Tuesday, September 15, 2009

Resumption of land sale via confirmed list draws mixed views

REGULAR, scheduled sales of state land will resume next year, to meet developers' increasing appetite for new sites.

The Government yesterday said it will again start selling plots through its confirmed list, a system it halted last October when the property market tanked.

It has since been selling sites through the reserve list, a market-driven process where land is put up for sale only when a developer submits a bid.

The resumption of confirmed list sales in January was widely expected, as it had been hinted at twice since July by National Development Minister Mah Bow Tan.

The ministry will reveal in December the sites it will push out for sale via the confirmed list over the following six months. It will also add to the current 16 residential sites on the reserve list.

Reactions from the industry to the announcement were mixed.

The Real Estate Developers' Association of Singapore was sanguine, saying these moves 'should provide ample supply to meet demand'.

Chief executive Steven Choo said whether or not sites are on the confirmed list, they will be 'taken up only when they have certain good attributes, and that's always going to be decided by the market'.

To Mr Karamjit Singh, managing director of Credo Real Estate, the impact hinges on how many sites will be on the confirmed list.

'From the end of the year, we will see more en bloc sale sites come on the market, and that will add to the supply too,' he said.

Jones Lang LaSalle's head of South-east Asia research, Dr Chua Yang Liang, said the revived confirmed list is 'likely to have a dampening effect on developers' marketing and pricing strategies in the short term'.

But property analysts were upbeat about the move. Kim Eng's Mr Wilson Liew said the confirmed list provides a more visible pipeline of available sites to developers, so they do not bid 'too aggressively' for any one site.

'With home sales going strong over the last nine months, developers have drawn down on their inventory and are looking to top up their land bank,' he said.

The most recent state land tenders, for condominium plots at Chestnut Avenue and Dakota Crescent, each attracted a bullish 13 bids as developers in need of land turned out in full force.

Mr Brandon Lee, property analyst at DMG & Partners, sees the reinstatement of the confirmed list as a signal that demand for mass market sites is sustainable.

He added that while the Government could have used more forceful measures to calm the market, such as restarting the confirmed list right now, that would 'run counter to its overall cautious tone on the economy'.

The Government also announced it will not extend measures in January's Budget to aid developers in the recession.

These included deferring property tax and giving developers more time to complete housing projects.

Source: Straits Times, 15 Sep 2009

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