Government Offers Fewer Land Sales Sites

Source : The Business Times, December 5, 2008

The move will help ease fears of a supply glut next year

NO NEW sites have been added to the Government's land sales programme for the first half of next year, an anticipated move designed to tame fears of a supply glut in an already weak market.

Only sites on the reserve list will be up for sale, and almost all of these are carried over from this year. The amount of commercial space will also be reduced.

'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,' said the Ministry of National Development, which releases the sales programme in June and December every year.

Knight Frank's director of research and consultancy, Mr Nicholas Mak, said the programme announced yesterday reflects government efforts to give the market a chance to adjust to a new supply and demand equilibrium and to lessen the pressure of a glut.

Much of the announcement was flagged in a special statement made on Oct 31, when the Government said it will suspend outright land sales in the first half of next year, leaving only reserve list sites for sale.

It went further yesterday by limiting office space and ruling that no new plots of land will be made available as response to recent tenders was poor, said Mr Mak.

Also, no new supply of private residential units from other government agencies will be made available. It placed about 20 such units on the market in the second half of this year.

Developers prefer reserve list sites as the land goes up for tender only if a minimum bid acceptable to the Government is submitted.

There will be 38 such sites on offer next year, with 37 carried over from the reserve list for the second half of this year. The remaining one is the unsold executive condominium site in Punggol.

That site was from the confirmed list, which meant that it was for outright sale, but there was no demand when it went to market last month.

There are 18 residential sites, 10 for hotels, six commercial plots, three white sites and a commercial/residential site.

The property market has been hit by weak buying interest and a credit crunch. Private home sales are at a standstill as buyers await more price falls.

Developers have also been withholding launches, adding to the stockpile of potential houses, said Mr Mak, who expects 'very few' residential sites to attract buying interest next year.

However, Credo Real Estate managing director Karamjit Singh said supply is not much of a problem as there are still buyers around.

'The problem is buyers' lack of confidence. If the current low sales volume carries into the next year, there is the fear of a deep plunge in prices. The Government should do something soon to stimulate demand,' said Mr Singh.

The Government statement yesterday said that its reserve list system provides 'greater flexibility to the market' to adjust to the economic conditions.

As housing prices are expected to fall further next year, developers may be able to pick up the better-located sites - in Bishan Street 14 and Dakota Crescent - at attractive prices, said CBRE Research executive director Li Hiaw Ho.

'It is likely that most residential activity will be focused on the lower end of the market where prices will be more affordable,' he said, adding that likely launches in the first half of next year include leasehold condos in Boon Lay Way, Elias Road, Simei Street 4 and West Coast Crescent.

The supply of commercial space for the first half of next year has been cut from 143,000 sq m to 40,000 sq m. Transitional office sites have been reduced.

The new land sales programme also offers slightly fewer hotel rooms.