GuocoLand: Cooling measures need not be so ‘blunt’

They should be more calibrated, rather than one-size-fits-all: Developer

Property developer GuocoLand, the Singapore-listed firm controlled by Malaysian billionaire Quek Leng Chan, would like to see a more calibrated approach to property cooling measures by the Government rather than a one-size-fits-all approach.

Said its newly-appointed Chief Operating Officer, Mr Cheng Hsing Yao: “In a global landscape where Singapore is trying to attract foreign talent, this approach with a blunt instrument is certainly not the best one and may even scare people off. The Government should recognise that the property market here has become more sophisticated and is now very segmented.”

Earlier this month, the Government introduced a comprehensive round of additional cooling measures, including higher stamp duty for certain home buyers, tighter loan-to-value limits and higher downpayment requirements for existing home owners seeking to buy additional properties.

GuocoLand, which focuses mainly on the top end of the market, also feels that the Government should pay less attention to the private sector.

“It should concentrate on its role of providing affordable housing for the masses. It already caters to more than 80 per cent of the population compared with Hong Kong, where the public sector is less than 50 per cent,” said Mr Cheng. “If people can afford S$2 million EC (executive condominium) penthouses, they do not need government help. It should interfere in the remaining 20 per cent of the market as little as possible.”

While GuocoLand thinks that the current measures will have little adverse impact on its sector of the market, it expects sales across the industry to slow down but with prices staying broadly flat.

Most property observers appear to be in agreement with that view, with some expecting volume to take a dive, but as developers are now better capitalised and able to hold on to their inventory, at least for some time, prices are not expected to ease too much.

“With the tough new measures in place, demand by investors and foreigners will be curbed substantially. We may expect sales volume to decline by 30 to 40 per cent and prices stagnating in the near term,“ said Jones Lang LaSalle Property Consultants.

“In a way we are lucky that we made a decision some time ago to get out of the lower end of the private property market and concentrate on the top end,” said Ms Trina Loh, GuocoLand’s group head for Singapore.

As a result, the company remains optimistic about the various properties it has under development, including its massive Tanjong Pagar mixed development.

It bid S$1.7 billion at just over S$1,000 psf for the 99-year leasehold site next to Tanjong Pagar MRT Station. The project, which will feature Singapore’s tallest building at 290m, includes offices, a 200-room hotel and about 180 residences and retail space. It is expected to be completed towards the end of 2015 or early 2016.

Meanwhile, Ms Loh suggested that changing the system of having “reserve” prices on land sales might offer another way of moderating property prices. As the reserve price is based on historic property values and not the future outlook of the market, “perhaps we should look at auctions, like how Hong Kong conducts its land sales”.

Ms Loh was also not happy with the decision to start charging for private enclosed space (PES). In a hot climate, such open spaces provide some relief and charging for the space will discourage developers from providing such amenities, she feels.

“Just because some developers have abused the previous concessions given, now everybody is penalised. There’s a cost to providing these facilities and most of us regard additional charges as a recovery item.”

Under the latest measures, PES and private roof terraces will be treated as gross floor area (GFA).

GuocoLand thinks the latest efforts by the Government to cool the market are “unlikely to be its last”, especially in the current low interest rate environment.

Source : Today – 23 Jan 2013

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