Private homes for sale likely to double in 1 to 2 years

[reporter2]

Private homes for sale likely to double in 1 to 2 years

Nov 15, 2017

Large portion from redeveloping projects sold en bloc, besides those from GLS scheme

Lynette Khoo


The number of private residential units available for sale is expected to at least double in the next one to two years, National Development Minister Lawrence Wong said at a dinner gathering of developers yesterday.

A large portion of the supply will come from the redevelopment of projects sold en bloc, on top of that coming from the ongoing Government Land Sales (GLS) programme. With more than enough supply to meet housing demand, Mr Wong urged buyers to do their homework before making a purchase.

To drive home his point, he noted that the vacancy rate for private residential units has been at above 8 per cent for almost two years. The last time vacancies were at such elevated levels was more than 10 years ago, in 2005.

"What this means is that, in terms of actual physical units, there are currently more than 30,000 vacant private housing units - all still looking for occupants," he said.

"This is more than the total number of dwelling units in the whole of Bishan today."

Mr Wong was speaking at the 58th anniversary dinner of the Real Estate Developers' Association of Singapore (Redas), where he again sounded a word of caution to developers on the risk of over-aggressive land bids.

He reminded them as well of the need to deliver properties of good workmanship, and hinted at possible actions against those who compromise on quality.

Mr Wong said that with land prices being high and a requirement for developers to complete the sale of a project within five years of the site being awarded or incur additional stamp duties, profit margins could come under pressure, and developers might be tempted to compromise on construction quality.

While the vast majority of developers are too responsible to do this, the Government has received feedback from time to time about some which do not meet expected quality standards, he said, adding that he had asked the Urban Redevelopment Authority and Building and Construction Authority to step up their checks.

For developers with a poor track record, the Government will consider further measures to hold them to higher standards of accountability, for instance, by making it a condition of their licence that they obtain Quality Mark certification for their projects.

The Government may even disallow these developers from launching units for sale until it is certain that they are committed to meeting acceptable standards, though he also gave an assurance that in working out these tighter regulatory measures, the Government is mindful not to add to overall regulatory costs.

Mr Wong said the Government strives to strike a balance between monitoring the property market with vigilance, while acknowledging there will be ups and downs in it. "As far as possible, we make use of the various levers we have to achieve a more stable and sustainable property market," he added.

Regarding developers' bidding behaviour, Mr Wong said last week in Parliament that higher land bids may not translate to higher selling prices when a project is launched as these are ultimately subject to market demand and supply forces.

Redas president Augustine Tan had a nuanced view of developers' bidding behaviour. He noted that in the purchase of sites from the GLS programme or private collective sites, the market has seen "different risk appetites of developers who had different views on how supply and demand would pan out".

[reporter2]

Lawrence Wong cautions home buyers, developers amid property rebound

Wed, Nov 15, 2017

Lynette Khoo


THE government has sounded words of caution to both homebuyers and developers amid this year's strong recovery in property transactions and the seemingly aggressive bidding for land by developers.

Homebuyers should do their homework before making their purchases, given the large supply of private residential units for sale - more than double from the current supply - over the next one to two years, amid elevated vacancy rates.

And developers have been warned against cutting corners on construction quality if their profit margins come under pressure as a result of their higher land bids, and their need to finish building and selling their projects within five years to avoid paying the additional buyer's stamp duty (ABSD) with interest.

These two messages came from Minister for National Development Lawrence Wong on Tuesday, who delivered them at the 58th anniversary dinner of the Real Estate Developers' Association of Singapore (Redas).

He told his audience of industry players at the Shangri-La hotel that a large portion of the supply of new housing units is coming from the redevelopment of projects sold en-bloc, on top of the continued supply from the government land sales (GLS) programme.

But the vacancy rate for private residential units is at an elevated 8.4 per cent, and has stayed above 8 per cent for almost two years. The last time vacancies were this high was more than 10 years ago, in 2005.

Mr Wong said: "What this means is that, in terms of actual physical units, there are currently more than 30,000 vacant private housing units - all still looking for occupants. To put things in perspective, this is more than the total number of dwelling units in the whole of Bishan today."

In reminding developers to deliver properties with a good quality of workmanship, he hinted at the action that may be taken against those who compromise on quality.

The vast majority of developers are responsible, he said; however, the government has received feedback from time to time about developers who fall short of the quality standards expected.

"I have asked URA (Urban Redevelopment Authority) and BCA (Building & Construction Authority) to step up their regulatory checks," he told his dinner audience.

Those with a poor track record may well find themselves held to higher standards of accountability, he said; for example, they may be required to obtain the Quality Mark certification for their projects as a condition for keeping their licence. The government may even bar them from launching units for sale until they show they are committed to meeting these standards.

"In working out these tighter regulatory measures, we are mindful not to take a one-size-fits-all approach, which may impact all developers. Rather, what we are seeking to do is to differentiate the black sheep from many of our responsible developers, who look out for the interests of our homeowners."

Mr Wong said the government strives to strike a balance between monitoring the property market even as it acknowledges its ups and downs. "As far as possible, we make use of the various levers we have to achieve a more stable and sustainable property market."

He further said that the government has noted the increased aggressiveness with which developers have been bidding for land parcels under GLS and for en bloc sites. It was a point he also made in Parliament last week, when he suggested that the higher land bids by developers may not translate to higher selling prices because developers know they are ultimately subject to the forces of demand and supply.

Redas president Augustine Tan, who also spoke at the dinner, took a nuanced view of developers' bidding behaviour. He noted that in the purchase of sites from the GLS programme or private collective sites, the market has seen "different risk appetites of developers who had different views on how supply and demand would pan out".

"They would have considered the geopolitical landscape, economic conditions and that all the property measures are still in place," he said.

Some industry players, guests at the dinner, also said most developers, especially the listed ones, are unlikely to risk their margins too much or compromise on quality.

Dentons Rodyk & Davidson senior partner Lee Liat Yeang said the listed ones are accountable to their shareholders, and the non-listed ones, to their family members who are the stakeholders.

"Developers can't compromise on quality especially for the prime sites. The bigger issue is the expectations of the en bloc sellers, who are asking for higher prices. They think that their property is worth more than what is transacted in the vicinity. It's owners' expectations that require tempering."

Ronald Tay, chief executive officer of CapitaLand Singapore, told The Business Times that because the CapitaLand group has a diversified portfolio, its options extend beyond Singapore. "Any investment we make must make financial sense and meet our target returns. If there are any sites in Singapore that meet our target returns, we will bid for them."

This year, the government injected a larger supply of residential sites through the GLS programme; the total supply of 11,225 residential units for the whole of 2017 is 38 per cent higher than the 8,135 private residential units in the 2016 GLS list, noted Redas chief Mr Tan.

The 25 successful collective sales last year and this year could yield some 12,800 new residential units. Another nine residential developments with a potential yield of about 2,900 units have started en bloc sale proceedings, based on Redas estimates. And then nearly 27,000 units could be available for sale in next year and in 2019.

Mr Tan added: "Although there is no visibility on how the economy will pan out in 2018 and 2019, the government has given the assurance that it will continue to monitor the overall property market trends and take appropriate actions to maintain a stable and sustainable market in Singapore."

[thomastansb]

He also talk cock. If he thinks there is an oversupply, then stop all GLS. Only know how to talk.