Location of sites in GLS programme could put pressure on developers

The location of several sites in the upcoming government land sales programme could put pressure on some developers, especially those with unsold private residential units or yet-to-be launched projects in the area — this is according to some property analysts.

Market watchers told Channel NewsAsia some developers may have to cut prices to move sales.

The private residential market will see a smaller injection of land supply from the government.

It is offering just eight sites on the confirmed list under its government land sales (GLS) programme for the first six months of 2014.

Therefore, market watchers expect land-hungry developers to dip into the reserve list, and they said that is where the attractive sites are.

Developers can apply to the government to trigger these sites for sale.

Looking at the slate of land for the upcoming GLS, analysts said some sites could pose risks for developers with unsold units or new projects nearby.

Chia Siew Chuin, director for research & advisory at Colliers International, said: “I do expect them to probably adjust prices somewhat, just before the adjacent or nearby sire is being launched, just to clear units. But I do not expect them to slash prices just enough to keep interest going and to move units.

“Some developers could actually bid for those sites should they adopt a strategy to cement their position, and thereby minimising potential price competition.”

Examples include a confirmed list site on Prince Charles Crescent, which is right next to the yet-to-be-launched The Crest by Wing Tai Holdings.

Responding to Channel NewsAsia, Wing Tai said The Crest could possibly be launched in the second quarter of 2014.

Some of the sites on the reserve list, if triggered for sale, could affect transactions at existing projects with unsold units.

The site at New Upper Changi Road is near The Glades and Urban Vista, while another plot at Alexandra View is a stone’s throw away from Alex Residences.

Overall, analysts said the tapering supply of land for private homes should help to further stabilise home prices, especially the mass market segment where most sites are located.

Mohd Ismail, chief executive officer of PropNex, said: “Having fewer land sites means there will still be a strong demand, and likely the mass market condo will be at the range of the eventual selling price, at S$1,000 to S$1,200 per square foot. And that is on the assumption that most of these land sites will be successfully bid at the range of S$500 to S$550 per square foot.”

In order to have a more sustainable and stable property market, industry players do not expect the government to unwind or relax any of the cooling measures or loan curbs, at least not in the first half of 2014.

Since 2009, the government has implemented seven rounds of measures to cool the property market.

It has also introduced new loan curbs in 2013 to ensure home buyers do not overstretch themselves financially.

Source : Channel NewsAsia – 19 Dec 2013

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