
|
500
|
Clementi
|
Lake
Vista @ Yuan Ching
|
$192 psf ppr
|
$500 to $585 psf
|
2,200
|
Lakeside
|
Parkland
Residences
|
$206 psf ppr
|
$498 to $612 psf
|
1,300
|
Hougang
|
Belvia
|
$224 psf ppr
|
$549 to $593 psf
|
3,000
|
Bedok
|
Centrale
8 @ Tampines
|
$261 psf ppr
|
$592 to $663 psf
|
800
|
Tampines
|
Adora
Green
|
$180 psf ppr
|
$430 to $539 psf
|
900
|
Yishun
|
The
Peak @ Toa Payoh
|
$160 psf ppr
|
$471 to $573 psf
|
800
|
Toa Payoh
|
Parc
Lumiere @ Simei
|
$137 psf ppr
|
$374 to $482 psf
|
650
|
Simei
|
Natura
Loft @ Bishan
|
$237 psf ppr
|
$479 to $572 psf
|
1,300
|
Bishan
|
Park
Central @ AMK
|
$212 psf ppr
|
$447 to $534 psf
|
800
|
Ang Mo Kio
|
City
View @ Boon Keng
|
$234 psf ppr
|
$477 to $568 psf
|
550
|
Boon Keng
|
The
Premiere @ Tampines
|
$117 psf ppr
|
$256 to $367 psf
|
950
|
Tampines
|
Also
buyers of DBSS flats are price sensitive as evidenced by the recent negative
reaction to a DBSS project where the most expensive units were initially priced
above $800,000 but subsequently lowered below $800,000 during launch. Other
DBSS launches appeared to have taken the cue and priced their most expensive
units below $800,000. The $800,000 price tag have become the “so-called
ceiling” for new DBSS flats.
Another
reason why some buyers chose DBSS flats over resale HDB flats is the high cash
over valuation (COV) demanded by some sellers and the age of the resale flats.
Comparatively the amount of cash downpayment for a DBSS flat can be lower than
the COV for a resale HDB flat. Furthermore for a similar or lesser cash amount,
buyers are getting a new flat if they choose a DBSS development.
Table 5: Prices of DBSS Flats versus Resale HDB Flats
Project
Name/Location
|
Estimated Price
Range
|
Resale HDB Flat
Prices in 2011*
|
Pasir Ris One
|
$389,000 to $760,000
($556 to $672 psf)
|
$303,000 to $565,000
($315 to $442 psf)
|
Trivelis
|
$375,000 to $770,000
($580 to $728 psf)
|
$288,000 to $765,000
($393 to $723 psf)
|
Lake
Vista @ Yuan Ching
|
$360,500 to $680,400
($500 to $585 psf)
|
$253,000 to $533,000
($332 to $465 psf)
|
Parkland
Residences
|
$359,000 to $738,000
($498 to $612 psf)
|
$244,000 to $610,000
($358 to $475 psf)
|
Belvia
|
$395,000 to $670,000
($549 to $593 psf)
|
$267,000 to $680,000
($351 to $682 psf)
|
Centrale
8 @ Tampines
|
$389,000 to $778,000
($592 to $667 psf)
|
$289,000 to $550,000
($332 to $490 psf)
|
Adora
Green
|
$310,000 to $650,000
($430 to $541 psf)
|
$260,000 to $520,000
($281 to $447 psf)
|
The
Peak @ Toa Payoh
|
$355,000 to $722,000
($471 to $573 psf)
|
Not Available
|
Parc
Lumiere @ Simei
|
$378,000 to $575,000
($374 to $482 psf)
|
Not Available
|
Natura
Loft @ Bishan
|
$490,000 to $739,000
($479 to $572 psf)
|
Not Available
|
Park
Central @ AMK
|
$433,000 to $689,000
($447 to $534 psf)
|
Not Available
|
City
View @ Boon Keng
|
$349,000 to $727,000
($477 to $568 psf)
|
Not Available
|
The
Premiere @ Tampines
|
$138,000 to $450,000
($256 to $367 psf)
|
Not Available
|
*
at time of launch/September 2011
Therefore
we can infer from buyers’ preferences that location and price are the key
factors behind their decision in buying a DBSS unit with design and finishes
secondary.
Grab One before it’s All Gone?
Given
that the DBSS has been suspended pending a review, does it mean that it will
become a rarity and buyers should jump in to grab one if the location and price
are right?
Not
necessarily so.
First
the pricing of DBSS flats have been pushing the boundaries so much that they
are now not far off from the prices of new EC projects under development.
According to caveats lodged with the URA, the price range for new EC projects in
2011 is from $501 to $820 psf and the median price for EC units is around $700
psf.
The
price gap between DBSS and EC units are perhaps around $100 to $150 psf,
meaning ECs are a compelling alternative to DBSS flats in the current market.
