New ESC landscape may see property market changes

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Published February 5, 2010

New ESC landscape may see property market changes

Areas under study could include tenures, reserve list system, zoning, land use and land productivity

By EMILYN YAP


(SINGAPORE) The government could be making a wide range of changes to the property market - from offering a greater variety of lease tenures to relaxing rules for industrial land use.

These are some of several proposals from the Economic Strategies Committee (ESC) sub-group studying ways to maximise the value of Singapore's land. It also suggested that the government track land productivity more closely, review the reserve list system of land sales, and enhance links with land-abundant neighbouring countries.

These ideas came in a report from the sub-group yesterday. The paper also contains proposals announced earlier on Monday, calling for the makeover of Tanjong Pagar into a waterfront district, the creation of underground space and more intensive use of industrial land.

Improving choice and flexibility in the property market was one of the key themes in the report. 'In addition to robust planning, we should also focus on making our land use system more nimble and remove barriers that may impede the flow of land resources from less to more land-efficient economic activities,' the sub-group said.

The sub-group recognised that a wider range of lease tenures would meet varying corporate needs. While industrial sites tend to carry 30 or 30+30-year leases, some capital-intensive industries have asked for longer leases for greater certainty on their investments. For commercial sites, the state usually sells them with 15 or 99-year leases but some have asked for something in between, say 60-year leases.

Property consultants generally welcomed the proposal. For instance, banks may feel more secure lending to businesses operating on sites with longer leases, said Knight Frank chairman Tan Tiong Cheng. But there are also concerns - having different lease tenures in an area may impede urban renewal later, he added.

Another suggestion from the ESC sub-group pertains to zoning and land use. Some firms have asked for an expansion of allowable uses for state property, or more relaxed guidelines on housing other activities within an industrial zone.

These requests are particularly relevant as product cycles get shorter, and the line between production and services becomes blurred. And in developing entire industries, manufacturing, research and consumer-testing activities may have to come together.

Other zoning assumptions such as buffers between residential and industrial areas may be in for a review, said Senior Minister of State for National Development and Education Grace Fu in an interview. She is also co-chair of the sub-group.

But increased zoning flexibility will come 'in a very targeted way', she emphasised. 'Zoning allows us to segment land use and therefore keep industrial land affordable. . . We are not talking about very broad-based changes in the zoning framework.'

There were also positive responses to having more wiggle room in land use and zoning. Colliers International research and advisory director Tay Huey Ying supported this, though she noted that 'it may make land valuation a bit more tricky'.

The government should also consider offering more types of business locations, the sub-group said. For instance, Gillman Village could become home to a creative cluster, while Lorong Halus could be a waterfront industrial park with more amenities and lush greenery.

The ESC sub-group further recommended that the government place greater emphasis on land productivity when deciding how to allocate land among various uses. For instance, it should track and consider indicators such as value-added and jobs generated per hectare.

As the other co-chair of the sub-group, Boustead Singapore chairman and group CEO Wong Fong Fui described: 'It is like you have a land budget for economic development and thinking about how to invest it to maximise the economic 'yield' from the land.'

The wide range of proposals is expected to have some impact on the upcoming Concept Plan 2011, but Ngee Ann Polytechnic real estate lecturer Nicholas Mak noted that 'it is still early days' to say how reviews would go. Changes should be gradual, he reckoned.


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