Limited Edition HDB Flats: All About Design Build and Sell Scheme (DBSS)

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January 04, 2022

Limited Edition HDB Flats: All About Design Build and Sell Scheme (DBSS)

“Limited Edition” HDB Flats: Design Build and Sell Scheme (DBSS)

Since its inception in 1960, the Housing and Development Board (HDB) has resolved Singapore’s housing crisis and successfully housed a nation, building public housing flats that have kept pace with the times. Over the decades, the HDB has offered a variety of flat types to meet different needs.

In this blog series, PropNex Research looks at some flat models which are no longer built - such as HDB terraced houses, maisonettes, Design, Build and Sell Scheme (DBSS) flats, and executive apartments – and why they have remained popular and are commanding premium prices in the resale market.

Part 4: DBSS

1. What is a Design Build and Sell Scheme (DBSS) HDB Flat?

DBSS flats are public apartments built under the Housing & Development Board's (HDB) Design, Build and Sell Scheme (DBSS) that was introduced in 2005. They are a unique and premium breed of HDB flats in Singapore built by private developers. The private developer will bid for and purchase the land from HDB, then oversee the design and planning of the project, as well as the sale and construction of the flats.

DBSS flats differ from more common, cookie-cutter HDB flats that have standard layouts and features. Within the home, residents of DBSS flats can expect condo-like designs such as balconies, study areas, floor-to-ceiling windows that allow for more natural light. The interior and layout of a DBSS flat resembles a private condominium unit more than an HDB flat.

While their designs are more condo-like compared to standard HDB flats, DBSS flats do not have the full suite of facilities and amenities available in private condominiums such as a swimming pool, gym, and so on. Also, unlike executive condominiums which can be fully privatized and sold as a private residential property after 10 years from TOP (Temporary Occupation Permit), DBSS flats cannot be privatized and will remain as a HDB property.

The DBSS scheme was rather short-lived, having been discontinued in 2012, only 8 years after its inception in 2005. In total there were a total of 13 DBSS projects that were built during this short-lived period. Due to the rarity of DBSS flats, their features and desirable locations, they have been very popular amongst Singaporeans on the resale market.

2. Where can they be found?

There are a total of 13 DBSS projects which can be can be found in a variety of locations in both mature and non-mature HDB towns. Tampines town contains the greatest number of DBSS projects, with 3 projects being situated within the estate and is where the first DBSS project was built – The Premiere @ Tampines – which was launched for sale in 2006 and completed in 2008.

In terms of size, most DBSS flats are comparable to HDB flats that were built during the time, ranging from 60 to 115 sq m. The largest DBSS flats in Singapore can be found in Natura Loft @ Bishan and Parc Central @ Ang Mo Kio with their 5-room units going up to 120 sq m. Many of the DBSS projects are situated within well-established neighbourhoods, with convenient access to the MRT and amenities such as town centres and reputable schools.

3. How have DBSS units performed in the resale market?

In 2021, there were a number of record-breaking million-dollar HDB transactions being inked, most of these deals were from DBSS flats. The top three most expensive DBSS units sold in 2021 were all located within the Natura Loft project in Bishan. The top deal was inked in December 2021, going for $1.36 million or about $1,053 psf, it is also the all-time highest purchase price for an HDB flat. The second top deal was for another unit located in the same project that went for $1.295 million ($1,003 psf) in September 2021.

Based on the transaction data, there were 715 DBSS units resold in 2021 – representing about less than 3% of the total HDB resale volume during the year. In 2021, sales volumes were expectedly stronger in projects that are outside the central region, owing to their more affordable pricing and availability of units for sale. Tampines topped the list with 146 DBSS transactions, followed by Clementi with 107 transactions.

