The Ministry of national Development (MND) has decided to moderate the Government Land Sales (GLS) Programme in an effort to minimize the chances of fueling the market any further. With the supply of sites trimmed, the “Play Safe” list issued by the ministry containing the state land sites on offer for private homes and executive condominiums will be lower than the number for the H1 this year. The number of such sites in the reserved list is lower but the rise in number in the reserve list has ensured that the overall supply of land remains same.
Supply of Government Land Reduced
14,155 units are available under the GLS Programme, which is quite close to the figure of 14,035 for the first half of 2013. Among the total list, 5,960 land sites are for the private homes and ECs under the confirmed list, with this being the lowest supply in the confirmed list since H1 2010 with 2,925 units. This is also a reduction of 14 percent over the H1 2013 figure of 6,935 units. Moreover, the supply of private homes only in H2 2013 is lower by 17 percent at 3,175 units compared to 3,825 units in the first half of the year, excluding the ECs. Even the full year figure of 7,000 private homes is considerably lower when compared to the figures in 2012 and 2011 at 8,060 and 13,255 units respectively.
The decision by MND to keep the overall supply of sites trimmed and ECs at 3,320 units in H2 compared to 3,110 units in H1 has surprised market watchers. This is because MND had trimmed the number of ECs to 2,875 units in H2 in an effort to prevent fueling of the market any further. A spokesperson for the Housing and Development Board (HDB) has clarified the MND’s policy on EC by stating that the release of EC sites in an effort to prevent any situation of undersupply. Since any such situation can drive up prices because of pent-up demands, it is up to the developers to bid for the sites after factoring market risks, and then price their units properly for the buyers.
Lesser pieces of land available in the pipeline
MND has also kept the number of prime sites in the list in check to prevent exuberant land bids. The decision to close the bid close to a year from now will also help in tempering bids because of greater physical completion of such projects. Development of a commercial site in the Woodlands MRT station region will help in initiating development of the Regional Centre there. On the hotel front, developers now have only three sites on the reserve list with potential to yield 955 rooms after the withdrawal of the Victoria Street site from the list.
With the supply of land trimmed, the Hillford in Jalan Jurong Kechil might be an attractive investment due to the fact that it is near to the upcoming Beauty World MRT as well as the fact that the prices are very low for the development.