Developers Still Want Demand-Side Measures

Source : The Business Times, February 3, 2009

Developers are still hoping for demand-side government measures to boost the property market.

When the government unveiled its 2009 Budget on Jan 22, it introduced supply-side measures aiming to prop up home prices by reducing the number of new homes on the market.

Ushering in a better year: (from left) Mr Cheong, president of Redas; Gan Kim Yong, Acting Minister for Manpower; and Liew Mun Leong, CEO of CapitaLand Ltd at the Redas Spring Festival lunch held at the Ritz-Carlton Millenia yesterday

To make it easier for developers to hold back some projects in these weak market conditions, the government deferred property tax for land approved for development for two years or until the project attains its temporary occupation permit (TOP) - whichever is earlier. The time developers are given to complete private residential projects will also be extended by one year.

A property tax rebate of 40 per cent for industrial and commercial properties for 2009 was also given - a move which is expected to reduce developers' operating cost and cash burden.

But supply-side measures alone are not enough to help the property market, a few developers and consultants told BT at the Real Estate Developers Association of Singapore (Redas) Spring Festival lunch yesterday.

'We are still hoping that the government will do something about the stamp duty, and also bring back the DPS (deferred payment scheme) in some way,' a listed developer told BT. Others echoed his views.

Developers want the stamp duty that buyers pay when they purchase a property reduced from about 3 per cent now, and would also like to see the collection of the tax deferred until the project obtains TOP. And bringing back the DPS - under which buyers could make just a 10 per cent downpayment, and pay the rest of the price upon TOP - will also lead to more buying interest, it is hoped.

Developers are expected to go ahead with several large project launches this year. UOL Group, for example, hopes to roll out its mass-market/mid-tier project in Simei, which is estimated to have about 600 units, sometime in the first half of this year. And property firm CB Richard Ellis estimates that another 94 projects are launch-ready.

At the lunch, Redas president Simon Cheong said that Redas stands ready to maintain a continuous dialogue with the government to ensure timely feedback so that the government's various proposals and measures can be effectively implemented.

Mr Cheong also said that many Redas members have informed him that they intend to pass on the 40 per cent property tax rebate to their tenants. 'We however only ask that tenants be reasonable,' he said. 'Requests for substantial reduction in rentals is neither realistic nor sustainable for building owners in the long run.'