Prompt move aimed at helping sentiment in sagging market
THE Government has put the brakes on its land sales programme, as the outlook for the local economy and the property market takes a turn for the worse.
The Ministry of National Development on Friday said it would move most of the land sites on its confirmed list this year to the reserve list, and suspend its confirmed list of sites for sale in the first half of next year – two-and-a-half years after it resumed releasing sites through its confirmed list.
It also lifted a ban on the conversion of office space in the central area, a moratorium that was due to last until the end of next year.
Meanwhile, most of the remaining sites on its confirmed list for the rest of this year will be moved to the reserve list.
“Since the announcement of the second-half 2008 Government land sales programme in June, the global economic landscape has changed significantly,” the ministry said.
It was making the changes “in view of the current uncertainties and to allow the market time to assess and respond to the dynamic economic conditions”.
Under the reserve list system, used since June 2001, a site is released for sale only when a party applies to buy it at an acceptable price, whereupon other tenders are invited. Sites under the Confirmed List are released for tender at a fixed date, without need for such a trigger.
From October 2001, the confirmed list was suspended and State land released mainly via the reserve list, :as the market struggled after the 911 attacks in the United States and the outbreak of Severe Acute Respiratory Syndrome.
Even with half-yearly reviews, the confirmed list was resumed only at the start of 2006 with the market’s pick-up.
The latest measures come as private home prices slipped 2.4 per cent in the third quarter from the preceding quarter, while prices for commercial properties dropped 3.9 per cent.
Two sites on the confirmed list – a residential site in Tampines and a transitional office site at Mohamed Sultan Road – were not sold when the tenders closed in August and September as the bids were all too low.
Property companies cheered the move.
“Developers are pleased the Government is being sensitive to the health of the property market,” said Mr Simon Cheong, president of the Real Estate Developers Association of Singapore. “The whole world has been
caught off guard, let alone Singapore and property developers.”
A spokesman for the Hong Leong Group, which includes listed property developer City Developments, said: “Given the unprecedented global financial crisis that we are in, the steep tumble in stock markets and serious slump in the property sector, any action that can alleviate the present situation will be welcomed.”
Knight Frank’s research head Nicholas Mak said: “If the Government didn’t do anything, there would be more opportunistic and very low bids or no bids. Such market signals would have continued to dampen sentiment.”
SUBHD: For how long, this time?
Still, one question is how long the current suspension will stretch given that previously, the confirmed list was off the table for more than four years.
“Nobody can tell,” said Mr Mak, adding that with the land sales programme reviewed every six months, the Government “can bring back the confirmed list when the market recovers again”.
For now, the measures are expected to help the wider economy. Mr Vishnu Varathan, an economist at Forecast Singapore, said: “There’s been an over-projection of office space demand, given the turn of events and this is one of the measures to not only support prices, but also make sure that excess capacity will not begin to weigh on the rest of the economy.”
The Government will announce the details of the reserve list for the first half of next year by December.
In May last year, the Urban Redevelopment Authority (URA) had said, at a time of strong demand for office space, that it would temporarily ban the conversion of offices in the central area to other uses. Since then, however, more office space has come on the market or will so shortly, the URA said.
With the lifting of this restriction, Mr Mak said: “There will be more flexibility for market players, which is necessary because the market environment has changed from a year ago. The ban was unusual anyway.”
Source : Today – 1 Nov 2008