This year started off strongly for Government Land Sales (GLS) en-bloc sales. Under the GLS, seven residential sites, including two for executive condominiums, were launched and sold, generating over S$2.5 billion for government coffers.

With the residential market hot from robust sales volumes and continued strong interest from developers, I am concerned that some of the estimates for break-even and launch prices quoted in the media or published in financial reports might be adding fuel to the fire.

For example, the Bartley Road GLS site was awarded to the top bidder at S$621 psf per plot ratio early this month. One of the media reports estimated that the developer’s “break-even cost could be around S$1,000-1,050 psf”. Assuming the developer targets a profit margin of S$150 psf, it would mean that the 99-year leasehold residences might be launched for sale at S$1,150-1,200 psf.

Taking into consideration that the Bartley Road ...