Property firm UOL Group has warned of a potential "disconnect" between recent bullish land bids and prices that new condominium units can eventually be sold for to home buyers.
Developers preparing for a possible upturn in the residential property market amid improving sentiment and sales have been bidding aggressively for sites in public land tenders and collective sales.
UOL deputy group chief executive Liam Wee Sin said: "Our concern is a possible 'disconnect' between the recent land tender prices and achievable end-sale prices.
"Transaction volume in the residential sector has risen steadily, but a sustainable recovery in end-sale prices will depend on the dynamics of economy, supply-demand and the rental market."
Private home prices here, which have fallen for 15 straight quarters as at June 30, are seen by analysts to be near the bottom, and could start rising next year amid higher land prices and rising optimism.
Unveiling its latest financial results yesterday, UOL said it plans to launch two condos here next year: a 140-unit project on a freehold site in Amber Road, and a 750-unit project in Potong Pasir Avenue 1.
It had acquired the Potong Pasir site - where privatised HUDC estate Raintree Gardens sits - via a joint venture for $334.2 million last October. The Amber Road site was bought for $156 million in January.
The residential property sector helped to boost UOL's earnings in the second quarter ended June 30.
The company reported a 59 per cent surge in net profit to $109.4 million from a year earlier.
It attributed the increase to higher recognition of revenue from condo project Principal Garden, higher contributions from associated companies and fair value gains on investment properties.
Revenue climbed by 10 per cent year on year to $399.1 million, with property development accounting for 55 per cent of the turnover during the quarter.
UOL said apart from Principal Garden, other residential projects which contributed to revenue included Botanique at Bartley and Riverbank@Fernvale.
Source: SRX (07 Aug 2017)