Redas hopes for wider range of govt land

Having land not near MRT stations or 'hotspots' will lead to lower bids and cheaper homes

(Singapore) DEVELOPERS hope to see the government offer more affordable private residential sites so that they, in turn, can build cheaper homes for buyers.

The Real Estate Developers' Association of Singapore (Redas) is in 'ongoing dialogue with the Urban Redevelopment Authority to more efficiently increase affordable land supply', said president Simon Cheong at a Mid-Autumn Festival celebration yesterday. 'We believe that there is more than sufficient supply of housing in the pipeline to meet future demands.'

The Government Land Sales Programme offers 99-year leasehold residential sites, and developers have been bidding fiercely for some of them.

Since July, developers have triggered the sale of five sites on the reserve list, of which two - at Dakota Crescent and Serangoon Avenue 3 - are next to MRT stations. The Dakota site attracted 13 bids, and the top bid exceeded the second-highest by more than 5 per cent. The reserve list still has several housing sites which have not been triggered for sale.

Plots near MRT stations or with other good attributes are 'hotspots', Mr Cheong told reporters. 'Perhaps in the next confirmed list, we have sites more spread out across the island for the developers to bid. Land that is not in MRT areas or hotspots probably will have a lower price.'

This would translate into more affordable homes for consumers, he said. This also means that there could be more mass to mid-market projects in future.

Frasers Centrepoint CEO Lim Ee Seng offered another perspective. 'High tender prices give the impression that the market is overheating. If the government can release more land on a wider spread, a bigger mix . . . the bids will be lower.'

DTZ executive director Ong Choon Fah believes that developers are taking the initiative to keep the property market stable - they may be concerned that the government would step in if land bids are very high.

Fears of a property bubble forming had prompted the government to introduce a series of cooling measures last month. These include the re-introduction of the confirmed list for H1 2010 and the removal of the interest absorption scheme.

The effect of these measures on home prices for the rest of the year remains to be seen. According to URA flash estimates on Thursday, the private home price index jumped 15.9 per cent in Q3 from Q2. This is a sharp reversal from its 4.7 per cent quarter-on-quarter drop in Q2.

Property prices are likely to remain firm, said Mr Cheong. Investors have been drawn to assets such as property since the financial crisis broke, and Singapore is not the only place in the region to see the market recover, he explained.

Hong Leong Group executive chairman Kwek Leng Beng also believes that property provides better returns in today's environment. 'Fixed deposit rates are only attracting 0.5 per cent per annum,' he said. 'If you keep your fixed deposit investments over the next five years, you will accumulate a 2.5 per cent interest. Property will appreciate more than that in five years.'

Source: Business Times, 3 Oct 2009