ST : Deposit cut for reserve sites

Mar 8, 2010

Deposit cut for reserve sites

THE Government has, with immediate effect, reduced the deposit for successful applicants of Reserve List sites from 5 per cent to 3 per cent of the minimum price, capped at S$5 million, to help lower upfront cost and the cash flow burden of the developers.

It will also consider launching a Reserve List site for sale once it has received sufficient market interest for the site, National Development Minister Mah Bow Tan announced in Parliament on Monday.

A site is deemed to have received sufficient market interest if more than one unrelated party submit minimum prices that are close to the Government's Reserve Price for the site within a reasonable period.

With this improvement, a site on the Reserve List can be released for sale by public tender even if the application prices are below the Government's Reserve Price. This will also enhance the responsiveness of the Reserve List system to dynamic market conditions, said Mr Mah. This new process will also take effect immediately.

Mr Mah also said a larger supply and wider variety of sites in the Reserve List will be made available in the second half of the the Government Land Sales (GLS) Programme this year.

The Reserve List system was introduced in 2001. It makes available additional sites, in addition to those on the Confirmed List, so that there is more than sufficient supply to meet any surge in demand.

Under this system, a developer who is interested in a site on the Reserve List would submit an application to the Government for the sale of the site, stating the minimum price to be committed for the land parcel. If the minimum price meets or exceeds the Government's reserve price, the application would be accepted. The applicant is then invited to execute an agreement to bid for the site at a price not less than the minimum price and to pay a deposit equivalent to 5 per cent of the minimum price.

Following this, the site will be launched for sale by public tender.

The Reserve List system has worked well. A total of 65 sites have been successfully triggered and sold under this system. In 2009 alone, 11 sites for residential, hotel and industrial developments were successfully triggered and sold.

To ensure that the Reserve List system remains responsive to dynamic market conditions and business needs, the Economic Strategies Committee (ESC) has earlier recommended that the Government review and make improvements to the system to make it less onerous for developers to trigger sites on the Reserve List.

This will enable supply to be more easily activated when needed. In response, the Government has conducted a review of the Reserve List and has decided to implement a number of improvements.