Redas urges 3-way plan to boost confidence

http://www.businesstimes.com.sg/sub/...07608,00.html?

Published November 27, 2008

Redas urges 3-way plan to boost confidence


(SINGAPORE) Real Estate Developers Association of Singapore (Redas) president Simon Cheong called last night for a three-way action plan involving developers, financiers and the government to shore up confidence in the property market.

The plan would involve moderating new supply, supporting demand and introducing fiscal measures to help ease funding for the industry, Mr Cheong said.

'For the real estate market to ride out the storm created by the global credit crisis, two imperatives stand out,' he said. 'First, market stability is important to prevent widespread decimation of asset values. And second, confidence must be shored up by keeping credit markets functioning.

'Only with confidence will demand return to the market. Pricing alone does not lead to sales volume. Sentiment and confidence lead to sales volume.'

Mr Cheong was giving the president's address at Redas's 49th Anniversary dinner, the theme of which was 'Living In a World Class Sustainable City'.

The event at Shangri-La Hotel was well attended, with even Redas patron Kwek Leng Beng, executive chairman of Hong Leong Group, making an appearance. Before the dinner, Redas top brass held private talks with National Development Minister Mah Bow Tan, who was guest of honour at the function.

In his speech, Mr Cheong shied away from specifying what measures developers would like the government to introduce to help the property market.

But property consultancy Knight Frank's managing director Tan Tiong Cheng made a few suggestions. 'Tax concessions affecting the property market could help reduce business costs and provide relief to developers immediately, yet leave the government flexibility to withdraw the measures when the market improves,' he said.

He suggested the authorities reinstate the deferment of stamp duty payment to the date of issue of Temporary Occupation Permit for properties under development. At present, buyers have to pay stamp duty within 14 days of their option to purchase being accepted.

The government should also revert to the formula of calculating development charges based on 50 per cent of appreciation in land value, instead of the current 70 per cent.

And property tax exemptions for vacant land, land under development and completed industrial and commercial buildings would help cut the cost of doing business and provide relief to developers so they don't have to rush construction of new projects, given weak demand, Mr Tan said. He also called on the authorities to consider reviewing the stamp duty rate, which now peaks at 3 per cent.

Last month, the Ministry of National Development (MND) announced a halt in state land sales through the confirmed list until first-half 2009. Mr Tan suggested MND could go further and announce a freeze on confirmed-list land sales for the next two years.

'This would provide a psychological booster and create more confidence and stability in the market, so banks and sellers don't panic,' he said.

He also suggested extending the CPF Housing grant available to first-time buyers of executive condos (ECs) and resale HDB flats to private home buyers. 'If necessary, minimum holding conditions could be imposed for private home buyers taking the CPF grant, which is what happens for ECs,' he said.

http://www.businesstimes.com.sg/sub/...07607,00.html?

Published November 27, 2008

Limits to what govt can do, says Mah

It cannot dictate to banks on loans or work against market forces on property

By KALPANA RASHIWALA


(SINGAPORE) National Development Minister Mah Bow Tan told developers yesterday 'there are limits to what the Government can and should do' to ensure the long-term stability and smooth functioning of the property market.

'For instance, we cannot dictate to banks that they should extend loans to companies or individuals with weak financial standing,' he said.

'We also cannot work against market forces and try to prop up property prices artificially. Such efforts are not sustainable and will not be beneficial to the health of the property market in the long run.'

Speaking at the Real Estate Developers Association of Singapore's 49th anniversary dinner at the Shangri-La Hotel, Mr Mah said any action the Government takes must be carefully calibrated.

'Any measure seen to be knee-jerk or excessive might even weigh market sentiment down further,' he said. 'It is in our interest to ensure that property prices move in line with economic fundamentals, as this affects home ownership, asset values, retirement savings and other sectors of the economy.'

But he gave the assurance that the Government will keep a close watch on the situation and will not hesitate to take further measures if necessary.

Last month, the Ministry of National Development (MND) suspended Government Land Sales through the confirmed list until the end of first-half 2009.

Since then, MND has received various suggestions from Redas and other stakeholders on how to help the property sector. 'We will study these suggestions as we continue to monitor the property market closely,' Mr Mah said yesterday.

He also told developers that with slower economic growth 'it is inevitable that demand will be lower and (property) prices will soften'. The official private home price index slipped 2.4 per cent in the third quarter from Q2.

On a more upbeat note, Mr Mah said the committed pipeline of major projects secured in the past few years will create a steady stream of job opportunities and sustain capital spending in the economy in the next few years.

'At Marina Bay alone, we have invested close to $5.7 billion in infrastructure and we will continue to invest to support the future growth of Marina Bay and to enhance connectivity with the existing city,' he said.

The Government will also continue with several key infrastructure and housing projects to support medium to long-term economic growth and social needs, as well as to rejuvenate older estates. Mr Mah stressed the importance of the real estate sector.

