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Thread: Analysts, developers applaud MND's move to reduce land sales

  1. #1
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    Default Analysts, developers applaud MND's move to reduce land sales

    http://www.channelnewsasia.com/stori...386856/1/.html

    Analysts, developers applaud MND's move to reduce land sales

    By Ng Baoying, Channel NewsAsia | Posted: 31 October 2008 2325 hrs


    SINGAPORE: The Singapore government has slashed the number of sites it is offering for sale in anticipation of falling demand due to the poor global economy.

    The Ministry of National Development (MND) has said no sites will be released under the confirmed list in the first half of 2009.

    And it has cut down the remaining sites for sale for the rest of 2008 from seven to just one. Five sites were moved to a reserve list, while one was taken off entirely.

    The measures are expected to allow the market to better respond to the current dynamic economic conditions.

    The last time the government cut back on land sales was exactly seven years ago - a month after the September 11 terror attack in the United States.

    The global economy was then facing uncertainty and volatility similar to the current environment.

    Analysts praised the government's latest response.

    Managing director of Cushman & Wakefield, Donald Han, said: "I think this is a very good, swift, prudent government reaction to the issues involved in the marketplace over here. By not choking the market with confirmed list sites, you elevate yourself from low or opportunistic bids."

    And developers agree.

    Hong Leong Group said: "This is a timely move by the government. Given the unprecedented global financial crisis that we are in, the steep tumble in stock markets and serious slump in the property sector, any action that can alleviate the present situation will be welcomed."

    The MND said Singapore's fundamentals remain sound, but global uncertainties have affected the country's economic outlook, as well as the property market.

    Analysts noted that some of the sites that were moved to the reserve list carry billion dollar price tags. These are likely to require foreign investors with deep pockets.

    Han said: "What the government is trying to do is to not force it out into the market when the market is not ready to put a bid for the site. Some sites the government is trying to launch are billion dollar ticket items, like the one in Rochor-Ophir and the site at Stamford Road location.

    "A lot of the sites require participation of foreign investors. And if you look at global investment transactions, the total activity has dwindled by as much as 60 to 70 per cent just over the last three quarters.

    "And the number of activity is likely to reduce further in the current quarter. If you're looking for participation by foreign investors, it's going to be a lull period."

    Under the reserve list system, the government will only release a site for sale if an interested party submits an application with a minimum price that is acceptable to the government.

    The situation is likely to improve towards the end of 2009, as construction costs come down.

    Han said: "The construction sector had a good run in the last 12 months. Construction market tends to lag the real property market about six months to a year.

    "We probably expect next year to be a good time to launch some of these sites. And we probably expect developers to come in and capitalise on lower construction costs next year and start bidding on sites. Activity will definitely pick up in 2009."

    The government also said it will allow developers to convert office space in the central area to other uses. This was previously disallowed in response to an office space crunch.

    Developers now have the option to build anything from serviced apartments to hotels, depending on demand.

    Han said: "It's not a supply crunch issue but demand sustainability. Now it's best to let market forces decide."

    - CNA/yt

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    http://www.channelnewsasia.com/stori...386795/1/.html

    MND changes Government Land Sales programme for greater flexibility

    By Asha Popatlal, Channel NewsAsia | Posted: 31 October 2008 1909 hrs


    SINGAPORE: The National Development Ministry has announced changes to the Government Land Sales (GLS) programme for the rest of 2008.

    It said that while Singapore's fundamentals remain sound, the global economic uncertainties have affected the outlook for the country's economy and property market.

    There were three main changes.

    Firstly, most of the sites under the confirmed list are being transferred to the reserve list.

    This gives flexibility as the government will only release a site for sale if an interested party submits an acceptable minimum price.

    Secondly, the confirmed list for the GLS programme for the first half of 2009 will be suspended.

    Thirdly, the existing ban on conversion of office space in the central area to other uses will be lifted.

    The temporary ban had started in May 2007 to ease the office space crunch.

    - CNA/yt

  3. #3
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    Did land-sale changes come too late?

    Loh CheeKong
    TODAY
    Thursday, 6 November 2008



    In a market where sentiment rules, the Urban Redevelopment Authority’s (URA) recent changes to the land sales programme have quite naturally cheered up developers.

    But has the intervention, which included cancelling the ongoing tenders for two sites, come a little late, and does the nature of the changes hint at the authorities being caught off-guard by the sharp fall in demand?

    Last week, the URA announced that it was lifting a ban — which was due to last until the end of next year — on the conversion of office space in the central area.

    At the same time, it said it would move most of the land sites on its confirmed list this year to the reserve list, and suspend its confirmed list of sites for sale in the first half of next year. The moves were intended to “allow the market time to assess and respond to the dynamic economic conditions”.

