Friday, June 15, 2007

Reading the lie of Singapore's land

Mixed signals sent as Govt releases more land for sale

Christie Loh
[email protected]

— Additional reporting by Joseph Yadao

IS THE Government worried or sanguine about the piping-hot property market?

Industry observers held mixed views yesterday when the closely-watched, half-yearly government land sales (GLS) programme was released.

In number, variety and motivations, the list was breathtaking: More homes for the middle-class, including the offer of an executive condominium site not seen since 2004; more land to ease the shortage of offices and hotels; and even strategies to boost public transport ridership in certain areas.

In all, the next six months will see the offer of 41 sites, which are expected to be completed by 2010.

More controversial is the Government's decision to put 14 plots on the "confirmed" list — double that in the first half — including 11 that were unsold from the first half's GLS programme.

Under the "confirmed" list, a site will be tendered at a pre-determined schedule regardless of whether developers show interest. In contrast, the 27 plots under the "reserved" list will be released only if an interested party's bid meets the Government's minimum price. The industry generally favours the second, market-driven approach, which has been in place since the 2001 recession.

To CBRE Research executive director Li Hiaw Ho, the number of residential sites for sale shows the Government's confidence in the residential market.

The Ministry of National Development (MND) itself said in a statement that the injection of new sites was to "meet strong demand" and "in line with the robust growth of the economy".

However, Chesterton International's head of consulting and research Colin Tan read the increasing number of confirmed sites as "a reflection of worry".

He felt that the Government was "mindful" of how the rocketing home prices were causing heartlanders to "give up" on upgrading, hence the outright release of eight residential sites in suburbs, such as Woodlands and Simon Road, to provide homes with "reasonable pricing".

From the MND's perspective, the confirmed list was "in response to the market conditions". Another reason it is selling many of the sites — including the residential one at Boon Lay Way and Race Course Road's white site, which can be used for any form of development — is "to expedite the development of land around Rapid Transit System stations and help to increase the ridership catchment for the rail system".

Also, the MND sees "a need for certain sites to be developed early". The latter reason covers the Marina View site to "maintain the momentum of building up the Marina Bay" and to cater to high demand for prime offices and hotels.

Colliers International's director for research Tay Huey Ying lauded the release of "white" sites, which allow mixed usage. "This flexibility is particularly valuable at a time when the supply crunch in the office and residential markets could be of a temporary nature," she said.

To meet near-term demand for office space, the MND said the Government would also supply 180,000 square metres of commercial space outside of the GLS scheme, besides identifying low-rise buildings for transitional offices.

Ms Tay, however, warned that the Government should not "over-react" and "over-correct" the present imbalance in supply and demand. This is because several en-bloc redevelopments will be completed in a few years' time.

"The Government would do well to consider addressing concerns over Singapore's eroding competitiveness via a combination of means instead of focusing on increasing land supply," said Ms Tay, suggesting tax incentives and concessions to help businesses and individuals cope with rising rentals.