Singapore land sale

The Government yesterday announced its biggest ever land sales programme in what is seen as a clear signal that it is serious about containing the rise in property prices and rents which could cripple Singapore’s competitiveness.

It is offering a total of 41 sites in the second half of this year - 14 through the confirmed list (double the seven in the H1 2007 programme) and 27 in the reserve list. The 14 confirmed sites is also the highest figure since the Ministry of National Development introduced the reserve list system in 2001.

MND has introduced 15 new sites, three of which are in the confirmed list, while the remaining 26 are being carried over from the current H1 2007 slate.

The confirmed sites for the second half include a site at Marina View - adjacent to an earlier plot released recently - and can yield about 900,000 sq ft gross floor area of commercial space.

Related article: Click here for MND’s press release

Agreeing, Knight Frank managing director Tan Tiong Cheng said: ‘Clearly, the message is to tell investors who may be concerned about rising office rents and home rentals in Singapore not to panic.’

A seasoned market watcher indicated there is also a message to developers, especially office landlords. There have been a lot of complaints from businesses about the doubling of office rents in the past 12 months.

Market watchers reckon the MND’s strategy of jacking up the number of sites in the latest confirmed list - despite repeated pleas from developers not to do so - is to ensure greater certainty of supply. Whereas reserve list sites are released only on successful application by a developer, confirmed sites are launched according to a stated schedule.

‘The economy is doing well, demand is there, so they must ensure there is sufficient supply,’ as a market watcher noted.

Real Estate Developers Association of Singapore declined to comment yesterday evening.

Colliers International director (research and consultancy) Tay Huey Ying said: ‘It’s very clear. The government is pretty concerned about the supply crunch and has gone very aggressive on the confirmed list.’

The last time the MND offered 41 sites was the full-year 1997 programme, but it was stopped in its tracks due to the Asian financial crisis. In that year, the MND had planned to release sites for a total of 10,000 homes (7,000 private homes and 3,000 executive condos).

The 41 plots the government is offering for the second half can potentially yield 8,000 private homes, including 620 executive condos or ECs - a hybrid of private and public housing - 3.8 million sq ft gross floor area (GFA) of commercial space and 6,500 hotel rooms.

This compares with 5,475 private homes, 5.3 million sq ft of commercial GFA and 5,285 hotel rooms that could potentially be developed from the 32 reserve and seven confirmed sites in the current H1 2007 programme.

The H1 2007 programme has a higher supply of commercial space, boosted by MND pushing back the release of the former NCO Club site in Beach Road from H2 2006.

In its release yesterday, MND also highlighted additional sources of space the government will make available in H2 2007 - including around 1.4 million sq ft of space from vacant state buildings, small plots for office and other commercial uses and transitional offices, which will include a site at Newton MRT Station.

The MND said 6.9 million sq ft of office space will be completed by 2010, including the first phase of Marina Bay Financial Centre. On top of that about 2.7 million sq ft GFA of business park space mainly from Changi Business Park and Alexandra Distripark is scheduled for completion from H2 2007 to 2010. Such space is suitable for back-room operations and data centres of financial institutions, and SMEs.

For the private housing market, MND said about 42,200 new private homes are slated for completion from the second half to 2010. Of these, nearly 40 per cent of 16,400 units will be in the core central region. Property consultants read this statement as assuaging concerns about housing rents escalating, driving expats out of Singapore.

However, none of the 20 residential sites in the latest Government Land Sales programme, including eight confirmed plots, are in prime district locations.

‘The collective sales market will take care of supply of land for the high-end market,’ as Mr Tan observed. Instead, the GLS residential plots are in attractive suburban and city-fringe locations like Sembawang, Tanah Merah, Boon Lay, Bishan, Toa Payoh and Redhill, many of them very near MRT stations.

‘This will be welcome relief for both home buyers and developers. Right now developers have to turn to the en bloc market even for sites in fringe locations. Now MND is offering a better selection of sites fo them,’ said Mr Tan of Knight Frank. ‘And it will bring relief to those who are looking for homes so they will not go into panic mode fearing a shortage of homes.’

Giving his perspective, a market watcher said: ‘We have enough supply of high-end homes catering to well-heeled local and international investors. So the focus of the GLS programme must be to ensure sufficient supply of affordable private housing and ECs for younger Singaporeans and professionals.’

MND is offering a reserve site at Punggol Field for about 620 ECs after a three-year break, to ‘ensure that ECs remain a viable housing option for those who aspire to private housing’, it said.

The government has also added four new hotel sites - in Jalan Bukit Merah, Jalan Besar, Race Course Road and Tanjong Pagar - to provide a good variety of hotel accommodation for visitors.

Source: The Business Times, 15 June 2007