(SINGAPORE) The government collected $7.3 billion from sales of state land in the year ended March 2009, $5.1 billion lower than the record $12.4 billion raked in the year before.
The figures were released yesterday in the Singapore Land Authority's latest annual report.
Analysts expect to see higher sales proceeds for the current financial year compared to the last as activity in the property market picks up. But proceeds are not expected to hit the record $12.4 billion collected in FY07/08 during the property boom.
'There is a good chance that we can surpass the numbers seen during the last financial year,' said Colliers International's director Tay Huey Ying, citing the increased demand for government land in recent months.
Chesterton Suntec International's research and consultancy director Colin Tan said that with improved sentiment and with developers now 'hungry for land', land sales revenue should rise this year as more sites are sold at higher prices.
Last year, the fall in overall sales revenue was due to lower proceeds from sites sold to the private sector. This fell to $4.7 billion in FY08/09 from $10.4 billion the year before. Land sold to the public sector rose slightly to $2.6 billion, from $2 billion in FY07/08.
The largest deal of the year was the sale of Atrium@Orchard, a Grade A office building, to CapitaMall Trust, which netted the state $840 million.
Other large sales of government land sites to the private sector included the land parcels for the condominium projects Trevista and The Peak at Toa Payoh, and Mi Casa at Choa Chu Kang.
SLA's chairman and chief executive said in their joint message that 'the slowdown in business was particularly felt in the second half of the financial year'.
Hence, while demand for state land and properties was relatively strong in the first half of the financial year, SLA's focus in the next six months was on 'facilitating the land needs for infrastructural developments, and implementing the government's economic relief measures for business'.
The agency's operating income fell 8 per cent to $92.5 million, from $100.9 million a year ago.
SLA said that the utilisation rate of state land rose to 79 per cent, from the previous year's 77.8 per cent. But occupancy rate for state properties was 86 per cent, one percentage point down from a year ago. SLA managed an estimated total gross floor area of 4.03 million square metres of state properties as of March 31, 2009.
The agency also reported that fewer instruments and caveats were lodged for HDB and private property transactions. Only 342,624 registrations were recorded in FY08/09, down from 537,629 the previous year.
Looking ahead, analysts said demand for residential land sites is expected to be strong. The last four tenders for government residential land sites drew 12 to 15 bids each.
The latest, a 99-year- leasehold land parcel in Serangoon Avenue 3 for which the tender closed on Wednesday, received 15 bids. The highest bid was $221.2 million or $529 per square foot of gross floor area.
Colliers' database, which tracks only sales of land plots (which would exclude the sale of the Atrium@Orchard building, for example) showed that $1.5 billion of government land sales were seen from April 2008 to March 2009.
However, from April 2009 to yesterday, sales of government land have already hit $1 billion, said Ms Tay. She therefore expects state proceeds in this financial year to exceed last year's.
In addition to residential land, demand is also expected to be healthy for small hotel sites and industrial plots. However, the commercial market is expected to see little to no interest, Ms Tay said.
To cope with the demand, Mr Tan suggested that more agencies release sites simultaneously.
'When demand builds up, as is the case now, it would be good to have more than one agency selling sites, to ensure sufficient supply to release the pressure from demand,' he said.
Source: Business Times, 9 Oct 2009
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