Friday, June 20, 2008

Fewer Confirmed Govt Sites Put Up For Sale

Source : The Straits Times, June 20, 2008

Only eight sites for outright sale; move follows poor sales in first half of year

THE Government is cutting back on the number of development sites being released for outright sale over the next six months.

The move follows poor sales of the 37 sites that have been available since the start of the year.

Only five sites on the confirmed list have been sold while four other plots have yet to be sold or launched.

None of the 26 sites on the reserve list has been put up for tender. These sites go on sale only if a developer makes a minimum bid.

The Government decided not to award one residential site as the bids were too low, and it withdrew an unsold hotel plot in Race Course Road after it failed to attract an offer.

CBRE Research executive director Li Hiaw Ho said: 'Given the (economic) uncertainty, the Government appears to be responding to feedback by allowing developers to decide on the pace of development through the reserve list.'

Even with the reduced number of new sites for the second half, developers will still have a wide choice.

In addition to the 13 new sites, there will be 27 carried over from the first half of the year. Of this batch of 40 plots, eight are on the confirmed list, with the rest on reserve.

'The existing supply is more than adequate to meet the market's medium-term needs and to address the Government's concern about supply,' said a developer.

'In such a volatile and uncertain market, force-feeding the market with a large, confirmed list may create opportunistic bids that are not indicative of true values.'

Chesterton International's head of research and consultancy, Mr Colin Tan, said the Government is forcing developers to be more reasonable with their pricing by pushing out sites on the confirmed list.

'While the overall numbers do suggest there is a good chance of a glut occurring, there are also pockets of pent-up residential demand, especially among owner-occupiers.'

If all the residential sites stay on the reserve list, developers can opt not to bid. But with no cheaper alternatives in the pipeline, homebuyers may have to stretch themselves and fork out the premiums demanded by developers, said Mr Tan.

There are 21 residential sites for sale, similar to the first six months, but just four are on the confirmed list. There were eight in the first half of the year.

There are some prime sites on the reserve list, including at Serangoon Avenue and Dakota Crescent, which are near new MRT stations.

Ms Tay Huey Ying of Colliers International said: 'Despite the attractiveness of these sites, they may not be triggered for sale in view of the subdued sentiment.'

But Mr Nicholas Mak, Knight Frank's director of research and consultancy, said the reserve list sites will help to ensure flexibility in the sales programme if the market picks up later this year.

No comments: