The Government Land Sale (GLS) programme is a biannual auction where developers bid for land parcels from the government. The winning bid determines the price of the land, which is a major factor in the overall cost of the project.
So, how can you use GLS to determine if a project is safe to enter? Here's a case study of The Botany at Dairy Farm to help you understand.
The Botany at Dairy Farm is a mixed-use development located in the Dairy Farm area of Singapore. The project comprises 1,016 residential units, as well as commercial and retail space. The land parcel for The Botany at Dairy Farm was sold through the GLS programme in 2019.
The Master Plan for the area shows that there are seven plots of land surrounding The Botany that have yet to be sold. This suggests that the demand for land in this area is strong, as developers are willing to pay a premium to acquire it.
The unsold land could have a positive impact on the future prices of The Botany. As land costs continue to rise, the developers of the unsold land will need to recover their costs by selling their properties at a higher price. This could lead to a bidding war among buyers, which could drive up the prices of all the properties in the area, including The Botany.
In addition, the unsold land could also create a "first-mover advantage" for The Botany. This means that The Botany will be the first new development in the area, and it will be able to attract buyers who are looking for a new home in a prime location.
Of course, the future prices of The Botany will also depend on other factors, such as the quality of the development, the demand for residential property in Singapore, and the overall economic conditions. However, the unsold land in the area is a positive sign for the future of The Botany.
My thoughts on the matter:
The unsold land could also lead to competition between the developers of The Botany and the developers of the unsold land. This could drive down the prices of the properties in the area, but it could also lead to better quality developments.
The unsold land could also create a sense of uncertainty in the market. Buyers may be hesitant to purchase a property in the area if they are not sure when the other developments will be completed.
Overall, the unsold land in the area surrounding The Botany is a mixed bag. It could have both positive and negative effects on the future prices of The Botany. However, the positive effects are likely to outweigh the negative effects, as the demand for land in this area is strong.
Let’s take a look at similar examples of first-mover advantage.
For the West Coast Vale GLS, we can see evidence of a rise in the price of land cost through the years.
Here are some similar examples of first-mover advantage in the West Coast Vale GLS:
Parc Riviera: This development was launched in 2013, and it is the first residential development in the West Coast Vale GLS. The land parcel for Parc Riviera was sold through the GLS programme in 2011, for $925 psf ppr. The average price of the units at Parc Riviera is now $1,400 psf, which shows that the development has appreciated in value by over 50%.
Tree House: This development was launched in 2018, and it is the second residential development in the West Coast Vale GLS. The land parcel for Tree House was sold through the GLS programme in 2017, for $1,088 psf ppr. The average price of the units at Tree House is now $1,600 psf, which shows that the development has appreciated in value by over 50%.
The Floravale: This development is still under construction, but it is the third residential development in the West Coast Vale GLS. The land parcel for The Floravale was sold through the GLS programme in 2022, for $1,200 psf ppr. It is expected that the average price of the units at The Floravale will be higher than the prices of the units at Parc Riviera and Tree House, due to the first-mover advantage.
How has this helped residents of Parc Riviera?
As you can see, because of the rise in land costs and the later project launches, it has helped to bump up the prices of Parc Riviera. Some homeowners even made close to $400,000 in profit!
These are just a few examples of how first-mover advantage can benefit property investors. By investing in the first residential development in a new area, investors can potentially enjoy significant capital gains. However, it is important to do your own due diligence before making any investment decisions, as there are always risks involved in the property market.
Here are some other factors to consider when evaluating the first-mover advantage of a property:
The location of the property: Is the property located in a prime location that is likely to appreciate in value over time?
The quality of the development: Is the development well-designed and built to a high standard?
The developer's track record: Is the developer reputable and has a good track record of delivering quality projects?
The overall economic conditions: Are the economic conditions favorable for property investment?
By considering all of these factors, you can make an informed decision about whether or not to invest in a property with first-mover advantage.