Eyes On Demand As Govt Keeps Land Supply In Check

Source : The Business Times, December 5, 2008

Analysts hope for measures to boost buying, such as stamp duty rebates

The government yesterday kept the lid on the supply of state land for development. All eyes in the market now are on what measures the state will come up with to stimulate property demand.

The Ministry of National Development (MND) has decided not to add any new sites to the Government Land Sales (GLS) Programme for first-half 2009.

The slate for the first six months of next year - comprising entirely reserve list sites, as previously announced - consists of a total 38 sites. These comprise 37 plots that are being carried over from the H2 2008 reserve list and the unsold executive condo site in Punggol that had been tendered out under the confirmed list of H2 2008.

These 38 land parcels can potentially yield about 7,920 private homes, 512,000 sq metres gross floor area (GFA) of commercial space and 5,160 hotel rooms.

In formulating its policy, the ministry took into account the current economic uncertainties and noted that the global economic outlook is likely to remain weak in 2009 and this would have an impact on Singapore's economy, including the property market.

Giving an update on land supply in January-June 2009 from government agencies, outside the GLS Programme, MND said there will be no new supply of private homes and a reduced supply of commercial space (this will only entail projects meant to achieve strategic economic or development goals).

The H1 2009 supply from this source will comprise about 40,000 sq metres GFA of commercial space and 240 hotel rooms - smaller than the land supply for 20 private homes, 143,000 sq m of commercial space and 240 hotel rooms outside the GLS Programme for H2 2008.

Welcoming the latest announcement from MND, a spokesman for the Real Estate Developers Association of Singapore said: 'This further confirms to the market the authorities are mindful of market conditions at the moment and (we) do not need to add further uncertainties.'

Knight Frank director Nicholas Mak says yesterday's announcement gives the market an opportunity to adjust to a new supply-demand equilibrium.

DTZ executive director Ong Choon Fah notes that most of the residential sites in the reserve list are in locations suitable for private housing developments catering to HDB upgraders. 'If developers' sales in these segments pick up, they have the choice of applying for such sites to be released from the reserve list for tender.'

Agreeing, CB Richard Ellis executive director Li Hiaw Ho said: 'As home prices are expected to decline further in 2009, developers may be able to pick up the better-located sites in the reserve list - such as the ones at Bishan Street 14 and Dakota Crescent - at attractive prices. It is likely that most residential activity will be focused on the lower-end of the market, where prices will be more affordable.'

However, analysts are more keen on some demand-side announcements from government.

JP Morgan analyst Chris Gee said: 'It's less of a supply side situation right now. The issue is what can be done to help stimulate demand. All eyes are turning to the Budget statement in January.' He reckons temporary exemptions on stamp duty and property taxes could be possible measures.

Credo Real Estate managing director Karamjit Singh too argues that 'the issues at hand relate to investment sentiments and fear of further downward slide in prices, which is why (home) buyers have been holding back and prices have declined'.

'It would help immensely if buyers could be incentivised to purchase, through measures such as a temporary suspension of stamp duty and the reintroduction of the deferred payment scheme, for example,' Mr Singh added.