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| Waterwoods Executive Condo in Punggol |
That is the question on everybody's mind. I wish it, too. But then.... one constant remains and as long as that attitude remains unchange, a price drop will remain a wishful thinking. What am I talking about? Land price.
The recent spate of government measures may have slowed down the market but no definite downward shift is on the horizon. Why so?
The most important ingredient in property development is land. And government land sales are not showing any signs of easing up. The latest HDB land sales for a piece of executive condo land in Jurong (Yuan Ching Road to be exact) went at a handsome $272,838,888 for a land size of 20,187.7 sqm with a potential of 60,563.1 sqm maximum gross floor area (GFA). The land sale was awarded to Evia Real Estate Pte Ltd.
Here is a simple calculation to derived the potential price per square foot for this upcoming executive condo.
First, we convert the Maximum GFA to square foot:
60,563.1 X 10.764 = 651, 901.208 sqft
Next, we calculate the price per sq foot that the developer paid for:
272,838,888 / 651,901.208 = $418.53 per square foot (psf)
"It is just $418.53 only! Affordable!" But wait. We need to add in projected construction cost, marketing and profit margin.
Construction cost is estimated at $350 psf and we add that to the land cost psf and we get $768.53. Then we factor in approximately 30% of that cost for marketing and profit, and that would be $230.56. The total estimated psf to the buyer is $999. This is the future price per square foot for executive condo compared to today's estimated $800 psf. If government subsidised housing is at $900 psf, imagine what would private condo pricing be like?
