The Urban Redevelopment Authority (URA) is seeking detailed information on the tender results of private-sector en bloc sales from marketing agents, including the names of all bidders and their bid prices.
Some market watchers think it may be gathering information with which to formulate the Government Land Sales (GLS) Programme for the first half of next year; others say the authorities could be keeping tabs on the heating en bloc sales sector, with a view to imposing cooling measures if the market spirals out of control.
A key concern among analysts is that the rise in private residential land prices being paid by land-starved developers will translate into higher launch prices for the new projects on these sites in future.
It should also be noted that the number of units in the new projects may be three or four times that of the existing developments on these sites.
This may result in an oversupply situation a couple of years down the road. “What we want is a stable market,” said a veteran property consultant.
When contacted, a URA spokesman said: “As part of URA’s role in monitoring trends in the property market, we have been collecting relevant market data such as on en bloc sales for internal statistical purposes.”
The talk in the industry is that the URA has been asking property agents marketing collective sales to submit information on the bidders and bid prices within two working days of the site being awarded. Where two or more developers team up to form a consortium, the agents are to provide the names of all the consortium members. Even where a site is not awarded, the names of all bidders are to be provided.
The Urban Redevelopment Authority Act empowers Singapore’s planning authority to require individuals to furnish it with data for the purpose of collating statistical information, on pain of penalties for those who fail to do so by a specified deadline, or who provide false particulars.
CBRE Research head of Singapore and South-east Asia Desmond Sim believes the information gathered will go into helping the URA to craft the H1 2018 GLS Programme so that it is aligned with what is going on in the private sector land supply, and to thus avoid an oversupply of private homes down the road.
By tracking tender bids, the URA will be able to identify bidder behaviour, said Mr Sim. “This could reveal, for instance, how hungry developers are – whether it is just one or two bidders who are bidding bullishly or if the sentiment is shared by a bigger pool of players.
“As more en bloc sites are sold, the URA can track whether developers’ appetite for land is starting to be satisfied, such as whether some of them stop participating in tenders after a while.
“With the data it gathers, the URA may also spatially plot where the highest demand for land is, so it can tailor the GLS supply to better suit the market’s requirements.”
Some quarters believe that, as more developers clinch sites, they will be less inclined to pay toppish prices for land, in view of the risks they would bear if private home prices start falling again in the medium term as the pipeline housing supply builds up again. This camp believes that the market will correct itself, and that there is no need for the government to intervene.
Another camp believes the government is monitoring the situation and preparing to launch measures to cool the en bloc fever if it gets out of hand.
Edmund Tie & Co’s head of research Lee Nai Jia said: “The first thing they can do without disupting the market too much would be to introduce more sites on the confirmed list of the next GLS Programme. “A slightly more drastic step could be to temporarily suspend the Balcony Bonus Gross Floor Area Scheme. This will remove developments with marginal increase in potential gross floor area (GFA) from en bloc play.”
The scheme allows a developer to build up to 10 per cent additional GFA beyond the Master Plan plot ratio for balconies if certain conditions are met. An even more drastic step – one which Dr Lee hopes will not come to pass – would be to tweak the formula for computing development charge (DC) rates. (The current formula creams off 70 per cent of the appreciation in land value arising from building more GFA on a site or enhancing the use of the site.)
An analyst who declined to be named suggested that, to cool an overheated en bloc market down, the government extend the period before a developer is allowed to launch a new private housing project on a site bought through a collective sale.
“This may halt the en bloc bandwagon for a while if things go crazy. Another measure to ensure we do not have an oversupply later on could be to put a cap on the number of new housing units that can be developed on collective-sale sites.”
To this end, the minimum average unit size stipulated for certain areas could be expanded, said the analyst.