Govt land sales stay nimble to nurse property recovery

Source : Business Times – 4 Jun 2009

The government yesterday announced a land sale programme for the second half of this year that should help nurse the nascent property market recovery.

As expected, the Ministry of National Development (MND) has continued its suspension of the confirmed list for the July-December period and has not made any dramatic increase to the reserve list either. In fact, it has added just two sites to the reserve list.

One is a private housing plot next to the new Bartley MRT Station on the Circle Line. The other site, next to Bedok MRT Station, is slated for a commercial and residential project incorporating a new bus interchange that will help rejuvenate Bedok Town Centre.

MND has removed from the reserve list a ‘white site’ above Outram MRT Station, ‘as it will be affected by future infrastructure works’.

Reserve list sites are launched for tender only if there is a successful application by a developer, unlike parcels on the confirmed list, which are released for sale according to a pre-stated schedule. In October last year, the government suspended the confirmed list.

City Developments executive chairman Kwek Leng Beng said the latest announcement will ‘certainly help instill confidence’ in the property market.

DTZ senior director and head, South-east Asia research, Chua Chor Hoon said: ‘The government is not rushing to re-introduce the confirmed list just because of a few months of strong home sales activity, which makes sense because we have not seen the economy bottom out yet.’

MND said its decision to extend the confirmed list suspension for another six months, amid prevailing uncertainties, will provide ‘flexibility for the market to adjust supply in accordance with current economic conditions’.

‘The government will monitor the situation closely before reviewing in late 2009 whether to suspend the confirmed list further.’

Besides the two new sites, the H2 2009 reserve list will include 36 sites from the H1 reserve list that will be rolled over to the second half.

The total 38 sites can potentially yield 8,655 private homes, 448,550 sq m of gross floor area (GFA) of commercial space and 4,430 hotel rooms.

The potential private housing supply on the H2 list is 9 per cent higher than the 7,920 units on the H1 list. The commercial supply is 12 per cent lower and the hotel room supply 14 per cent lower than in H1.

The smaller commercial space quantum is mainly due to MND’s decision to remove the Outram site from the reserve list.

Knight Frank chairman Tan Tiong Cheng said: ‘The government has not done anything that will cause alarm amid the supply glut for commercial space.’

According to CB Richard Ellis, 8.3 million sq ft of net lettable office space is slated for completion between now and 2013. Already, the office market has seen two consecutive quarters of negative take-up.

‘The absence of new office sites on the latest Government Land Sales (GLS) list is hardly surprising,’ said CBRE director (research) Leonard Tay.

Mr Tay expects more reserve list sites to be activated for release in H2 this year – including the better-located housing plots and smaller hotel sites – contrasting with a dearth of such releases in the past nine months.

CBRE figures show residential supply of about 40,300 private homes, comprising unsold units in projects launched as well as projects yet to be launched. Based on average annual demand of about 8,000 units over the past 10 years, this can last four to five years.

MND also said yesterday that outside the GLS Programme, government agencies will not release any additional supply of private homes and hotel rooms in H2 2009. And the commercial space supply from these agencies will also be lower, at about 28,000 sq m of GFA compared with planned supply of 40,000 sq m in H1.

‘These comprise projects to meet strategic economic or development objectives, and some of these projects also have pre-committed end users,’ MND said. The planned commercial space supply for H2 includes localised retail facilities at Sentosa, community centres, parks and MRT stations and about 7,000 sq m of GFA at one-north.

Knight Frank’s Mr Tan said the latest announcement will contribute to the property market recovery. ‘Private housing sales are in recovery mode but there isn’t sufficient evidence to say the worst is behind us,’ he said.

‘The Deferred Payment Scheme, on which many high-end homes were sold in the past, may or may not cause another round of concern, as projects sold on DPS during the peak year of 2007 near completion,’ he added.

‘At the same time, there is a sufficient spread of suburban housing sites catering to upgrader demand on the reserve list. Anyone who thinks the upgrader market has recovered can trigger these sites for release.’