URA should review its reserve list policy

I AGREE with the commentary by Kalpana Rashiwala, ‘Don’t give up confirmed list card again’ (BT, Nov 12).

Our Prime Minister and Minister for National Development have repeatedly stressed the importance of ensuring that residential property prices do not get out of sync with economic growth and that operating costs for business remain stable. The volatility in prices and rentals of residential and commercial properties in the last few years is an indication that the land sales programme needs to be tweaked.

I have written to URA a few times about the need to review the policy of putting sites in the reserve list as I strongly felt that the policy is seriously flawed. URA maintained that the reserve list policy is market-driven.

The property market is dominated by a few big players with large land banks. The motivation of the major developers is to maximise profit and value of their land bank and not to maintain price stability.

Does it make sense to increase supply and thus lower the value of their land bank by making a bid for the sites in the reserve list?

The way the property game is played is intriguing. Developers play with their cards close to their chests. URA not only plays with its cards on the table but also shows its next card. I have decided to bet on the winner and buy property stocks!

In my opinion, URA should scrap its policy of putting sites in the reserve list. URA, with its vast resources and with the help of other government agencies like EDB, should be able to estimate demand and supply of residential and commercial properties.

Based on projected supply and demand, URA should then put up sufficient sites for tender. If demand is weak and the tender price is below the threshold, URA can choose not to award the tender to the highest bidder.

URA should consider the impact of its policy on those who buy properties for their own use, particularly Singaporeans. Sharp hikes in prices result in massive transfer of wealth from buyers to banks and developers. It has also serious social ramifications – on population growth, savings for retirement, and leads to discontentment.

Singapore needs to attract companies, particularly MNCs, to locate their regional HQ in Singapore. Companies need a stable operating environment. Sharp hikes in rentals of offices and apartments will deter companies from setting up or expanding their operations in Singapore. They can also kill small companies operating on thin margins.

Of course, in theory, companies can move to cheaper locations. In reality, it is not so simple.

Philip Ng Lin Ai
Director
OCSC Global


Source: Business Times, 20 Nov 2009