Govt likely to release more land for sale

Govt likely to release more land for sale

‘Every likelihood’ the Govt will reintroduce confirmed list of land sites, says Mah

By Joyce Teo

The Pinnacle@Duxton has 1,848 units, of which 111 are unsold. The final skybridge at Singapore’s tallest public housing project was launched yesterday. — ST PHOTO: CHEW SENG KIM

THE Government is mulling over how much land to release for sale - a move industry experts see as a signal it is ready to act if the highly buoyant property market overheats.

National Development Minister Mah Bow Tan said yesterday there was ‘every likelihood’ the Government would reintroduce the confirmed list of land sites, which was suspended last October.

This is a list of sites tendered out on a fixed schedule, without preconditions such as developer expressions of interest.

‘It’s a question of how much we put on the confirmed list,’ Mr Mah said.

He also said HDB resale prices will continue to rise this year by perhaps 1 per cent or 2 per cent in tandem with the recovery in Singapore’s economy.

New home sales in Singapore have shot through the roof recently. Resale prices of many popular projects have also risen from the lows early this year.

‘As far as (private home) prices are concerned, we want to make sure the property market does not become overheated, that there is no excessive speculation,’ said Mr Mah.

‘The Government is monitoring the market very closely. If there’s any necessity, obviously we will take certain actions. One of the things we are looking at is the government land sales.’

The Government suspended the confirmed list last October when the property market was in the doldrums and Singapore slipped into recession.

‘Now that the market is coming back, demand is coming back and the take-up is strong, there’s every likelihood that we will resume the confirmed list,’ the minister said.

Mr Mah was speaking to reporters at the launch of the final skybridge at Singapore’s tallest public housing project, The Pinnacle@Duxton. It has 1,848 units, of which 111 are unsold.

Developer Kwek Leng Beng had said restarting the confirmed list could be used by the Government to cool the market.

Mr Mah’s comments signal the Government is ready to step in if prices rise too sharply and more people are swept up in a panic-buying spree, said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

The move, however, will not have an immediate impact on prices, he said.

Said Savills Residential director Phylicia Ang: ‘It’s healthy for them to bring it back because some developers are running out of land.’

Some developers have recently done very well with the sales of mass-market to mid-tier projects, and are actively looking for new sites.

ERA’s associate director, Mr Eugene Lim, noted that some of the demand in the HDB resale market is coming from buyers who have been forced out of the rising private homes market.

When asked about HDB resale prices, Mr Mah said they are likely to continue rising this year.

‘Flat prices would probably go up, they will go up by 1 per cent, 2 per cent, or whatever,’ he said.

‘They will just keep on going up if the economy recovers as people expect, and if confidence returns, but affordability will always be there.’

HDB resale prices go up in tandem with a very strong market, but their movements will not be as volatile as private home prices, Mr Mah said.

Price rises have to be viewed from both sides as sellers naturally do not mind prices going up, he pointed out.

In the HDB market, resale prices are sitting at record high levels after climbing 1.4 per cent in the second quarter and about 35 per cent since 2007.

Indeed, HDB resale prices could rise by as much as 3 per cent this quarter on strong demand, going by the rise in the cash amounts that buyers are willing to pay over and above a flat’s valuation, said ERA’s Mr Lim.

Mr Mah said buyers of old flats are using on average about 25 per cent of their household incomes to repay their loans - which is still below the international affordability benchmark of 30 per cent - thanks to government grants.

His advice to buyers: ‘Before you buy a property, you must remember three things - think, think and think… Think carefully, Think long term, Think about the unexpected.’

THINK THRICE

‘Before you buy a property, you must remember three things - think, think and think… Think carefully, Think long term, Think about the unexpected.’

Mr Mah’s advice to home buyers

Source : Straits Times - 03 September 2009

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Laguna Park goes on sale for $1.2b

Laguna Park goes on sale for $1.2b

Consent level reached in Dec, but now’s the right time for tender, it says

By Jessica Cheam

EAST Coast condominium Laguna Park was put up for collective sale yesterday with a hefty price tag of $1.2billion - potentially the second highest price ever here for such a deal.

