Government tweaks Reserve List System

The government has introduced changes to the Reserve List System under its Land Sales Programme.

These include a cut in the deposit when bidding for reserve sites, which is set to benefit property developers.

But analysts said the revisions are unlikely to have a far-reaching impact on the property market.

The government said the Reserve List System for land sales has worked well since it was introduced in June 2001.

A total of 65 sites has been triggered and sold under the system so far.

In 2009 alone, 11 sites for residential, hotel and industrial developments were sold under the Reserve List.

And according to National Development Minister Mah Bow Tan, more sites are expected to be offered under the Reserve List for the second half of this year.

But he said the system will be fine-tuned with immediate effect to make it more responsive to business needs.

Mr Mah said: “We will henceforth consider releasing a Reserve List site for sale immediately if there is more than one party that submits a minimum bid that is close to the Government’s Reserve Price for the site, within a reasonable period.

“If members may know, prior to this, a site is released for sale only if a developer submits a minimum bid which is equal to or higher than the reserve price.”

Analysts said the change will make the Reserve List System more dynamic, especially in down cycles where reserve prices may not be in sync with market conditions. And it could also help developers obtain sites at less favourable locations at lower prices.

Among other changes, the deposit on Reserve List sites required from successful applicants will be cut to 3 per cent of the minimum price.

This is down from the current 5 per cent, and it will be capped at S$5 million.

Observers expect more sites to be released for tender at a faster rate following the changes, particularly for residential sites.

Donald Han, managing director, Cushman & Wakefield, said: “It will certainly ease requirements to put up a deposits for such properties, so you might be able to see more entry-level or boutique-sized developers and the medium-sized developers to partake in (the) Government Land Sales Programme.”

Meanwhile, the government said there will be no further moves to cool the property market for now, following anti-speculative measures introduced in February.

There will also be more space for businesses in the city, as several government agencies will relocate to new growth areas in Jurong Gateway and Paya Lebar Central by 2015.

Source : Channel NewsAsia – 8 Mar 2010

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