HDB to incur S$270m loss on Central Weave@AMK BTO project where units sell for up to almost S$900,000

SINGAPORE — The Housing and Development Board (HDB) will incur an overall loss of about S$270 million for the Build-To-Order (BTO) project Central Weave@AMK, which made headlines when some of its units were priced at almost S$900,000.

The development loss will be S$250 million with another S$20 million if housing grants extended to eligible buyers are taken into consideration, Mr Desmond Lee said in Parliament on Tuesday (Oct 4).

The Minister for National Development was answering a question from Mr Leong Mun Wai, Progress Singapore Party’s Non-Constituency Member of Parliament, about the land cost for the project in Ang Mo Kio and the Government's overall net profit and loss position in relation to it.

In his response, Mr Lee said that the land cost for the project is about S$500 million.

“The money that HDB will need to pay for the land must be paid back into the past reserves, which are invested and grown for future generations and are protected,” he explained, adding that such proceeds cannot be treated as revenue for spending in the Budget.

The flats at Central Weave saw a strong interest from buyers, with an average of more than 10 applicants vying for each flat there in the afternoon on the closing day of applications.

The number of property hunters who applied for the five-room, three-generation flat at the project was even more — at 5,907 applicants for 372 flats on offer, including 39 units of three-generation flats.

This represented an application rate of close to 16 times, which showed that potential buyers were not deterred by the flat type’s selling price of between S$713,000 and S$877,000.

Property analysts last told TODAY that the hot resale market for public housing and higher building costs are some factors pushing top-range BTO flat prices closer to the million-dollar mark.

Mr Lee explained on Tuesday that new flats are not priced based on cost.

Instead, HDB establishes their market value by considering prices of comparable resale flats nearby, prevailing market conditions and other factors, before applying “a significant subsidy” to the assessed value to make the BTO flats affordable to first-home buyers.

As a result, HDB incurs a significant deficit every year because the amount it collects from flat sales is far less than the cost of its building programme and the value of grants disbursed.

HDB recorded a deficit of S$3.85 billion for the financial year of 2021-2022, while the average deficit incurred between 2019 and 2021 was about S$2.68 billion yearly.

“So, claims that HDB profits from the development and sale of HDB flats are false,” Mr Lee added.

HDB receives grants from the Government to finance the deficits that it incurs. For example, in its 2020-2021 annual report, it was stated that the board received a grant of S$2.35 billion for the 2020 financial year.

Recently, HDB issued a correction order to the Facebook page The Alternative View, under the Protection from Online Falsehoods and Manipulation Act, for “implicitly” saying that the housing agency profits from the Ang Mo Kio BTO flats, which are part of the August BTO sales exercise this year.