The sprawling 30-year-old condominium has been in the headlines over a spate of vandalism attacks on residents who were not keen on the sale.

Despite its troubles, the estate attained the crucial 80per cent consent level from its owners last December.

But the tender exercise was put on hold until now ‘as major developers have only recently returned to the land market with confidence’, said its marketing agent Credo Real Estate.

If it succeeds in finding a buyer, Laguna Park will be the second billion-dollar en bloc deal here, after the 618-unit Farrer Court was sold to a CapitaLand-led consortium for $1.34billion in 2007.

Laguna’s entry on the market marks a milestone in the estate’s troubled path towards a collective sale that was made highly public due to incidents of vandalism which hit the estate last year.

Residents who spoke to The Straits Times yesterday said the estate’s once-peaceful atmosphere has begun to return.

One resident, Mr Robin Sng, who had his car damaged by a corrosive liquid, says he has still not signed up to the deal because he wants to stay on.

Even with the payout, he feels it will be difficult to get a replacement unit with the same attributes in the area.

‘Very few people now talk about the en bloc sale openly, although we know it is going on,’ he said.

Another minority owner, who declined to be named, said he was adopting a wait-and-see approach to the sale, but confirmed that some owners - who themselves were victims of vandalism - had changed their minds and signed up after considering the attractive price tag.

At the current price, most owners will receive $2.1million to $2.3million, while the penthouses will fetch between $3.5million and $4.1million, said Credo.

This price, which works out to about $1,300 to 1,400 psf depending on the unit size, is double the price such units have been fetching in recent months - about $682 psf- even in the bullish market.

Industry analysts are speculating that the overall price tag - at $1.6billion, including an estimated $400 million payable to the Government for development charges and a fresh top-up of the lease - might deter developers.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak notes that the steep sum may lead to interested developers forming joint ventures.

On the timing of the sale, he said this time is ‘as good as any to launch, as developers are triggering government land sales sites and 99-year leasehold condominiums seem to be selling out’.

Like Farrer Court, Laguna Park is a former HUDC estate; it is located in Marine Parade and was privatised in 2007. The condominium has a land area of about 677,493 sq ft and a gross plot ratio of 2.8.

Credo deputy managing director Tan Hong Boon estimates that the buyer could build about 1,500 new apartments with an average size of about 1,200 sq ft.

The land price for the condominium, which has 67 years left on its lease, works out to about $844 per sq ft per plot ratio, including the $400million payable.

At this price, the successful purchaser could break even at about $1,200 to $1,250 psf, with a view of pricing the new units at $1,400 to $1,600 psf, said Mr Tan.

Chesterton Suntec International’s research and consultancy director Colin Tan said the condominium sits on an attractive site that faces the sea, but ‘it remains to be seen if it can achieve that kind of pricing’.

The tender closes on Oct13 at 3pm.

Source : Straits Times - 03 September 2009

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Laguna Park up for collective sale

Laguna Park up for collective sale

More than 80% of owners consent to sale at a reserve price of $1.2b

By UMA SHANKARI

(SINGAPORE) Laguna Park, a 528-unit ex-HUDC estate in Marine Parade, has just been officially put up for collective sale. More than 80 per cent of the owners have inked their consent to the collective sale agreement at a reserve price of $1.2 billion.

On the market: The 528-unit ex-HUDC estate in Marine Parade has a land area of about 677,493 sq ft and a gross plot ratio of 2.8
The price works out to $844 per square foot per plot ratio (psf ppr), including an estimated total cost of about $400 million payable to the state for the increase in intensity of the site to the plot ratio of 2.8 and the topping up of the lease term to fresh 99 years.

Laguna Park has a land area of about 677,493 sq ft and a gross plot ratio of 2.8. The successful developer would be able to build close to 1.9 million sq ft of gross floor area or some 1,500 apartments with an average size of about 1,200 sq ft. Laguna Park is one of the few known sites that have successfully obtained majority owners’ consent under the amended Land Titles (Strata) Act, which came into effect in October 2007.