    Analysts concur that URA’s latest moves — two-and-a-half years after the authority resumed releasing sites through its confirmed list — would safeguard land value by deterring vulture investors.

    “Government for-sale sites are not distressed assets,” said Cushman and Wakefield managing director Donald Han, “You might get opportunistic bids ... or no bids at all, which is worse, as it sends out the signal that there’s no interest in prime land in Singapore.”

    The writing was on the wall when two sites on the confirmed list — a residential site in Tampines and a transitional office site at Mohamed Sultan Road — were left unsold when tenders closed in August and September, as the bids were too low.

    Still, the measures have been met with isolated grumbling from businessmen, who feel they would artificially maintain land prices — and indirectly, office rent levels.

    “When bids are too low, they are always seen as not reflective of the market, which is not entirely true. It’s like the ratchet effect ... prices can only keep going up,” noted Chesterton Suntec International director Colin Tan.

    Still, the changes are necessary, given that demand for office space has “shrunk dangerously low”, he said. Based on his data, the net additional demand fell to just 10,000 sqm in the second quarter of the year, compared to the average quarterly figure of 46,000 sqm over the decade.

    But did the changes come too late, given that signs of a potential supply glut were already obvious in the second quarter?

    “The authorities must have responded to the falling demand and they wanted to inject confidence immediately,” said an analyst, pointing to the “unprecedented” cancellation of tenders for the transitional office site at Mountbatten Road and the white site bordered by Rochor Road and Ophir Road.

    A URA spokesman told Today that the latest measures “were not in response to any drastic changes in demand or prices”. She added: “Cancelling the tenders for the Rochor/Ophir and Mountbatten sites also does not remove their availability for sale to interested parties, as they are now placed on the Reserve List and can still be triggered for sale if there is demand.”

    There is also the argument that the rise of office Reits (real-estate investment trusts) and major office landlords in the last few years could have distorted market signals. Given their large inventory, it is argued, such Reits and landlords could prop up rents while allowing occupancy rates to drop.

    Overall office rents declined 0.8% in the third quarter. But a CB Richard Ellis report last month showed that rents for prime office space remained sticky as vacancies for Grade A offices doubled from 0.6% in the first two quarters to 1.2%.

    Citing the “wide array of office buildings in Singapore which are owned by different landlords”, the URA spokesman rejected suggestions of oligopolistic behaviour in the market.

    She said: “The URA compiles detailed and comprehensive information on the rentals, prices, occupancy, take-up, supply, as well as supply in the pipeline of properties across various property sectors, including the office sector, and take all these information into account in calibrating our land use policies.”

  4. #4
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    Steps to buoy the market
    What other levers does the Government have?

    Ku SweeYong
    TODAY
    Thursday, 6 November 2008

    In the mess that the globe is in today, having a responsive government is not a bad thing.

    In fact, many Singaporeans, institutions and foreign investors have probably found much comfort in the significant actions taken by the Monetary Authority of Singapore (MAS) and the Urban Redevelopment Authority (URA) over the last two weeks. The Government has shown that it is listening, while willing to act decisively and swiftly.

    Guarantee On Deposits

    Our central bank, the MAS, has used our reserves to guarantee $150 billion of deposits. A quick check of the MAS website for preliminary September 2008 numbers, shows that this figure is equivalent to nearly half (45 per cent) of the total Singapore Dollar money supply (M3), two-and-a-half times (260 per cent) that of Demand Deposits, and equal in value to the Fixed Deposits (99 per cent) in the country.

    This act not only bolstered public confidence, it prevented funds from flowing out of Singapore into jurisdictions which guaranteed deposits, and better yet, attracted more money into the Republic for safe-keeping. During a crisis, it is important to protect what we have. Preserve and treasure current assets, consolidate, assess the environment, then move on.

    Government Land Sales

    Last week, the URA transferred all but one site from the confirmed list of the second half of this year’s Government Land Sales (GLS) to the reserve list, and announced that the first half of next year’s GLS will have no sites on the confirmed list.

    You could almost hear the sighs of relief across the property sector. While there is no immediate impact, the swift action shows one more government entity has its ear to the ground.

    Eight months with a blank confirmed list will allow the market to build up equity. The expected 4,000 residential units to be completed by June next year would see Central Provident Fund (CPF) monies and home mortgages flow into developers’ coffers, reducing credit lines on land and construction. This will lighten the load on banks’ exposure to developers and construction companies.

    The longer term impact will be the softening of the over-supply threat that many expect from 2011 and beyond.

    This is yet another confidence boost for investors and those waiting to invest — locals and foreigners; individuals and institutions.

