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Thread: Govt stops outright land sales

  1. #1
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    Default Govt stops outright land sales

    November 1, 2008 Saturday

    Govt stops outright land sales

    Only exec condo site to proceed, while tenders for other sites cancelled

    By Joyce Teo, Property Correspondent

    THE Government has largely put a halt to outright land sales until the middle of next year to help stave off the risk of oversupply as the property sector keeps heading south.

    Most development sites it had previously slated for definite release this year will be shifted to a reserve list where properties are offered for sale only if adequate interest is registered by developers.

    Property players hailed the move, saying it will alleviate the pressure of a supply glut and help inject some much-needed confidence into the market.

    'The Government is recognising the market situation is more severe than forecast, given tight credit and high construction costs,' said Savills Singapore's director of marketing and business development, Mr Ku Swee Yong.

    'It's fantastic news. It demonstrates the Government is on top of the property situation, sensitive to the health of the property market,' said Real Estate Developers Association of Singapore president Simon Cheong. 'More importantly, it shows that it is prepared to come up with other measures if the market deteriorates further as the health of the property market has major implications for the Singapore economy.'

    Official data shows that property prices here have started to slip. While they have yet to plunge, sentiment has deteriorated dramatically in recent weeks.

    As the global financial crisis deepens, property stocks have been battered and banks here have tightened credit to developers. Industry sources say banks have become more selective in who they deal with, with one saying lending for new projects is hard to secure.

    In the office and residential markets, there are fears of an oversupply. The office market expects a large supply to come onstream from 2010. There is a long pipeline of residential launches. 'We all know about supply but demand is the unknown quantity,' said Chesterton Suntec International's Mr Colin Tan.

    Knight Frank managing director Tan Tiong Cheng said: 'This is one small measure which will be a relief to developers who are worried about further supply coming to the market. It is also a signal that the Government is prepared to stabilise the market, and not allow it to go the way of equities.'

    A Hong Leong Group spokesman said: 'Given the unprecedented global financial crisis we are in, the steep tumble in stock markets and serious slump in the property sector, any action that can alleviate the situation will be welcomed.'

    Yesterday, the Government said that it will cancel the tenders for two out of three confirmed sites that were launched but not yet closed. It will allow the outright sale of an executive condominium.

    Of four remaining confirmed sites for sale this year, three will be moved to the reserve list and one will be removed.

    Developers like the reserve list system as it allows them to adjust supply to meet demand. It was the only sale method used for nearly four years after the slowdown in the wake of Sept 11, 2001.

    Of the cancelled sites, one is for a transitional office site at Mountbatten Road while the second is for a white site - which can be used for different functions, such as residential or commercial - bordered by Rochor Road and Ophir Road.

    Transitional office sites, aimed at easing the tight office supply, have lost their appeal as more supply will come in 2010.

    The Government did not award a recent transitional site tender as the one bid received was 'too low' and has since moved it to the reserve list. The Government has also suspended the sale of confirmed sites in the first half next year and will sell only reserve list sites.

    The Ministry of National Development also lifted a ban imposed 18 months ago on the conversion of office buildings into apartments in the city area.

    The Urban Redevelopment Authority imposed the ban in May last year to ease an office space crunch. It was to have lasted till the end of next year.

    While a rush of conversion projects is not expected, the move gets rid of an unneeded ban and will help to lift the confidence level in the market, experts say.

    The ministry said the changes will allow the market time to assess and respond. 'While Singapore's fundamentals remain sound, the global economic uncertainties have affected Singapore's economic outlook, as well as the outlook for the property market,' it said.

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  2. #2
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    Published November 1, 2008

    Govt suspends sale of state land

    Move welcomed in property circles as timely. By Arthur Sim

    GOVERNMENT Land Sales (GLS) from the Confirmed List of state sites have been suspended for the first half of next year.

    The remaining sites on the Confirmed List will be transferred to the Reserve List. And a ban on converting office space in the central area to other uses, such as housing, will be lifted.

    In a statement yesterday, the Ministry of National Development (MND) said Singapore's fundamentals remain sound but the global downturn has affected the outlook for the island's economy and property market.

    Steps have been taken 'to allow the market to better respond to the current dynamic economic conditions', MND said. 'The government will continue to monitor the demand and supply situation for the various property sectors closely and calibrate the GLS programme accordingly.'

    The news was met with jubilation in property circles.

    Simon Cheong, president of the Real Estate Developers Association of Singapore (Redas), said the move is 'timely' and shows the government is 'sensitive to the health of the market'.

    'I am sure that if the market weakens there could be other measures,' he said. 'It could extend this for another two to three years.'

    The Confirmed List was last suspended between H2 2001 and H2 2005, according to the Urban Redevelopment Authority. A spokesman said: 'The suspension of the Confirmed List is not indefinite. As the GLS Programme is reviewed every six months, the government will review the demand and supply situation in six months' time and calibrate the programme according to the conditions then.'

    Mr Cheong, who is also chairman and chief executive of SC Global, did not rule out the possibility of a return of deferred payments to support the property market. 'You never know,' he said. 'If deferred payments were brought back, buyers will come back.'

    The impact of the latest move may be limited, but it is important to 'stabilise' sentiment, Mr Cheong said. 'No one will go into the market if they think prices will go down.'

    Frasers Centrepoint CEO Lim Ee Seng also thinks MND has fired only an opening salvo. 'I am sure there will be more measures,' he said.

    Mr Lim also reckons MND's action is not designed to 'revive the market'. Instead, the suspension of the Confirmed List is expected to have a 'psychological' impact, as recent tenders resulted in bids below reserve prices.

    Colliers International's director for research and advisory Tay Huey Ying said that in the current weak market, sites on the Confirmed List would likely attract opportunistic bids or none at all. 'Land is the country's asset and the government has to make sure it is sold for a worthy sum,' she said. The government has to regulate supply and demand and the GLS is a 'tool' to do this.

    Concerns that there could be too many sites on the Confirmed List are not new. But until this year, the government's position was that this was necessary to control rising business and living costs by making commercial and residential space affordable.

    'Initially, when the government continued with the Confirmed List, there was still some interest,' Ms Tay said. But this has now mostly disappeared.

    Recently, URA rejected the sole bid for a transitional office site in Mohamed Sultan Road because it was too low - at reportedly less than half of market expectations.

    Of the seven sites on the Confirmed List, three have been launched for tender but the tenders have yet to close. Now, only the tender for an Executive Condominium (EC) site will proceed, as there are no new EC units available for sale.

    The sites will still be available through the Reserve List. Under the Reserve List system, the government will only release a site for sale if an interested party submits an application and guarantees to pay a minimum price acceptable to the state.

    Knight Frank's director of research and consultancy Nicholas Mak has faith in the Reserve List system because 'it is very market driven'. 'You want a market equilibrium where there is no glut or supply squeeze,' he said.

    While he believes MND's move will have little or no impact on supply, he noted that the government releases land based on assumed demand for property arising from economic growth.

    The lifting of the ban on the conversion of offices in the central area to other uses could add more supply. But Cushman & Wakefield managing director Donald Han thinks this will simply give developers room to 'breathe'. 'It will allow them to adapt to certain market changes, like converting the offices to serviced apartments instead,' he said. 'We will not see hordes applying for a change of use.'

    Savills Singapore's director of marketing and business development Ku Swee Yong said: 'The government recognises there is enough new supply and will now go back to the original intention of bringing life back to the city.'

    It seems more help would be welcome. A spokesman for City Developments said: 'We hope the government will continue to monitor the situation and introduce more pro-active measures to stabilise the property market.'

    [email protected]

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