‘Although the 80 per cent consent was obtained in December 2008, the tender exercise was put on hold till now, as major developers have only recently returned to the land market with confidence,’ said Tan Hong Boon, deputy managing director at Credo Real Estate, which is marketing the project.

Other analysts echoed this view. ‘If you look at the past 12 months, right now is as good a time as any to launch the project,’ said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

The collective sale market first came to life again earlier this year with the launch of Dragon Mansion on Spottiswoode Park Road - the first development to be launched for sale en bloc this year. Owners asked for $120 million for the freehold project, or $1,020 psf ppr including a development charge of about $400,000

But while the tender for that site closed last month, the property is yet to be sold, BT understands. If the reserve price for Laguna Park is met, most owners stand to receive sale proceeds ranging from $2.1 million to $2.3 million, while the penthouse owners will get between $3.5 million and $4.1 million each.

Credo also pointed out that if the site is sold, it could potentially be Singapore’s second billion-dollar en-bloc deal. The largest sale price quantum achieved for a collective sale project to date is the 618-unit Farrer Court, which was also sold by Credo for $1.3388 billion in June 2007.

‘At $844 psf ppr, the successful purchaser may work towards breaking even at around $1,200 to $1,250 psf, with a view of pricing the new units at $1,400 to $1,600 psf,’ said Mr Tan.

Source : Business Times - 03 September 2009

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Confirmed land sales poised for comeback

Confirmed land sales poised for comeback

Mah says govt may bring confirmed list back next year as demand returns

By UMA SHANKARI

(SINGAPORE) There is a ‘definite possibility’ that the government will re-introduce land sales through its confirmed list system from next year, Minister for National Development Mah Bow Tan said yesterday.

Skygarden: Mr Mah yesterday launched the final skybridge at the Pinnacle @ Duxton, the tallest HDB project
Right now, it is ‘a question of how much we put on the confirmed list’, he added.

Mr Mah was speaking to reporters at the launch of the final skybridge at the Pinnacle @ Duxton, Singapore’s tallest public housing project. The project will be completed in December 2009.

Sale of state land under the confirmed list was suspended for the first half 2009 Government Land Sales (GLS) Programme to help stave off oversupply risk as the property market here was then on a downtrend.

Instead, state land was only made available under the ‘reserve’ list system for H1 2009 and H2 2009.

Under the reserve list system, the government releases a site for sale only if an interested party submits an application with a minimum price that is deemed acceptable.

By contrast, land parcels under the confirmed list will be tendered according to scheduled dates - which could translate to more residential property launches.

But now, with the property market on an upswing again, it seems as if state land will be made available through the confirmed list once again in the H1 2010 GLS programme.

‘Yes, that is a definite possibility, to bring back the confirmed list,’ said Mr Mah when asked if there will be confirmed list sites in the first half 2010 GLS programme. The H1 2010 GLS programme will be ready by the end of this year.

‘As you know, we have always had a mix of the reserve list and the confirmed list, and we dropped the confirmed list when the property market was in the doldrums, when the recession hit us and we needed to remove supply from the market… but now that the market is coming back, demand is coming back and the take-up is strong, there is every likelihood that we will resume the confirmed list.’

Property analysts said the government was reacting to signals from the market that more land will be welcome.

For example, a recent government tender for a 99-year condo site at Chestnut Avenue drew 13 bids and a much-higher-than-expected top bid of $280 psf per plot ratio from two companies from the Hong Leong Group. The bid price was 2.3 times the minimum price.

However, some analysts warned that it was still difficult to tell if seeming recovery in the property market is for real.

‘I think it is still early days,’ said Tan Tiong Cheng, chairman of property consultancy Knight Frank. ‘A lot really depends on whether the surge continues.’

There was also speculation that the re-introduction of the confirmed list could be the first action by the government to combat signs of overheating and speculative buying in the property market.

Yesterday, Mr Mah reiterated that the government is monitoring the market very closely and will take ‘certain actions’ if necessary.