    Other Levers To Push

    Looking at the speed at which financial markets crumbled, inaction could have landed us in deeper trouble. In case external conditions worsen, what other levers might be available for the Government to manage the pricing, supply and demand of real estate?

    First, let’s preserve what we have, treasure the investors who have taken a bet with us and who are still with us. Give them incentives to stay on. With the strength of the Singapore dollar, foreign investors may be tempted to sell Singapore properties and remit their funds back in Korean won, British pounds, Australian dollars, and the rest, for hefty forex gains.

    We might prevent the outflow through incentives, such as simplifying or nullifying property taxes and stamp duties. Special considerations for higher plot ratios for the strategic development precincts of Orchard Road and Marina Bay would be useful in holding on to the many foreign funds and institutions that have invested heavily with us in the past three years.

    Second, the Deferred Payment Scheme (DPS) could be re-introduced with some modifications — DPS could be allowed, subject to obtaining bank loan approvals.

    This would curb speculative purchases by investors who have enough money in their CPF for down-payments, but who are of poor credit quality. It would allow serious home buyers to return to the market, especially young families who are upgrading from public housing and buying into new launches.

    It’s time to show the world that Singapore has what it takes to stage a rebound.


  5. #5
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    this is nonsense! the govt should allow free market capitalism to rule instead of interference. prices are distorted because of this govt propping up.

  6. #6
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    Quote Originally Posted by stupid!
    this is nonsense! the govt should allow free market capitalism to rule instead of interference. prices are distorted because of this govt propping up.
    You mean if you are the government, you will ignore the stress or problems in the economy or the market?

    I can safely say you will be a lousy government, if you ever have a chance to be one. I don't think we need a government for doing nothing.

    When the prices go up, we need the government to softly moderate it. Vice-versa. When the prices go down, we need the government to softly moderate it too. "Softly moderate" means remove DPS, increase land sales, etc..

    When the times are good, the government should save. When the times are bad, the government should spend.

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    Quote Originally Posted by Unreg¡stered
    You mean if you are the government, you will ignore the stress or problems in the economy or the market?

    I can safely say you will be a lousy government, if you ever have a chance to be one. I don't think we need a government for doing nothing.

    When the prices go up, we need the government to softly moderate it. Vice-versa. When the prices go down, we need the government to softly moderate it too. "Softly moderate" means remove DPS, increase land sales, etc..

    When the times are good, the government should save. When the times are bad, the government should spend.
    Wah lau! Goverment means govern mah!

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    Quote Originally Posted by Unregistered
    You mean if you are the government, you will ignore the stress or problems in the economy or the market?

    I can safely say you will be a lousy government, if you ever have a chance to be one. I don't think we need a government for doing nothing.

    When the prices go up, we need the government to softly moderate it. Vice-versa. When the prices go down, we need the government to softly moderate it too. "Softly moderate" means remove DPS, increase land sales, etc..

    When the times are good, the government should save. When the times are bad, the government should spend.
    Smart guy! This is exactly what the government will do.

    Quote Originally Posted by CNA

    Economists say government could increase spending by S$10b
    Wong Siew Ying
    Channel NewsAsia
    Friday, 7 November 2008, 2015 hrs



    Economists expect Singapore's government to increase its spending by up to S$10 billion next year.

    Senior Minister Goh Chok Tong said on Thursday that the next budget will be an "expansionary" one, which means the government will be spending more and collecting less.

    With corporate earnings hit by the economic slowdown, analysts said on Friday that the private sector will scale back significantly on spending and investment.

    Song Seng Wun, CEO & regional economist, CIMB-GK Research, said: "Financing is not a problem. Since the new term, the government has been able to record fairly substantial surpluses and with the change in constitution, it allows them to dip into reserves. They do have a larger war chest to deal with this downturn."

    One way to pump-prime the economy is to keep infrastructure projects flowing.

    Market watchers said the government is likely to start public sector projects which were deferred earlier. About S$4.7 billion worth of projects were held back till 2010 to ease pressure on the construction sector.

    The government is also expected to inject more funds into the research and bio-medical sector, which is likely to create more jobs.

    Analysts said the government could also help individuals and companies by offering tax incentives. They do not rule out a reduction in the Goods and Services Tax (GST), which will go some way to help lower the cost of living.

    Older workers, in particular, may be given an extra lift through the Workfare Bonus Scheme – a programme to encourage low-wage workers to take on jobs.

    Heng Chee How, deputy secretary-general of NTUC, said: "In a recession, it (workfare bonus) is something that you could look at because cash flow is something that workers are also concerned about."

    Analysts said needy families are also likely to get more assistance through a range of rental and utility rebates.

    On the whole, they expect many of the potential budgetary measures to be one-offs, designed to help cushion the impact of the downturn.

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