Saturday, September 10, 2011

Developers: Review cooling measures

PROPERTY developers want the cooling measures reviewed in the coming months, on fears that global economic woes could undermine the property market.
Mr Wong Heang Fine, president of Real Estate Developers' Association of Singapore (Redas), says economic trends are less rosy and developers have to prepare for the worst.

'We are just signalling that in the coming months, it may be a good time to look at what is happening in the world and what is happening in the local market and then review some of these policies,' said Mr Wong, who is also chief executive of CapitaLand Residential Singapore.

While the market now is still 'okay' with decent sales, it is conditions further down the road that developers want to prepare for, he added.

A 'timely review' of the various market tightening measures would also help avoid artificially suppressing genuine demand for private properties, noted Mr Wong, who was speaking on the sidelines of the Redas Mid-Autumn Festival at the Shangri-La Hotel yesterday.

City Developments (CDL) executive chairman Kwek Leng Beng said a review in the next three to six months would give a clearer picture as to whether the measures are still needed.

Frasers Centrepoint group chief executive Lim Ee Seng agreed, suggesting a good time for the review would be the end of the year as the measures would have been in effect for 12 months by then.

'The measures are working as reflected in the bids... The new launches are selling, but of course a lot slower than before. That shows that (buyers) are careful and are thinking more,' he noted.

The latest January cooling measures include tighter financing rules and a sellers' stamp duty of up to 16 per cent.

Private home price gains have been moderating for seven consecutive quarters, inching up just 2per cent in the three months to June.

Developers are watching the market for signs of a slowdown, given gloomy economic sentiment and wild share market swings, consultants say.

Mr Colin Tan, Chesterton Suntec International's research head, added: 'The falling stock markets have unnerved people. The negative news coming out of the US and Europe and talk of a recession will also affect buying sentiment and developers will be concerned, especially if they have a lot of inventory to clear.'

Mr Wong said it was a good time to address the government land sales programme for next year, adding that it should continue with its pragmatic approach and make greater use of the reserve list system in managing sales.

Mr Wong noted: 'If the Government does not go ahead with a sale in the confirmed list, there may be misinterpretation by the public that things are not good.

'But in the reserve list, all of us can trigger it and so it's... market driven.'

Confirmed list sites go on sale regardless of interest. Land on the reserve list is put up for tender only if developers table an acceptable initial offer.

Land prices have dropped for some recent tenders. Frasers' Mr Lim says this is due to developers possibly pricing in a longer holding period and the additional associated costs they have to bear.

Lower bids are not necessarily due to anticipation of a price correction but an expected slower pace of sales instead, he added.

But CDL's Mr Kwek says his firm will be realistic in its land bids.

'I think (the Redas president) has said we should be mindful of the 53,000 (units in the pipeline) but this is difficult to say because the scenario may turn overnight... But we should be cautious and be mindful not to overbid,' he added.

Despite warnings of an impending oversupply, Mr Kwek says his firm has not felt an impact as there is still genuine demand in the market. Low interest rates and stock market volatility have also made property a more attractive alternative.

Separately, The Straits Times understands that about 350 units at Sim Lian Group's 882-unit A Treasure Trove in Punggol has been sold at an average price of $866 per sq ft.

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