http://www.businesstimes.com.sg/arch...upply-20140529

Published May 29, 2014

Consultants expect further paring of confirmed list supply

Slowdown in private home sales, substantial supply pipeline cited

By Kalpana Rashiwala

[email protected] @KalpanaBT


[SINGAPORE] An overwhelming majority of property consultants predict that the government will further trim land supply for private housing development in the confirmed list for the second half of this year, citing the sharp slowdown in home sales and the substantial supply pipeline.

They also expect the authorities to offer commercial sites on the confirmed list and/or reserve list in locations such as Paya Lebar and Woodlands to speed up their development as commercial hubs.

Despite Chesterton Singapore recently urging the authorities to release more hotel sites, citing a looming shortage of hotel rooms, most other property consultants think that there is sufficient supply and hence no pressing need to release land for hotel development. No hotel sites are on offer in the H1 list.

Most consultants reckon that the reserve list - where sites are launched for tender only upon successful application by a developer - will continue to make up the bulk of private housing land supply in the upcoming H2 2014 Government Land Sales (GLS) Programme. In the H1 slate, the Ministry of National Development (MND) is releasing land for nearly 7,000 homes, including 605 executive condominium (EC) units, through the reserve list.

Property consultants polled by BT generally predict the same order of overall supply for the H2 reserve list, though most expect the supply of ECs - a public-private housing hybrid - to be higher, at around 1,000 units.

In the confirmed list, where sites are launched according to schedule regardless of demand, land for 4,630 homes (including 2,165 ECs) is being sold this half. For H2, the forecast quantum is generally lower: 2,000-4,400 (including ECs).

DTZ regional head (SEA) research Lee Lay Keng estimates the number at 3,500-4,000 units (including 1,900-2,200 ECs).

CBRE Research Singapore head Desmond Sim expects no ECs on the confirmed list and about 1,000 on the reserve list. "New rules for EC buyers introduced last December have cooled demand, resulting in a backlog of some 800 launched but unsold units as at end-April 2014."

JLL national director Ong Teck Hui predicts that MND would offer a supply of about 8,000 private homes (2,000 on the confirmed list and 6,000 on the reserve list) - 10 per cent lower than for H1.

"The key consideration is the pace of slowdown in the residential market . . . At many projects, sales have stagnated or are progressing slowly. The number of unsold uncompleted private homes (excluding ECs) with pre-requisites for sale has risen dramatically by 48 per cent from 13,402 units in Q2 2013 to 19,828 units in Q1 2014."

Alan Cheong, research head at Savills Singapore, argues: "Given a market that is heavily restrained by cooling measures and the TDSR (total debt servicing ratio), it would be very unwise to launch even more."

Voicing a contrarian view, Knight Frank executive chairman Tan Tiong Cheng said that the authorities may choose to leave both confirmed and reserve list supply numbers untouched from current levels. "If the authorities are looking to begin rolling back some of the property cooling measures at some point in the second half of this year, they don't need to be over-generous by scaling back the GLS Programme as well.

"Otherwise, if there is a sudden surge in demand from fence-sitters if, say, the ABSD (additional buyer's stamp duty) is reduced or removed, developers and agents may tell potential buyers: There's no new supply coming, so you'd better buy from me."

There is market talk that the commercial site next to Paya Lebar Circle Line Station, currently on the reserve list, will be enlarged. The site has a minimum office stipulation, with other uses allowed such as retail, hotel and residential.

Colliers International director of research and advisory Chia Siew Chuin and CBRE's Mr Sim both suggest that MND could move this site to the confirmed list, to spur the growth of the Paya Lebar commercial hub. If this happens, that will still leave the "white" site along Marina View/Union Street (also with a minimum office component) on the reserve list.

The list could then be augmented with the addition of one or two more commercial or white sites, suggests Mr Sim.

Savills' Mr Cheong is not ruling out a mixed office-retail suburban site in the HDB heartlands for the H2 slate. Knight Frank research head Alice Tan reckons that "a couple of residential and commercial sites could be plausible in the Buona Vista/Pasir Panjang precinct" to meet underlying demand.

Some observers also speculate if the mixed-development site in Holland Village featured in the Draft MasterPlan 2013 may surface in the GLS Programme as early as H2 - if all technical conditions are met. The site is expected to cater to retail and residential use.