Tag Archives: City Developments

Call for review of property curbs increasingly insistent

Singapore’s second-biggest property developer, City Developments, has been calling on the government to ease the property cooling measures “as soon as possible”, reported the Singapore Business Review.

The company saw its profit fall 16 percent in Q3, on the back of lower contributions from its property development unit. “The Group continues to hold the view that the property cooling measures need to be reviewed as soon as possible, given that the home ownership rate in Singapore is over 90 percent. Timing is the most important factor to achieve a healthy and sustainable property market,” it said in a statement.

Notably, the quarterly Real Estate Sentiment Index released by the Real Estate Developers’ Association of Singapore (REDAS) and the National University of Singapore (NUS) earlier this month showed that market sentiment among property developers had fallen further in Q3 2015. “The sentiment in the market continued to weaken in Q3 2015,” said NUS associate professor Sing Tien Foo.

As such, more respondents called for the removal of “some of the cooling measures, such as ABSD and SSD to arrest the worsening market condition”.

In fact, 83.1 percent of the respondents believed the government should tweak or lift the cooling measures in the next six months. 56.7 percent of them felt the sellers’ stamp duty (SSD) should be lifted, while 60.8 percent said the additional buyers’ stamp duty (ABSD) should be removed.

“ABSD should be removed due to the tight supply of housing in the market. It should not be a permanent policy, as it creates inefficient market equilibrium. Furthermore, it does not encourage financial prudence. MSR and TDSR are based on ratios and percentages; percentages only address the issues of the average category, and could be too harsh or too lenient,” noted one survey respondent.

“The ABSD should be lifted as private residential property prices dropped by about eight percent in Q2 2015, compared to the third quarter of 2013. However, the TDSR Ratio should be retained,” said another respondent.

Property players vanishing from market

With hardly any new projects or land bids in recent years, some developers have disappeared from the scene due to financial woes and tougher competition, media reports revealed.

These boutique developers, such as Raffles Medical Group’s Esquire Land and Indonesia-oriented Sinarmas Land, were active in the 1980s and 90s, when freehold land costs less than $100 million and profit margins exceeded 20 percent, said Chesterton Singapore’s Managing Director Donald Han.

Another example is Waterbank Properties, former transport group DelGro Corp’s property division, which left the property industry in September 1998.

On the other hand, some property players are only active when the market hits rock-bottom, such as Ho Bee Land and Lippo Group. “These are the early movers who read the market well, tend to take risks and generate the highest returns,” Han explained. “When the market nears its peak, these developers and consortiums then drop off, and are replaced by the more gung-ho ones.”

NTUC Choice Homes went into a hiatus after it submitted a losing bid of $97.4 million for an HDB housing site at Pasir Ris Central in May 2011.

“In the past few years, land prices in Singapore have not moderated much,” said its spokesman. As a result, opportunities to develop affordable and quality houses were scarce.

Since its founding in 1995, the company has built 15 projects with 6,944 units, including the Dakota Residences and Trevista. Its new development, the 315-unit Belysa is expected to be completed by October.

Nevertheless, NTUC Choice Homes has a moderate risk profile, meaning it could start acquiring landbanks when prices fall, noted Han.

In contrast, some developers are active all year round such as CapitaLand, UOL Group, Keppel Land, Singapore Land, City Developments, Frasers Centrepoint and Far East Organization.

Ku Swee Yong, Chief Executive at Century 21, added, “Some developers who are listed must show a steady flow of projects, otherwise there will be certain quarters when they report revenue plunges or zero profits.”

Source : PropertyGuru