Govt's Slate Of Land Sales Seen As Prudent

Source : The Business Times, December 7, 2007

List for H1 next year is roughly similar in scale to that for H2 this year

The Ministry of National Development is adopting a measured strategy in its Government Land Sales (GLS) Programme, offering up a slate for the first-half of next year that's roughly similar in scale to the offerings for H2 2007.Noting that the government is taking a "prudent approach", some market watchers said the ministry is factoring in the recent caution in the property market triggered by the subprime crisis, but is not dumping land to ease a short-term supply crunch in, for instance, the office market.

"It's not so bad, just 11 sites in all on the confirmed list. And of these, the eight private residential sites are in suburban locations like Choa Chu Kang, Tampines and Yishun, to cater to upgrader demand," said a developer of yesterday's GLS announcement.

For the first half of next year, the government is offering a total of 37 sites in H1 2008 - 11 in the confirmed list (down from 14 for the current H2 2007 programme) and 26 in the reserve list (one site fewer than in the current list).

The latest sites will yield about 8,250 private homes including executive condos (ECs), 4.4 million sq ft in gross floor area of commercial space and 5,850 hotel rooms. This is similar to the 8,000 private homes, 3.8 million sq ft commercial GFA and 6,500 hotel rooms supply for H2 2007.

And reflecting a market-led approach, the bulk of the supply for H1 2008 will continue to come from the reserve list, where sites are launched for tender only upon application by developers.












The latest confirmed list - where sites are released according to a stated schedule regardless of demand - will yield about 3,000 private homes, 1.6 million sq ft of commercial GFA and 1,670 hotel rooms - again close to the 3,000 private homes, 1.78 million sq ft commercial GFA and 1,810 hotel rooms in the current slate.

In all, MND has introduced 17 new sites, six in the confirmed list and 11 through the reserve list.

None of the two new sites with substantial office components are in the financial district, including the sizzling Marina Bay area.

Instead, one site - in the confirmed list - engulfs the Parkview Square development and is bound by Rochor, North Bridge, Ophir and Beach roads, and the other, a reserve-list site, is at one north, next to Buona Vista MRT Station.

"The authorities are adopting a more cautious approach on CBD office supply, despite an immediate supply crunch, because the sub-prime crisis is expected to lead international banks to downsize and scale down their office space requirements," the developer suggested.

CB Richard Ellis executive director Li Hiaw Ho also described the government's tack as prudent.

"The current office crunch is a short-term problem. There's over 10 million sq ft of supply on the horizon, most of which will be completed in 2010 and beyond; so in the mid-term there will be sufficient supply. There's no point for the government to dump 99-year office sites now as the supply will only be completed in the mid-term because of construction time.

"That's why government is pushing for conversion of state properties and transitional, 15-year lease sites to address the office shortage in the short- term."

A seasoned market watcher observed a similarly measured strategy for the residential market, where the high-end segment is now taking a breather after runaway prices fuelled by speculators and specu-vestors earlier.

"MND's focus is on ensuring there's sufficient supply in the mid-tier and mass-market private housing segments. It's offering a spread of suburban sites for upgrader private condos as well as four EC sites (through the reserve list), to make sure such homes are within the reach of genuine home buyers," he added.

Three of the four EC sites are new additions - in Yishun, Jurong West and Sengkang East Avenue.

A developer welcomed the government's decision to include, among its slate of eight residential sites on the latest confirmed list, two landed housing plots - at Westwood Avenue in Jurong West, and Sembawang Greenvale (Phase 2). "There's really a shortage of landed housing sites," he added.

He also viewed positively the fact that both hotel sites on the confirmed list - at Race Course Road in the Little India area and Balestier/Ah Hood roads - are in locations suitable for three- and four-star hotels, which are witnessing strong demand from the India and China markets in particular.

MND also highlighted additional sources of space the government will make available in H1 2008 - including about 1.3 million sq ft of commercial GFA from sources like interim use of vacant state buildings and transitional office sites; about 110 private homes including 90 serviced apartments at one north; and 780 hotel rooms.

MND said that 9.5 million sq ft GFA of offices, 4 million sq ft of business park space, 5.6 million sq ft of shops and 8,850 hotel rooms are expected to be completed by 2010.

For the private housing sector, about 44,500 new private homes are slated for completion by 2010, of which 40 per cent or 17,800 units will be in the Core Central Region, which includes all the high-end locations.

On the Singapore Exchange yesterday, the All Singapore Equities (Property) Index ended 12.09 points higher at 1,391.57.

"They are not releasing that many sites. They are calibrating supply very carefully in response to the economy," the developer said.