Table 6: New EC Projects for Sale
EC Project Name
|
Location
|
Nearest MRT
|
Median Transacted
Price
|
Blossom
Residences
|
Segar Road
|
Choa Chu Kang
|
$702 psf
|
Arc at
Tampines
|
Tampines
Avenue 8
|
Tampines
|
$734 psf
|
Belysa
|
Pasir
Ris Drive 1/ Elias Road
|
Pasir Ris
|
$696 psf
|
RiverParc
Residences
|
Punggol
Drive/ Punggol East
|
Punggol
|
$696 psf
|
Prive
|
Punggol
Field/ Punggol Road
|
Punggol
|
$697 psf
|
Austville
Residences
|
Sengkang
East Avenue/ Buangkok Drive
|
Buangkok
|
$717 psf
|
The
Canopy
|
Yishun
Avenue 11
|
Yishun
|
$656 psf
|
Esparina
Residences
|
Compassvale
Bow
|
Buangkok
|
$762 psf
|
Second
the revision in income ceiling on 15 August 2011 from $8,000 to $10,000 for BTO
and DBSS flats and $12,000 for EC units means that buyers have more choices. However
there is a catch.
Even
though a couple earning a combined income up to $10,000 per month can qualify
for a DBSS flat, they are not eligible for a HDB concessionary loan if their
combined income exceeds $8,000 per month. Comparatively the couple can qualify
for a HDB concessionary loan if they decide to go for a BTO flat. If they
decide to take a bank loan because of the lower interest rate, then they can
consider an EC as well since the price gap between an EC and DBSS flat is not
far off.
Table 7: Eligibility for HDB Concessionary Loan
Income
Ceiling
|
|||
Flat
Type
|
Below
$8,000 per month
|
$8,001
to $10,000 per month
|
$10,001
to $12,000 per month
|
BTO
|
HDB/Bank Loan
|
HDB/Bank Loan
|
Does not qualify
to buy BTO
|
DBSS
|
HDB/Bank Loan
|
Bank Loan
|
Does not qualify
to buy DBSS
|
EC
|
Bank Loan
|
Bank Loan
|
Bank Loan
|
The
difference between a HDB concessionary loan and a bank loan at the current
interest rate can offset the price difference between a DBSS flat and an EC
unit giving buyers more options.
Table 8: Mortgage Installments for DBSS Flat and EC Unit
Estimated
Price
|
Cash
(5%)
|
Downpayment
(20%)
|
Fixed
Interest Rate
|
Mortgage
Installment
(30
year loan)
|
|
DBSS
|
$650,000
|
$32,500
|
$130,000
|
2.6% (HDB)
|
$2,081.76
|
EC
|
$750,000
|
$37,500
|
$150,000
|
1.6% (Bank)
|
$2,099.63
|
Assumed flat size of
1,130 sq ft, Maybank 1-year Locked-In Variable Rate loan at 1.28%, 1.38% and
1.98% for first three years
Thirdly
even though the DBSS is suspended for now, it is possible that the scheme may
be revived in the future when market conditions necessitate it as evidenced by the
reintroduction of EC scheme in 2010.
Conclusion
The
DBSS may have served its purpose for the past few years where it catered to a
particular group of buyers who wanted condominium finishes without a
condominium address.
Location
was a key consideration among buyers when they made their decision to purchase
a DBSS flat over a BTO flat with affordability next in mind. However if a BTO project
is in a good location, they are likely to attract more buyers too.
For
example, the Dawson Estate BTO in 2009 was six times oversubscribed with 9,865
applications for 1,718 premium units. Another good example would be the
Pinnacles@Duxton in 2004. Thou not a DBSS development, the Pinnacles@Duxton was
a BTO development designed by private sector architects. The subscription rate
was 2.7 times with 4,953 applications for 1,848 units.
Hence
the key differentiating factor between a DBSS and a BTO is the location. If you
have a DBSS project in a good location, there will be more applications for the
project as shown by the different subscription rates for the latest three DBSS
projects and BTO projects.
In
fact there was no need for DBSS in the first place with EC projects already offering
buyers quality design and finishes except that some EC developments are not in
matured estates. But with prices of DBSS flats encroaching onto EC prices, buyers
of DBSS flats should seriously consider EC developments. If there are concerns
over affordability, buyers can take heart that the difference in interest rate
can offset the price difference between a DBSS flat and an EC unit as shown in
Table 10. Furthermore buyers of EC projects can opt for Deferred Payment Scheme
further lowering the burden on buyers during the construction phase.
In
terms of future supply, there are at least five more EC projects in the
pipeline for buyers to choose from.
Table 9: Upcoming EC Projects
Yet to be Launched
EC Location
|
Nearest MRT
|
Yishun
Avenue 7/ Canberra Drive
|
Yishun
|
Pasir
Ris Drive 3/ Pasir Ris Rise
|
Pasir Ris
|
Punggol
Way/ Punggol Field
|
Punggol
|
Tampines
Central 7
|
Tampines
|
Choa
Chu Kang Drive
|
Choa Chu Kang
|
In
summary, the DBSS has served its purpose and should be suspended till market
conditions necessitate it again. For buyers considering DBSS flats, they can
consider widening their options to include EC developments which are compelling
alternatives to DBSS flats since the price gap is not big.
