Government trims private housing land supply as expected

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Government trims private housing land supply as expected

The move shows its confidence that its demand-side cooling measures will continue to dampen the market

By Lee Meixian

[email protected]@LeeMeixianBT

Jun 12, 2015


AS expected, the Singapore government is continuing to trim the private residential land supply in the second half of the year, an indication that it expects the property market to continue to cool.

The number of private residential units (including executive condos or ECs) across 17 confirmed and reserve list sites introduced this time - 7,825 - is 11 per cent fewer than in the first half and the lowest since H1 2007.

Confirmed list sites are launched for tender according to schedule regardless of demand; reserve list sites are launched only upon successful application by a developer.

Only four residential sites (including one EC site) have been offered in the confirmed list - the lowest since 2009, when no sites were launched at the time of the financial crisis. The four sites, all in the city fringe and suburbs, can yield 2,130 units - the fewest since H2 2010.

Consultants read the supply slowdown as a sign that the authorities expect developers' demand for land to soften. The government has been steadily cutting land supply for private homes since H2 2010.

Chia Siew Chuin, Colliers' director of research and advisory, noted that 73 per cent of the residential units that have been put up in the second half are on the reserve list, up from 66 per cent in the first half.

"This is an indication of the government's commitment to reduce the use of the confirmed list, and to allow the reserve list to carry the bulk of the potential supply, letting the market decide whether more land for the development of residential units is needed," she said.

For some, like Chua Yang Liang, JLL's research head for Singapore and South-east Asia, these supply-side measures reflect the underlying market dynamics where the backlog of demand has been largely resolved.

The Urban Redevelopment Authority (URA) said a large pipeline supply of about 84,000 private residential units (including ECs) is coming in the next few years. This is not helped by the overall slow absorption at new launches.

The slowdown in state land sales is thus the government's way of balancing the real estate supply and demand dynamics in 2016 and 2017, said SLP International executive director Nicholas Mak.

Cushman & Wakefield research director Christine Li added: "The emphasis of the government has clearly shifted from keeping a lid on price growth to just maintaining sufficient supply to meet the long-term housing demand."

The rather severe 36 per cent cut in non-EC private housing supply to 1,610 units also shows the government's confidence that its demand-side cooling measures through stamp duties and loan curbs have worked, and that a turnaround in the residential market is not imminent, she said.

But in order not to create a situation where developers start to overbid too competitively for too few sites, a "respectable pipeline" still has to be ensured for developers keen on amassing land banks, said Desmond Sim, CBRE research head for Singapore and South-east Asia.

Of the four sites, developers are likely to be drawn to a 0.84-ha site in Alexandra View and a 1.93-ha site in Siglap Road for their proximity to Redhill MRT station and Siglap MRT station (on the upcoming Thomson-East Coast Line) respectively.

The Alexandra View plot comes with 2,000 sq m of commercial shops, which will help developers' cash flow, while the Siglap plot will enjoy a sea view.

There are no commercial or hotel sites on the confirmed list, but the reserve list has two commercial-cum-residential sites, two commercial sites and one white site (where a range of uses is allowed).

A new mixed-use site in Bukit Batok West Avenue 6 has been added, while there is no change to the list of commercial sites. URA said the two Beach Road and Woodlands Square reserve list sites, predominantly for office developments, "will allow developers to initiate the development of more office space if they assess that there is demand".

A new white site in Marina Bay at Central Boulevard, sited between the two Asia Square towers and One Raffles Quay, has been added to the reserve list. It replaces a previous white site at Marina View/Union Street, which has had no takers since it was listed in October 2011. The URA said it will review development plans for the plot.

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Land supply cut further for second half of year

Move comes as experts warn of possible oversupply of homes

Published on Jun 12, 2015

By Rennie Whang


THE Government has further cut land supply for the second half of this year, in a move that suggests cooling measures are unlikely to be significantly eased soon.

The confirmed and reserve sites on offer can accommodate about 7,825 residential units, an 11 per cent cut from the Government Land Sales (GLS) programme in this half of the year. It is the lowest number of new residential units to be made available via GLS since the first half of 2007, when about 5,475 units were put up.

The reduced supply comes as experts warn of a possible oversupply of homes, said Century 21 chief executive Ku Swee Yong.

Total stock is expected to be 363,391 in 2017, but going by an average annual take-up of 8,205 units since 2006, 314,752 units or so should be occupied then, he said. This means a vacancy rate of about 13.4 per cent, up from 7.2 per cent at the first quarter's end.

Condo demand may also be complicated by a sea change in the expat rental market, said Savills Singapore research head Alan Cheong. "Expatriates are becoming rarer by the day. While there may be more Employment Pass holders, they are typically on lower budgets and may end up renting rooms in HDB flats."

The private residential sites on yesterday's confirmed list - these go on sale regardless of interest - are in Alexandra View, Clementi Avenue 1 and Siglap Road, with a total of about 1,610 units. An executive condominium site in Yio Chu Kang Road can add 520 units.

A higher proportion of sites put up for sale in the second half are on the reserve list, meaning they go to tender if an acceptable offer is made, noted Colliers International director of research and advisory Chia Siew Chuin.

"This is an indication of the Government's commitment to... allow the reserve list to carry the bulk of the potential supply, letting the market decide whether more land for the development of residential units is needed."

The steady cut in residential supply from GLS sites suggests the Government expects the market to remain soft, said SLP International executive director Nicholas Mak: "By reducing supply, developers could bid up land prices and therefore property prices. But the Government seems to feel prices will not rise much by the second half of next year... So we may not expect substantial changes to cooling measures for the next 12 months."

A plum commercial and residential site near Holland Village MRT station has stayed on the reserve list from this half while a new mixed-use site in Bukit Batok West Avenue 6 was added.

While two more commercial sites, in Beach Road and Woodlands Square, and a white site, where multiple uses are allowed, in Central Boulevard were put on the reserve list, developers are expected to "tread carefully" given supply concerns in the office segment, said Cushman & Wakefield research director Christine Li.

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