TODAY ONLINE : A more responsive trigger

A more responsive trigger

Also, a wider variety of sites in the second half

05:55 AM Mar 09, 2010

by Ong Dai Lin

SINGAPORE - The National Development Ministry has found a possible way to meet the call by the Economic Strategies Committee to make land supply more responsive to market forces.

And as it considers this new procedure - releasing sites for sale as long as more than one bid comes close to the Government's minimum asking price, within a reasonable period - the ministry announced a more immediate piece of good news for developers.

The deposit to be provided by successful applicants for Reserve List sites has been reduced from 5 per cent to 3 per cent of the minimum price, capped at $5 million.

This tweak to the Reserve List system will reduce the cash flow burden of successful bidders, National Development Minister Mah Bow Tan said as the parliamentary debate on his ministry's upcoming plans ended yesterday.

The Reserve List was introduced in 2001 to make more sites available to business needs, other than those on the Confirmed List of land sales. In the case of the former, a public tender is called only if a developer's bid matches or exceeds the Reserve Price for the site.

The system has "worked well", Mr Mah said, and a total of 65 sites have been successfully triggered and sold under the system. This includes 11 sites last year for residential, hotel and industrial developments.

So how might the lower deposit and potential new procedure impact prices and bidding?

As far as bidding prices - and home prices - go, property analysts said there would be little impact.

"It's unlikely to inadvertently drive up bidding prices as developers are likely to adopt the bigger picture when bidding for the land. Developers are expected to pay premiums for lands they are interested in, and which they see business potential in," said Mr Tan Tiong Cheng, chairman of property consultancy Knight Frank.

Market sentiments should still rule, added Mr Colin Tan, director of property consultancy Chesterton International. At this time, he said, developers are likely to put in higher bids because "they want to secure a land quickly to take advantage of the robust market". "They know that it will not last forever," he said.

More Home Choices, Better Prices

Of greater impact will be MND's final announcement yesterday, that the Government will make available a larger supply and wider variety of sites in the second half of the Government Land Sales Programme this year.

"If there are more attractive sites, developers may put in bids to trigger and that will create more activity in the market," said Mr Tan.

There are 22 sites listed now on the Reserve list now for residential, commercial and hotel purposes. With more sites available, "there would be more choices for homebuyers one to two years later," Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

"More choices for homebuyers could stabilise prices. With more choices, there is more supply out there and there's a possiblity that it will meet the demand and prices of houses will not increase at a very fast pace," said Mr Mak.

He thinks that most of the new sites will be residential ones, with the variety coming from more landed property sites, and mixed commercial and residential developments such as Jurong Point.

In the long term, all the measures could make for a steadier supply of developments, "especially in a turning market when reserve prices could be out of sync with market trends", said Dr Chua Yang Liang, director of research for southeast Asia from Jones Lang La Salle.

On the possible Reserve List procedure, he said: "This would ensure that sites are awarded not based primarily on minimum prices but a reflection of market demand, based on the number of bids offered."

In a statement yesterday, the Real Estate Developers Association welcomed the measures, particularly the deposit reduction and the releasing of sites from sufficient market interest, adding that they will "minimise cost burden" for successful applicants of the land bid.

Mr Mah also told Parliament yesterday that Singaporeans accounted for close to 90 per cent of all private housing transactions last year and gave the reassurance that "properties in Singapore still remain largely in the hands of Singaporeans" despite the influx of foreigners.

He added that buyers do not need to rush into the market as there is "an ample supply of private housing" to meet demand over the next two years.

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