Short-Term Land Leases Will Lead Us Nowhere

Source : The Straits Times, 13 Aug 2007

The writer of ‘Have 40 to 60-year leases in land-scarce nation’ (ST, Aug 6) focuses on the spectre of collective sales while ignoring the positive sides of renewal and asset appreciation.

The 99-year leasehold concept is the bare minimum threshold to retain residual values for property. Short-term leases denote things temporal. The downside of short leases for housing would preclude the erection of nice buildings and those of lasting design. Who will spend a fortune to build a beautiful landmark to be torn down 40 years later?

Buildings are designed to last over 100 years. Buildings, especially the high-rise ones, on 40-year leasehold land still need to comply with all construction specifications and structure safety design of national standards. Property should not be regarded as durable consumable goods like cars and TV sets. Can you imagine the magnitude of waste to demolish all such solid structures hardly before you get used to seeing your homes?

What benefits are there for homeowners and town planners if the structures are to be reduced to ground zero within 40 years? Can developers compromise building codes with costs? Would the prices be cheaper? Where is the intrinsic value of asset appreciations for its citizens if everything is temporal?

The perception of house ownership on such short lease becomes one of depreciating commodity. There is no resale value and no appreciation of one’s investment. Where is the value of posterity and asset enhancement living here? Why stay in a place where things are temporal?

We should not forgo the forest trying to protect one tree. From the economic point of view, there are upsides to collective sales. In a nutshell en-bloc sales multiply one’s investments manifold while enabling society to accelerate its tempo of developments. Moving to another area with plenty of hard cash may not necessarily be a bad thing.

A country will not progress without renewal and improvement of its infrastructure and landscapes. Short-term land leases will lead us nowhere.

Paul Chan Poh Hoi