reporter2
26-11-14, 16:21
http://www.businesstimes.com.sg/companies-markets/time-to-tweak-some-measures
Time to tweak some measures?
By Lynette Khoo
[email protected]@LynetteKhooBT
24 Nov
SOME government policies targeted at the property market are better tweaked than left alone, MCC Land (Singapore) managing director Tan Zhiyong argued. Rather than having the intended effect of taming residential prices, Mr Tan believes that the reverse has taken place.
One example is the revised guidelines by the Urban Redevelopment Authority (URA) in early 2013 that count private enclosed spaces and private roof terraces in non-landed residential projects as gross floor area (GFA) for which development charges apply. Previously, developers could sell such free spaces for a profit.
The revision was apparently prompted by the creation and sale of super-sized penthouses in some executive condominiums (ECs) to buyers who did not appear to be from the sandwiched class - for which the hybrid public-private housing product was designed to serve. While developers profited on those free spaces, buyers ended up with a higher price quantum.
Many homeowners and end-users had also given feedback to URA that they found such spaces less useful compared to indoor living areas, while the provision of such spaces reduced the common space for greenery and communal facilities for all the residents.
Being a developer, Mr Tan understandably offered a different perspective. "By selling larger spaces to those who can afford, it helps to defray the costs of other typical units," he said. "This actually serves to benefit the ordinary buyers."
Neither has the 15-month waiting time between acquiring an executive condominium site to launching the project tempered developers' interest for such sites, Mr Tan argued. "Prices for EC sites have not come down as a result of the rule," he added. "On the contrary, it has led to some adverse impact. The development period gets lengthened, leading to higher human capital costs and hence overall development costs. During this waiting period, the developer still needs to plough its own capital into funding the foundation works. The higher costs will eventually be passed down to the consumers." Clearly, this policy is crowding out the smaller players but the bigger developers with large balance sheets are still able to throw in higher land bids, he argued.
At the same time, the mortgage servicing ratio that caps the loans that EC buyers can obtain at 30 per cent of gross monthly income has made ECs less affordable, he noted.
Mr Tan believes too that there is room to tweak the additional buyers' stamp duty, which is seen deterring foreign buyers who are typically eyeing properties in the prime Core Central Region. "As an international hub, Singapore can afford to be more accommodating towards foreign capital," he said.
Time to tweak some measures?
By Lynette Khoo
[email protected]@LynetteKhooBT
24 Nov
SOME government policies targeted at the property market are better tweaked than left alone, MCC Land (Singapore) managing director Tan Zhiyong argued. Rather than having the intended effect of taming residential prices, Mr Tan believes that the reverse has taken place.
One example is the revised guidelines by the Urban Redevelopment Authority (URA) in early 2013 that count private enclosed spaces and private roof terraces in non-landed residential projects as gross floor area (GFA) for which development charges apply. Previously, developers could sell such free spaces for a profit.
The revision was apparently prompted by the creation and sale of super-sized penthouses in some executive condominiums (ECs) to buyers who did not appear to be from the sandwiched class - for which the hybrid public-private housing product was designed to serve. While developers profited on those free spaces, buyers ended up with a higher price quantum.
Many homeowners and end-users had also given feedback to URA that they found such spaces less useful compared to indoor living areas, while the provision of such spaces reduced the common space for greenery and communal facilities for all the residents.
Being a developer, Mr Tan understandably offered a different perspective. "By selling larger spaces to those who can afford, it helps to defray the costs of other typical units," he said. "This actually serves to benefit the ordinary buyers."
Neither has the 15-month waiting time between acquiring an executive condominium site to launching the project tempered developers' interest for such sites, Mr Tan argued. "Prices for EC sites have not come down as a result of the rule," he added. "On the contrary, it has led to some adverse impact. The development period gets lengthened, leading to higher human capital costs and hence overall development costs. During this waiting period, the developer still needs to plough its own capital into funding the foundation works. The higher costs will eventually be passed down to the consumers." Clearly, this policy is crowding out the smaller players but the bigger developers with large balance sheets are still able to throw in higher land bids, he argued.
At the same time, the mortgage servicing ratio that caps the loans that EC buyers can obtain at 30 per cent of gross monthly income has made ECs less affordable, he noted.
Mr Tan believes too that there is room to tweak the additional buyers' stamp duty, which is seen deterring foreign buyers who are typically eyeing properties in the prime Core Central Region. "As an international hub, Singapore can afford to be more accommodating towards foreign capital," he said.