Govt eases land sales for first half of next year

SINGAPORE — The government is scaling back the supply of land for residential development in the first half of next year, a move that analysts said made sense in light of the softening market and the large supply of homes already being developed.

The Ministry of National Development (MND) said yesterday seven residential sites and one mixed-development land parcel — mainly located away from the central region — have been placed on the confirmed list under the Government Land Sales (GLS) programme from January to June next year, potentially yielding 4,630 homes. Analysts said this is the lowest number of units since the GLS programme for the first half of 2010.

The government has also earmarked another 13 private residential sites capable of accommodating 6,995 units that it will sell if there is sufficient interest or when a developer places a bid deemed acceptable.

In a statement yesterday, the MND said supply from the GLS programme, together with the large number of units from projects already in the pipeline, is expected to be adequate in meeting the demand for private housing over the next few years.

“The softening of land supply next year falls in line with the Government’s intention to moderate the market, complementing the series of polices released recently,” said Dr Chua Yang Liang, Head of Research for South-east Asia and Singapore at Jones Lang LaSalle.

However, Century 21 Chief Executive Ku Swee Yong said developers may continue to be aggressive in bidding for land now that there are fewer land parcels on offer.

“Many developers need to build up their land bank, so they will be bidding. Therefore, such a situation may not lead to more stable prices. The only way to solve this is to close the tender for four or five pieces of land on the same day, so developers will have to be very careful on how they deploy their resources as they cannot get the financial backing for every plot,” he said.

Currently, tenders for adjacent sites of similar size and unit yield are closed on the same day to encourage more prudent bidding. Two pairs of sites from the latest GLS confirmed list, Yishun Street 51 and Fernvale Road, will be put up for sale under this system.

This arrangement has given developers more incentive to put in higher bids to secure both parcels, as that allows them to control launches and prices without competition, Mr Ku said, citing the recently closed tenders for two adjacent sites at Upper Serangoon View, which drew bids from five common participants.

Developers, however, are expected to be more cautious in bidding for the four executive condominium (EC) sites on the confirmed list after recent changes to the hybrid public-private home scheme. The four parcels are expected to yield 2,165 units. Another site on the reserved list may yield an estimated 605 EC units.

EC buyers are now subject to the Mortgage Servicing Ratio at 30 per cent of their gross monthly income and second-time applicants have to pay a resale levy when upgrading to EC units. “Whether there is still as much vigorous demand (for ECs) after the announcement … has yet to be tested by the market,” said Colliers International’s Director of Research and Advisory Chia Siew Chuin.

Ms Chia said among the confirmed list sites, developers would find the private residential parcels at Prince Charles Crescent and Fernvale Road, as well as the Choa Chu Kang Drive EC sites attractive as they are well located. Sites on the reserved list that are situated close to transport nodes, such as Lorong Lew Lian and Sturdee Road, can also potentially be triggered.

Besides residential development, the government has also included around 193,000 sq m gross floor area of commercial space in the latest GLS, of which 5,000 sq m will come from the mixed residential and commercial site at Upper Serangoon Road/Meyappa Chettiar Road on the confirmed list.