http://www.straitstimes.com/News/Hom...ry_686570.html

Jul 3, 2011

Khaw raps BT over misleading report

Media urged to help calm property market, where there is 'some panic buying'

By Daryl Chin


National Development Minister Khaw Boon Wan sharply criticised a newspaper yesterday for misleading the public with an article that inflated the profit margins of developers like Sim Lian Group.

He also called on the media to do its part to help calm Singapore's property market, something he said he was 'working my guts out' to do.

The Business Times (BT) report in question was published on Thursday. It claimed that private developers behind the Housing Board's Design, Build and Sell Scheme (DBSS) projects made hefty profit margins of up to 76 per cent.

BT arrived at the figures after analysing the land price, revenue, maximum gross floor area (gfa) and estimated construction cost for seven recent DBSS projects.

It said that five out of the seven projects netted developers a profit margin of above 28 per cent and that the latest Centrale 8 project in Tampines will give developer Sim Lian a margin of 76 per cent.

Writing in his Housing Matters blog, Mr Khaw said he was 'startled' when he read about the high profit margin for Centrale 8, achieved even after the developer reduced its highest selling price for the flats by more than $100,000.

'I thought it could not be right and had it checked. Sure enough, the article was fraught with serious errors,' he added.

Mr Khaw explained that the figures quoted by BT citing a land price of $82,222,000 and maximum gfa of 721,188 sq ft were wrong. The correct figures were $178,128,000 and 682,385 square feet respectively.

The difference of almost $100 million would have shrunk the profit margin for Centrale 8 to 26 per cent.

'But even the reduced figure was wrong as the article had excluded key cost items such as financing, marketing and administrative costs,' he said.

'These are significant costs and when included, would have further lowered the profit margin for all the DBSS projects listed in the article.'

Since its publication, another two developers - Hoi Hup and Sunway - have come out to clarify the numbers. They said in a joint statement on Friday that the net margins for their DBSS projects ranged from 15 to 18 per cent.

In a strongly worded letter sent to BT late on Friday night correcting the errors, the Ministry of National Development's director for housing Han Kok Juan said: 'We are disappointed that The Business Times had not thought it fit to verify the facts.'

He added: 'The general public rely on and expect responsible and accurate reporting from the mainstream media. It is unacceptable that BT had not exercised due diligence and professional journalism, which resulted in an erroneous and highly misleading report.'

BT, which carried the ministry's letter in full on the front page of its Saturday edition, apologised for the error.

It explained that the error arose because it had inadvertently used the land price of another Sim Lian project - The Premier - to calculate the profit margin of Centrale 8. Both developments are located in Tampines.

In his blog posting, Mr Khaw also commented on the stress of his new job. The former health minister was appointed to his new post as part of a sweeping Cabinet reshuffle in late May.

'I have been in MND for five weeks, and not sleeping well,' he wrote. 'I am working my guts out to try to calm the market, for the good of all Singaporeans. But I can't do it alone. I need all to help.'

He added: 'HDB architects are working round the clock to ramp up BTO supply. Contractors are building up capacity to deliver the flats on time. HDB is setting BTO prices carefully to help guide the market.

'I hope our media can do their part too. There is some panic buying out there, by people worried that prices will continue to rise. Sensationalised articles will merely feed the frenzy.'

He asked readers of his blog to help to circulate the posting to their friends to clarify matters.

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