Redas urges 3-way plan to boost confidence

Source : Business Times - 27 Nov 2008

Real Estate Developers Association of Singapore (Redas) president Simon Cheong called last night for a three-way action plan involving developers, financiers and the government to shore up confidence in the property market.

The plan would involve moderating new supply, supporting demand and introducing fiscal measures to help ease funding for the industry, Mr Cheong said.

‘For the real estate market to ride out the storm created by the global credit crisis, two imperatives stand out,’ he said. ‘First, market stability is important to prevent widespread decimation of asset values. And second, confidence must be shored up by keeping credit markets functioning.

‘Only with confidence will demand return to the market. Pricing alone does not lead to sales volume. Sentiment and confidence lead to sales volume.’

Mr Cheong was giving the president’s address at Redas’s 49th Anniversary dinner, the theme of which was ‘Living In a World Class Sustainable City’.

The event at Shangri-La Hotel was well attended, with even Redas patron Kwek Leng Beng, executive chairman of Hong Leong Group, making an appearance. Before the dinner, Redas top brass held private talks with National Development Minister Mah Bow Tan, who was guest of honour at the function.

In his speech, Mr Cheong shied away from specifying what measures developers would like the government to introduce to help the property market.

But property consultancy Knight Frank’s managing director Tan Tiong Cheng made a few suggestions. ‘Tax concessions affecting the property market could help reduce business costs and provide relief to developers immediately, yet leave the government flexibility to withdraw the measures when the market improves,’ he said.

He suggested the authorities reinstate the deferment of stamp duty payment to the date of issue of Temporary Occupation Permit for properties under development. At present, buyers have to pay stamp duty within 14 days of their option to purchase being accepted.

The government should also revert to the formula of calculating development charges based on 50 per cent of appreciation in land value, instead of the current 70 per cent.

And property tax exemptions for vacant land, land under development and completed industrial and commercial buildings would help cut the cost of doing business and provide relief to developers so they don’t have to rush construction of new projects, given weak demand, Mr Tan said. He also called on the authorities to consider reviewing the stamp duty rate, which now peaks at 3 per cent.

Last month, the Ministry of National Development (MND) announced a halt in state land sales through the confirmed list until first-half 2009. Mr Tan suggested MND could go further and announce a freeze on confirmed-list land sales for the next two years.

‘This would provide a psychological booster and create more confidence and stability in the market, so banks and sellers don’t panic,’ he said.

He also suggested extending the CPF Housing grant available to first-time buyers of executive condos (ECs) and resale HDB flats to private home buyers. ‘If necessary, minimum holding conditions could be imposed for private home buyers taking the CPF grant, which is what happens for ECs,’ he said.