First, real estate services and construction together accounted for about 9.6 per cent of overall GDP and 13 per cent of total employment in Singapore in 2007.

Second, the health of the property market affects other major sectors of the economy. 'Third, as a country with the highest rate of home ownership of more than 90 per cent, the property sector is where most of us have invested our hard-earned lifelong savings,' Mr Mah said.

'Our economic prospects in the medium term and our fundamentals remain strong. I urge you to continue building up capabilities within the industry and use this period to strengthen your competitive advantages so you are well prepared to capitalise on opportunities that may emerge when the current economic uncertainties subside.'

http://www.businesstimes.com.sg/sub/...07513,00.html?

November 26, 2008, 8.02 pm (Singapore time)

Gov't has important role in property market: Mah

By UMA SHANKARI


The Government has an important role in ensuring the long-term stability and smooth functioning of the property market, said Minister for National Development Mah Bow Tan at the Real Estate Developers' Association of Singapore's (Redas) anniversary dinner tonight.

'Let me first highlight why the real estate sector is important to us,' Mr Mah said.

Mr Mah's comments comes in the wake of public queries over the government's role in the property market, with some wondering if the land prices should be left to market forces.

Mr Mah said there are mainly 3 key reasons.

'First, it is a major economic sector in Singapore. The real estate services and construction sectors together accounted for about 9.6 per cent of overall GDP and 13 per cent of total employment in Singapore in 2007. Second, the health of the property market affects other major sectors of the economy. Third, as a country with the highest rate of home-ownership of more than 90 per cent, the property sector is where most of us have invested our hard-earned lifelong savings.'

The Government will do whatever is within its means to help all the various economic sectors in Singapore cope with the current crisis and mitigate the impact on businesses, Mr Mah said.

For the property market specifically, the Government will ensure that the supply of land released for development is well calibrated and sufficient to meet demand over the medium to long term. It will also give developers the flexibility to activate Government Land Sales supply according to market demand by using a pre-dominantly market-led approach through the use of the Reserve List.

The authorities will also provide detailed real estate information to enhance market transparency and allow informed decision-making by market players, and will put in place policies that ensure that systemic risks to both the demand and supply sides are minimised, thus safeguarding the overall health of the property market, Mr Mah added.

Finally, the Government will also guard against irrational market behaviour such as excessive speculation that is not in sync with economic fundamentals, Mr Mah said.

http://www.straitstimes.com/Money/St...ry_307294.html

November 27, 2008 Thursday

Mah sees softening of property prices

Future movements will depend on how industry adjusts to conditions

By Michelle Tay


PROPERTY prices will inevitably soften and demand will weaken amid slower economic growth, National Development Minister Mah Bow Tan said yesterday.

Private housing prices fell 2.4 per cent in the third quarter, and further price movements will 'depend on the severity of the economic slowdown'.

Mr Mah was speaking at the 49th anniversary dinner of the Real Estate Developers' Association of Singapore (Redas) at the Shangri-La Hotel.

He said future price movements will also depend on the 'ability of the industry to make adjustments in response to the changes in economic conditions'.

Meanwhile, Mr Simon Cheong, Redas president and chief executive of upscale residential developer SC Global Developments, said he expects construction prices to ease off with the trend of falling oil prices and easing inflation.

'Current pressure on construction services (will) begin to moderate once the lag in demand kicks in with a slowdown in new commitments by developers,' he said.

Mr Mah also addressed recent moves by Redas to present market analysts with other sources of market data after they had drawn bearish conclusions about the industry recently.

Redas had said the analysts' findings were based on official numbers from the Urban Redevelopment Authority (URA), which they felt are too general. Reports said the industry body met property analysts from local and foreign research firms two weeks ago to advise them that URA data may not give an accurate picture of specific sections of the market.

Mr Mah said the Government has a vital role in guarding against 'irrational market behaviour, such as excessive speculation, that is not in sync with economic fundamentals', to ensure the long-term stability and smooth functioning of the property market.

Mr Cheong agreed: 'The market is at best currently fragile and nervous. Market stability is important to prevent a widespread decimation of asset values...Redas will do its best to work closely with the Government to provide timely market feedback to facilitate a timely and effective response that the property market needs.'

But there are limits to what the Government can and should do, said Mr Mah. For one thing, it cannot work against market forces and try to prop up property prices artificially.

Mr Mah explained: 'Such efforts are not sustainable and will not be beneficial to the health of the property market in the long run. Any measure seen to be knee-jerk or excessive might even weigh market sentiment down further...It is in our interest to ensure that the property prices move in line with economic fundamentals as it affects home ownership, asset values, retirement savings and other sectors of the economy.'

But Mr Cheong said: 'Only with confidence will demand return to the market.' He advised Redas members to 'take this opportunity to do our house cleaning, improve our product and get ready for the next upturn'.

'Pricing alone does not lead to sales volume. Sentiment and confidence lead to sales volume.'

[email protected]