Nice things do come in small packages sometimes, but real estate development sites are usually not among them.
With a full slate of residential redevelopment sites of varying sizes on the collective sale market, sprawling plots may sometimes get overlooked owing to their heftier price tag relative to that of smaller ones. Well, they should not be dismissed so quickly.
Larger land parcels have their advantages which could directly benefit the developer, and will likely have a deep impact on the quality of life of residents at the future development. Let’s not forget that there are very few large contiguous sites in prime central locations in land scarce Singapore.
Bigger plots provide ample spaces for recreational use, for functional facilities as well as social areas where residents can mingle and build bonds, a luxury that many smaller projects in prime locations are unable to offer.
Young families, local and expatriate, increasingly appreciate more sizeable and spacious residential developments that offer a more conducive environment for personal and community activities, complementing the modern efficient housing formats today.
Based on transactions tracked by Colliers International Research, larger developments also attracted higher premium, transacting at higher average prices over comparable projects.
The case for large sites:
1. FLEXIBILITYA sizable and generally regular-sized plot will offer greater flexibility to the developer in site configuration and planning, including having a more favourable facing for the residential towers and seamless integration of various facilities within the project.
2. EFFICIENCY AND SAVINGSGiven more flexibility in project design and site planning, the developer can create a well-designed development with more efficient layout, incorporating more thoughtful features, such as more generous car parking facilities and wider driveways.
Large construction projects can also lead to economies of scale which will have some positive implications on cost management.
Residents can also enjoy economies of scale in the form of lower monthly maintenance fee payable as the cost is spread over a larger number of units in the development. For example, based on a range of condominium projects managed by Colliers, the fees paid by those living in a larger development could be lower by as much as 60% per share value.
3. PRICE PREMIUMColliers’ research found that some of the largest developments in Districts 9, 10 and 11 have enjoyed higher average transacted prices in 2017 compared with those in smaller projects in their respective areas (see Figure 1).
District 9: Rivergate, the second largest project in District 9 after 20-year-old Aspen Heights, fetched a 10-29% premium over comparable developments in the vicinity.
District 10: Ardmore Park, the largest project in the Orchard/Ardmore area, achieved a 19%-64% premium over nearby developments, largely due to its vast landscaping, well-maintained facilities, and the posh factor.
District 11: Park Infinia, the biggest development in District 11, garnered 22-39% premium to projects in the area owing to the build quality, clout and posh factor.
Figure 1: Larger projects had higher premiums in 2017 based on average transacted price
4. QUALITY LIVING ENVIRONMENT
A sprawling site will offer more space for varying recreational facilities, lush greenery and social areas to be built. It presents a unique opportunity for the developer to create a signature project that would not be viable on smaller plots. For instance, an idyllic resort-like sanctuary tucked amidst zen gardens and beautiful landscaping, with walking trails and man-made ponds, as well as an inviting and spacious front porch.
5. SENSE OF COMMUNITY
Community is a vital aspect of living. Having a large contiguous development site will enable the developer to create vibrant community environments and spaces – including well-designed playgrounds, pavilions and courtyards - that will help to increase social interactions.
It is also much easier for children to find playmates across age groups since there are more families living in a larger residential development.
The higher quantum of larger sites may appear daunting, but developers can forge partnerships which will go some way to help mitigate risks. Take the recent dual-envelope public tender for the attractive commercial and residential site in Holland Road, the 15 bids received came from 10 consortiums, with some tabling multiple bids. Tying up with the right partner(s) with complementary strengths will also help to drive synergies and potentially help to manage development costs.
A well-provisioned development with a comprehensive range of facilities, ample open-spaces and lush greenery will also be more appealing to today’s homebuyers who are highly conscious of factors beyond home values. Many young families and professionals now see their home as not just a roof over their heads, but a respite from the hustle and bustle of city living.
Most importantly, larger land parcels give developers the freedom to create iconic, memorable and well sought-after projects that will stand out from the crowd.