And speaking about the HDB market, Mr Mah said that while HDB flat prices are expected to rise by another 1 per cent or 2 per cent this year, the government will continue to ensure that public housing remains affordable for Singaporeans.

Source : Business Times - 03 September 2009

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Bleeding stops, speedy recovery sets in

Bleeding stops, speedy recovery sets in

GDP may shrink just 3.6% this year, grow 4.5% in 2010: survey
By TEH SHI NING

(SINGAPORE) Things are looking up for Singapore’s economy, which may shrink far less than was feared until recently.
The median forecast by economy watchers for this year is now a 3.6 per cent contraction in GDP, which suggests a much brighter outlook than the 6.5 per cent decline forecast in June. This also exceeds the government’s official expectation of a 4-6 per cent contraction.

And, looking further into the horizon, the latest quarterly Monetary Authority of Singapore (MAS) survey of professional forecasters found that expectations for next year’s GDP growth have risen to 4.5 per cent as well.

Optimism about the economy has been palpable for a while now, as ‘data releases have been improving more quickly than most people anticipated’, said David Cohen, director of Asian Economic Forecasting at Action Economics.

Singapore’s second- quarter economic performance was unexpectedly strong - GDP grew 20.7 per cent from the first, and contracted 3.5 per cent year- on-year.

And the data which has been released since MAS sent out its survey on Aug 11 has shown further improvement, Mr Cohen said. Even though July’s industrial production was largely boosted by pharma output, it showed a pick-up in momentum in other sectors too.

The economists polled by MAS also predicted a 3 per cent contraction in Q3’s GDP, and positive growth in Q4 of 1.9 per cent.

Barclays Capital’s economist Leong Wai Ho said: ‘We now see more signs that the recovery has broadened out to industries other than electronics. Smaller companies are also benefiting from the improved order flow.

‘These are signs that the current recovery can be sustained well through the end of this year. Private forecasters are awakening to these realities. We may well experience another external shock, but for now the near-term prognosis is good,’ he added.

Mr Leong’s GDP forecast has remained unchanged at minus 4 per cent through the past year’s turbulence. The 2009 growth forecasts MAS compiled from 21 economists and analysts ranged from minus 5 per cent to minus 1.8 per cent.

Citi economist Kit Wei Zheng, whose forecast of minus 2.7 per cent falls in the higher end of this range, says that he sees more upside yet.

‘July proved to be a strong start to the third quarter, and recovery is likely to broaden into the trade-related services,’ he said, expressing confidence that full-year growth would beat the median forecast of a 3.6 per cent contraction.

‘But, not to sound overconfident, certain risks - such as that of a W-shaped recovery - are still there,’ Mr Kit added. Still, he thinks that if it does come, the second dip would be in the latter half of 2010, rather than sooner.

OCBC economist Selena Ling too thinks that ‘optimism will probably need to be tempered with a few reality checks’. Even though she considers a sharp second dip unlikely, the recovery ahead will be ‘choppy and bumpy’.

‘Much hinges on US consumption recovery - because the US consumer still seems to be deleveraging and saving, and how global demand pans out will be seen in the Christmas orders over the next few months,’ she said.

The International Monetary Fund’s (IMF) country report on Singapore, released on Tuesday, expects an 8 per cent contraction this year, but this was based on meetings with Singapore officials in May and probably excluded the strong Q2 performance.

MAS’s survey of forecasters also showed that the economists have upped their estimates of growth for manufacturing - minus 7.1 per cent versus minus 14 per cent back in June - as well as for financial services and construction. But forecasts have been lowered for wholesale trade and retail, and hotels and restaurants.

Private consumption is now expected to shrink a smaller 2.5 per cent, while the slide in non-oil domestic exports is expected to be less severe too at minus 11.5 per cent, the survey results showed.

The median forecast for consumer price index inflation also rose to zero, from the negative 0.5 per cent reported in June’s edition.

As for the labour market, estimates for the unemployment rate have also been lowered to 3.8 per cent by year-end, compared to 4.2 per cent in the June survey.

 
Source : Business Times - 03 September 2009

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