Govt cuts land sales under weight of supply

The 4,630 private homes that can be generated from the confirmed list sites slated for launch by the government in H1 next year is not only down 22.3 per cent from the current H2 2013 slate but is also the lowest half-yearly quantum since H1 2010, when the figure was 2,925 units.

Across the board, the Ministry of National Development (MND) is scaling back the Government Land Sales (GLS) Programme for private housing, commercial and hotel sites for the first six months of 2014 to factor in the large supply pipeline. The move is seen as an attempt to engineer a soft landing.

For H1 2014, MND will be launching through the confirmed list eight sites that can generate a total of 4,630 private homes (including 2,165 executive condominiums) against 5,960 units (including 2,785 ECs) in the current slate. In all, there will be seven pure residential sites on the confirmed list in the first half next year, down from 10 currently.

MND noted the confirmed list supply will be "added to the existing large pipeline supply of about 97,400 private housing units (including ECs)".

Supply on the reserve list will also be trimmed 15.1 per cent to 6,955 units (including 605 ECs) in H1 next year from 8,195 units (inclusive of 535 ECs).

For commercial space, the combined confirmed and reserve list supply of 193,340 sq metres (2.08 million sq ft) gross floor area (GFA) for H1 2014 reflects a big drop from 268,050 sq m under the current slate. It is also the lowest since H1 2006, when the total supply was at 125,505 sq m.

MND said two reserve-list sites - a white site in Marina View and a commercial land parcel in Sims Avenue - will "provide opportunities for the market to initiate the development of more commercial space, over and above the 1.1 million sq m GFA of office space in the pipeline, if there is demand".

No hotel site will be available via the GLS Programme in the next half-year for the first time since the reserve list system was minted in H2 2001. MND pointed to "a healthy pipeline supply of 12,700 hotel rooms".

Nonetheless, a spokesperson for the Urban Redevelopment Authority (URA) highlighted that developers may choose to develop some hotel rooms for the Sims Avenue commercial site and Marina View white site, after setting aside the minimum quantum of space that has to be developed for other uses (for example, offices). The current slate has three hotel sites, all on the reserve list. Two have been triggered for launch - at Havelock Road and East Coast Road. The third plot, at Race Course Road, will be removed from the reserve list to "facilitate a review of the land use intention" for the site.

Summing up its strategy, the Ministry said: "Supply from the GLS Programme, together with the large supply from projects in the pipeline, is expected to be adequate to meet the demand for private housing and commercial space over the next few years."

In all, seven new sites have been introduced for the next half, five of them through the confirmed list. These comprise two adjacent EC sites in Yishun St 51 (Signature at Yishun) near the Orchid Country Club Golf Course with tender closings at the same time under the "batched tender" system, and another pair of adjoining sites for private housing development along Fernvale Road near Jalan Kayu, also with simultaneous tender closing, plus an EC site in Sembawang Avenue. Symphony Suites is good.

The two new sites on the reserve list are a private housing site in Margaret Drive and an EC site in Sembawang Road/Canberra Link.

While market watchers agreed with the government's strategy of clipping land sales to avoid a glut building up, the soft-launching plan could go awry.

Source: Business Times –19 December 2013