Govt offering fewer residential sites to balance supply

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http://www.straitstimes.com/archive/...upply-20130626

Govt offering fewer residential sites to balance supply

Confirmed list has a commercial site to kick-start Woodlands development

Published on Jun 26, 2013

By Melissa Tan


THE Government will roll out fewer residential land sites to developers in the next six months, as it strikes a balance between ensuring adequate supply while preventing a glut.

A total of 24 sites able to yield 14,155 homes are on the Government Land Sales (GLS) programme for the second half of the year, released yesterday.

That is well down from 32 sites on the first half-year's list, though the number of potential homes is similar at 14,035.

Still, the confirmed list has just 10 sites, down from 13 sites. Confirmed sites go on sale, while reserve list sites are put up for tender only if developers make an acceptable initial offer.

The reserve list allows the Government to tweak supply according to changing conditions.

Aside from housing sites, one highlight in the latest confirmed list is a commercial site at Woodlands Avenue 5 and Woodlands Square. This site will "kick-start the development of Woodlands Regional Centre", the Ministry of National Development (MND) said.

Woodlands Regional Centre is meant to anchor the North Coast Innovation Corridor, designed to add more jobs near homes in Singapore's north, it said.

The 1.97ha site is expected to provide 66,000 sq m in gross floor area of office space and 3,500 sq m of retail space.

Property industry consultants said the latest GLS residential site programme was on the cautious side and likely took into account a potential oversupply of homes.

"MND is trying to balance developers' desire to build their residential land and potential oversupply, as a high number of homes come onstream in the next few years," said ERA Realty key executive officer Eugene Lim.

Jones Lang LaSalle national director of research and consultancy Ong Teck Hui said uncertainty over interest rates and the availability of credit in the months ahead probably played a part.

The 10 confirmed list sites include five executive condominium (EC) sites, and could yield nearly 6,000 homes.

This comes on top of the record high supply of 100,600 units, including ECs, in the pipeline, of which 39,000 units still remain unsold as of the first quarter of this year, MND said yesterday.

This is fewer than the approximately 6,900 homes released on the confirmed list in the first half of the year, which Colliers International research and advisory director Chia Siew Chuin said was "a sign that the Government wants the market to tell it what it wants, rather than feeding it with sites regardless of market conditions".

Excluding ECs, the supply of private homes on the confirmed list for the full year is 7,000 units, well down from 8,060 units last year and a bumper 13,255 units in 2011, Mr Ong said.

MND also said yesterday that it will continue to put similar residential sites up for sale with the same tender closing date, to curb overly ambitious bids.

It said two pairs of sites on the confirmed list will have their tender closing dates "batched". The first pair consists of two adjacent private residential plots at Upper Serangoon View. The second pair is made up of two adjacent EC sites at Choa Chu Kang Grove.

There are 14 sites on the reserve list, including one EC site, which could yield about 7,500 homes.

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http://www.businesstimes.com.sg/arch...-list-20130626

Published June 26, 2013

MND trims supply of sites in confirmed list

By Kalpana Rashiwala


[SINGAPORE] The Ministry of National Development (MND) has released what Knight Frank chairman Tan Tiong Cheng calls a "play safe" list of state land sites for the second half amid rising concerns about a ramp-up in physical completion of new private homes starting this year.

It has trimmed supply in the confirmed list but made up for this in the reserve list, thus maintaining the overall supply of land for private homes and executive condominiums (ECs) for the second-half Government Land Sales (GLS) Programme at 14,155 units - close to the 14,035-unit supply for the first half.

For H2 2013, MND will release land for 5,960 private homes and ECs under the confirmed list - a 14 per cent reduction from the 6,935 units for H1 2013. This is the lowest confirmed-list supply since the H1 2010 figure of 2,925 units. Excluding ECs, the supply of private homes in the H2 2013 slate is 3,175 units, down 17 per cent from the 3,825 units in H1 this year.

The full-year confirmed list supply of 7,000 private homes (excluding ECs) is significantly lower than the 8,060 units for 2012 and 13,255 units for 2011, notes Jones Lang LaSalle national director for research and consultancy Ong Teck Hui. "The programme appears prudent, taking into account the supply that is in the pipeline, as well as uncertainties pertaining to liquidity and interest rates going forward."

Market watchers say that it makes sense for the authorities to have moderated GLS supply for private homes and ECs on the confirmed list as the more supply government pushes out, the higher the risk that this will fuel the market further - first at the land tenders, and subsequently when developers launch projects on the sites.

What surprised some market watchers is that the government is still supplying a substantial amount of EC land in H2, although the quantum of EC units from the confirmed list sites has been trimmed 10.5 per cent from H1 to 2,785 units in H2.

"We were expecting a larger scaling back or perhaps a complement annulment of EC supply," said Alan Cheong, research head at Savills Singapore.

However, MND is introducing land for 535 ECs in the reserve list in H2, which means the overall EC supply at 3,320 units in H2 is slightly ahead of H1's 3,110 units.

A spokeswoman for the Housing and Development Board (HDB), which oversees EC policies, said: "There is still demand for ECs. Hence, the government will release sites for EC development to prevent a situation of undersupply, which may otherwise lead to pent-up demand and drive up prices . . . Developers will have to factor in market risks when bidding for the sites and subsequently pricing the units for sale to eligible EC buyers."

Market watchers also saw in MND's release steps designed to rein in exuberant land bids. For one, the proportion of new sites in prime areas or near MRT stations seems lower than in the H1 slate. Knight Frank's Mr Tan said: "Generally, the sites under the confirmed list appear to be slightly inferior in terms of accessibility and location (and) there are no prime sites, unlike the H1 2013 confirmed list."

This could help temper bids.

Also, tenders for seven of the 10 residential sites will be launched in November/December, which means they will close next year when more physical completions will be visible and could rein in bids.

The government will also continue to require developers of EC sites to launch units for sale only 15 months from the date of award of sites or after the completion of foundation works, whichever is earlier.

A plum commercial site next to Woodlands MRT Station that will be launched in December can generate about 66,000 square metres gross floor area (GFA) of office space and 3,500 sq m GFA of ancillary retail space. This will help kick-start the development of Woodlands Regional Centre.

Colliers International director Chia Siew Chuin said: "Woodlands as a regional centre has long lagged behind in development compared with Tampines and Jurong East."

The Woodlands site is a stone's throw from the interchange station for the existing North-South Line and future Thomson Line. SLP International executive director Nicholas Mak predicts that the Woodlands site could fetch top bids in the $1,100-1,150 per square foot per plot ratio (psf ppr) range if it were put on the market today.

For hotel land, the authorities have pulled out the Victoria Street site from the reserve list as the site's use is under review. This leaves only three hotel sites - all on the reserve list - that can potentially yield 955 hotel rooms. This is down 45 per cent from H1.

"The authorities are calibrating hotel supply, which makes sense given that RevPAR (revenue per available room) has been easing a little," notes DTZ's Southeast Asia chief operating officer Ong Choon Fah.