PRIVATE APARTMENTS IN HDB ESTATES : A FEASIBILITY ANALYSIS

Abstract

In the mid-eighties, Singapore's public housing programme entered a new phase in which higher quality and larger size apartments were provided for a more affluent and more discerning population. In line with the Government's intention to privatise some of the public sector operations, sites in some public housing estates were offered for sale to the private sector to develop residential and commercial properties. The main aim was to enhance the social mix of Singaporeans. The HDB Sale of Sites Programme has, since its introduction in late 1989, enjoyed good response. This shows in part the developers' perception of good potential for these sites. However, this perception may be wrong as the concept of private sector development in public housing estates is new. With the volatility and growing complexity of the real estate market, decision-making for real estate development should not be based solely on the developer's intuition and market sentiments. Feasibility analysis should instead be adopted as an effective guide to investment decisions. This study demonstrates the importance of a feasibility analysis to a condominium development on an unfamiliar HDB site. Using modern investment appraisal techniques, the results of the rigorous analysis indicate that the proposed development is feasible. However, the development will only be successful provided that the developer takes precautions over the marketability aspect of the project.