Monday, April 26, 2010

Rise in ads seeking development sites

PROPERTY developers, keen to ride the buoyant market, seem to be getting more aggressive in replenishing their depleting land banks.

Some, such as Far East Organization, have taken out advertisements in publications such as The Straits Times to seek development sites of various sizes in the city area and suburbs.

They want to develop homes, office buildings and shopping complexes.

Experts say that while this is not uncommon, developers are usually more discreet. However, their depleting land banks might be prompting these developers to look beyond acquiring land through the government land sales (GLS) programme.

Singapore Press Holdings' Cats Classifieds said advertisements placed by developers seeking to acquire sites had doubled over the past year.

Research compiled by property consultancy DTZ this month showed that out of 16 major developers in Singapore, half had fewer than 1,000 residential units left in their land banks as of Feb 28. Another five developers had between 1,000 and 2,000 units.

Many developers ran down their land banks in the recession and were suprised by the rapid rebound.

The numbers do not factor in strong March home sales - which means that many developers' land banks would have shrunk further by the end of last month.

Some experts are thus predicting more collective sales in the second half of this year.

Chesterton Suntec International's research and consultancy director, Mr Colin Tan, said placing ads could be a more aggressive method adopted by developers to replenish their land bank rather than passively waiting on the Government to release new sites.

'They might be looking beyond just industry people and businesses to target the layman as well in the hope of triggering collective sales... It might not just be vacant land that they're looking for,' he said.

Mr Tan added that in such cases, developers might get better price deals as they have a better understanding of how the market is moving - for example, if government sites have recently been tendered at record prices - compared to the sellers, who may be less savvy.

However, Ngee Ann Polytechnic real estate lecturer Nicholas Mak said the party with the upper hand is mostly determined on a case-by-case basis, depending on who is the savvier of the two.

Knight Frank manager of consultancy and research Ong Kah Seng noted that such advertisements could be a means of acquiring prime freehold development sites since the GLS programme offers only land with 99-year leases.

'For developers looking at high-end residential developments, collective sales and private treaties are still the main avenues to acquire prime freehold sites.'

Mr Ong, however, added that acquiring land through the GLS scheme has its advantages such as not needing to go through lengthy negotiations and the ability to start making development plans soon after the site is awarded.

CB Richard Ellis residential executive director Joseph Tan added that developers will still participate in the GLS programme as there are many choices available and the sites do not attract development charges. If prices are reasonable, however, they may also look at private treaties and collective sales, he said.'

Source: Straits Times, 26 Apr 2010

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