While DBSS flats located in the popular areas such as Ang Mo Kio, Bishan and Toa Payoh, saw fewer deals, the price range of such deals are significantly higher. Bishan, for instance, had 24 transactions in 2021 with prices for 4-room units and 5-room units averaging at $897,000 and $1,144,000 respectively. In comparison to DBSS flats in less popular areas such as Hougang, Jurong West, Yishun, the difference in prices can go up to as much as $400,000 for these DBSS flats. Other than location, it appears that buyers were willing to pay a premium for DBSS flats in general. Comparing against 5-room flats resold within the same town in 2021 to DBSS counterparts, the average prices of DBSS units were significantly higher than the 5-room counterparts across towns

There has been an uptick in sales of DBSS flats since Q2 2020, with a spike occurring in Q3 2020 where 202 DBSS units were transacted – up by 206% from 66 units sold in the previous quarter. Ever since Q3 2020, sales of DBSS flats have remained brisk, selling more than 170 units every quarter, far exceeding the sales volume achieved in previous quarters prior to the pandemic.

The rise in transaction volume from Q3 2020 coincided with the end of the circuit breaker – which coincided with the start of the recovery of the HDB resale market. A number of buyers had turned to HDB resale flats due to delays in BTO construction as well as the generous HDB resale grants, allowing many HDB owners who had sold their older HDB flats to look for new homes. DBSS flats had caught the eye of many HDB upgraders due to their relatively affordable price tags and good locations. The interest in DBSS flats were not only spurred by HDB upgraders, but also by private property owners looking for larger homes without breaking the bank. The pandemic had triggered an influx of interest toward spacious homes, with work-from-home arrangement taking root, many buyers have been on a look-out for homes that are large enough to accommodate a work or study room.

The growing demand for DBSS units had also pushed prices higher. The average unit price rose by nearly 2% quarter-on-quarter since Q2 2020. Based on transaction data for Q4 2021, the average price of DBSS flats has reached $761 psf, up by about 10% from Q2 2020 ($691 psf).

4. Does it make sense to buy DBSS?

While the locations and modern features of the DBSS flats may seem appealing, these flats are not without their set of issues which prospective buyers should take note of. When some of the DBSS projects had first been completed, there were a number of complaints arising from workmanship issues and design features such as flooding, water leaks and narrow corridors. While not all DBSS projects had been afflicted with such issues, interested buyers should take extra care during inspection of the units as well as the common areas before purchasing the flat.

As mentioned earlier, DBSS flats cannot be fully privatized and are subject to the 5-year Minimum Occupation Period (MOP) rules for subsequent resales, unlike ECs. For owners and investors, full privatization creates the potential for a collective sale to a private developer. Without the possibility of privatization, the looming prospect of surrendering the flat back to HDB once the 99-year lease is up, continues to hang over the owners’ heads, much like any other HDB flat. This goes to mention the lease depreciation effect on the flat’s value.

Other than the issues arising from workmanship and inability to be privatized, there is also the issue of escalating prices of DBSS flats and limited potential for future upside. With a handful of these flats going above the million-dollar mark, it raises the question as to affordability and the potential for prices to rise. While this will not be an issue for genuine home owners who are determined to make the flat their forever home, for those who had purchased the DBSS flat at a high price and wish to off-load the flat in the future, they may face difficulty in selling at a profit or at the original purchase price. This issue may be exacerbated when the lease has run down below 60 years.

Nevertheless, the scarcity of DBSS flats as well as their superior locations will continue to prop up their values and appeal, as evidenced by the high transaction volume as well as steadily increasing prices. These DBSS flats provide owners a taste of condominium living at a relatively manageable price-point. These flats also find favour from those who are downgrading from a private property and would like to live in a relatively matured estate where most of these DBSS projects are located. A sizable (say 1,100 sq ft) DBSS flat in Ang Mo Kio or Bishan at the price of $1 million would still be a more compelling option for many, compared to more expensive private condos in the fringe area. Furthermore, since the DBSS scheme has been discontinued, this has rendered the supply of DBSS flats limited, making them that much more desirable.