Published November 26, 2010
Govt plays land supply card, has more up its sleeve
Bumper offering of residential sites over coming months; MAS keeping eye on property market situation
By UMA SHANKARI
(SINGAPORE) Singapore stands ready to take more steps to cool the property market and will roll out another bumper supply of land for new residential projects for the first half of 2011, government agencies said yesterday.
There is 'a possibility' that property transactions and prices could pick up again given the current global conditions of ample liquidity and low interest rates, said the Monetary Authority of Singapore (MAS) in its Financial Stability Review report.
But MAS conceded that the Aug 30 anti-speculation measures appear to have dampened activity in the private residential property market 'somewhat'.
The government will adopt additional measures if necessary, MAS added.
Tackling the supply side of the equation, the Ministry of National Development (MND) said it will release a large supply of land for new homes in H1 2011 as demand from both developers and homeowners remains robust.
A total of 17 residential sites, with a potential 8,100 private and executive condominium units, will be offered under the confirmed list of MND's Government Land Sales (GLS) Programme for H1 2011. This is close to the record 8,135 units offered under confirmed list sites in H2 2010.
More than half of the new sites are located close to plots sold earlier this year in government land tenders or are near popular property launches. But MND said that the sites were not selected with the intention of dampening prices at neighbouring developments.
'Demand for private housing remained strong for the first 10 months of 2010 because of Singapore's strong economic performance,' said Marc Boey, group director for land sales and administration at the Urban Redevelopment Authority, an MND unit. 'In response to the strong demand, developers have continued to acquire land for private housing development from the second-half 2010 GLS Programme.'
Developers sold about 13,600 private homes (including about 530 executive condo units) in the first 10 months of the year. This is comparable to what was sold over the same period last year.
Major developers including CapitaLand, Hong Leong Group and Keppel Land said that they welcomed the release of more sites and predicted that prices will hold.
'I do not think the GLS will depress prices,' said CapitaLand chief executive Liew Mun Leong, who was speaking at a property launch. 'Demand is still heavy. Developers want to get their inventory built up.'
But some market players raised concerns of oversupply just as the H2 2010 GLS Programme was unveiled in May this year.
'Developers are still bidding for sites and bid prices have not fallen much. So the government continues to flood the market with supply. It might be too much,' said one developer.
DTZ's South-east Asia research head Chua Chor Hoon said that if developers soak up the supply, there will be a substantial number of units which will be completed in a few years' time.
'If the Western economies do not pick up by then and global growth is not strong, there may be a problem of too many units chasing after a smaller pool of occupants,' Ms Chua warned. 'On the other hand, if the Western economies recover, interest rates will start to rise which will also curtail buying demand, which is currently fuelled by the low interest rates.'
Teo Hong Lim, chief executive of Roxy-Pacific Holdings, pointed out that sites sold through government land tenders are still more attractive than those bought from the private sector through treaties and collective sale tenders.
Including reserve list sites, the H1 2011 GLS Programme will have a total of 30 sites which can generate about 14,300 residential units. This is higher than the 13,900 residential units offered for the second half of 2010.
The increase is due mainly to an increase in the reserve list supply from about 5,800 units in H2 2010 to 6,200 units in the first half of 2011.
Across all sectors, the H1 2011 GLS Programme comprises 19 confirmed list sites and 25 reserve list sites. There will be 28 residential sites, five commercial sites, two commercial & residential sites, one 'white' site and eight hotel sites.
These sites can potentially yield about 14,300 private homes, 318,000 square metres of commercial gross floor area and 3,700 hotel rooms.
Home sales in Singapore declined in September following the latest round of anti-speculation measures. But sales of new private homes picked up again in October. The private property price index moderated somewhat in Q3 2010.
But views from market contacts appear mixed, said MAS, with some buyers staying on the sidelines in the hope of price declines and others expecting transaction volumes to pick up again next year.
MAS also warned that expectations of a sustained period of low interest rates may affect the borrowing decisions of individuals and encourage buyers to take on excessive leverage. And financial institutions may also be tempted to loosen lending standards in a bid to extend more loans in the face of thinning interest margins
Source: www.businesstimes.com.sg
