Land prices in Singapore have slumped by up to 50 per cent since the property boom in 2007, according to market watchers. Weaker prices, coupled with recent strong demand for homes, could lure developers to replenish their land bank.
As home buyers have been flocking to project launches over the past few months, analysts said developers are showing more interest in good residential sites.
More than 7,200 new homes were sold in the first half of this year, far exceeding the over 4,200 units sold in 2008.
Last month, the government released two sites from its reserve list, under the Land Sales Programme, after receiving applications with minimum bids.
Among them was a plot at Dakota Crescent, which attracted a bid of at least S$130 million. It will be put up for public tender soon.
Despite an uptick in demand for land, observers said the government’s Reserve List System still works.
Under the system, the government will release a site for sale if an interested party submits an application for the site to be released for tender with a minimum price that is acceptable to the government.
On the other hand, sites under the Confirmed List are released for tender at a pre-determined date, without a need for the sale to be triggered by an application.
Tay Huey Ying, director, Research & Advisory, Colliers International, said: “Force feeding the market via the Confirmed List is not an appropriate measure, especially if the demand is more speculative driven, rather than owner-occupier driven.
“If the government reacts to this speculative demand by pumping up supply, then we will end up with a supply glut situation in the mid term.”
Analysts expect developers to apply for two to three more residential sites over the next six months, at a price range of between S$150 million to S$200 million.
Developers here declined to comment on their land banking situation, but told Channel NewsAsia that they are on the lookout for sites with good attributes. Many of them still have three to five projects that have yet to be launched.
Apart from acquiring land from the government on a 99-year lease, developers can also dip into the private market. Observers said the en bloc sales market is beginning to stir, but it will take six to 12 months before sales activity picks up.
They said there is also a mismatch in price expectations. Freehold land prices have fallen by 40 per cent since the peak in 2007, but sellers are not willing to settle for less.
Donald Han, managing director, Cushman & Wakefield, said: “For us to see a re-generation of developers starting to bid on these private sites, we probably need to see a price increase of 30 per cent from current levels, and we need to see an increase in take-up rate for the high-end and for the upper-mid tier.”
In contrast, experts said hotel and industrial sites are less popular. They expect just one or two plots to be triggered for sale at the S$100 million price range.
Source : Channel NewsAsia – 3 Aug 2009