Property consultants generally expect the authorities to either maintain the supply of private housing land for the second half of this year around the same level as H1 2015, or trim it slightly.
The government is likely to weigh the substantial supply pipeline of new homes against the fact that developers are still demonstrating a healthy appetite for land at state tenders albeit at lower land bids.
However, some property consultants forecast that the Ministry of National Development (MND) may cut the supply of private homes in the confirmed list while increasing supply in the reserve list - to avoid exacerbating the housing glut.
When it comes to executive condo (EC) housing, a few analysts argue there is no need to release any sites on the confirmed list in the upcoming H2 2015 Government Land Sales (GLS) Programme, given weakened buying of this public-private housing hybrid - due to rule changes.
Property consultants whom The Business Times polled said that their forecasts assume status quo on the current property cooling measures.
Most market watchers also suggest that given the substantial completion of office space starting next year, MND is unlikely to include any predominantly office sites on the confirmed list for the next half - maintaining the strategy it has adopted in the current H1 2015 GLS Programme, where office sites are available only on the reserve list.
Sites on the confirmed list are launched for tender according to schedule regardless of demand; reserve list are launched only upon successful application by a developer.
One analyst does not anticipate any large increase in the supply of land for retail use - with the overriding factors being labour constraints and a less-than-buoyant market. Also, caps to the retail component in mixed-development sites are likely to be maintained.
Market watchers also envisage that the authorities will stick to the policy of not releasing any hotel sites on either confirmed or reserve lists.
Apart from a pipeline supply of 11,305 hotel rooms slated for completion between Q2 2015 and 2018, an expert highlighted the ongoing labour crunch as well as declining tourism arrivals. He also cites another factor that MND is holding a public consultation for short-term rental of private residential properties. If the feedback is favourable and demand for accommodation from tourists goes up, the government is likely to allow private home owners to sublet their properties for short stay.
MND has reduced land supply for private homes (including ECs) on the confirmed list of its half-yearly GLS Programme from about 8,100 units for each of the H2 2010, H1 and H2 2011 lists to around 7,000 units for each of the H1 and H2 2012, and H1 2013 programmes before clipping the quantum further to around 6,000 units for H2 2013, 4,630 units in H1 2014, 3,335 units in H2 2014 and 3,020 units in the H1 2015 slate.
The current half confirmed list supply can generate an estimated 2,530 private residential (non-EC) units and 490 EC units. In addition, sites on the reserve list could potentially yield up to 5,225 (non-EC) private residences and 520 EC units - if they were all triggered by developers.
Another analyst predicts that the upcoming GLS Programme will see (non-EC) private residential land supply for 2,000 to 2,500 units on the confirmed list and 5,000 to 5,500 units on the reserve list. He estimates the EC supply in both lists at 400-600 units.
It would make sense for the H2 2015 quantum to remain around that of H1 2015. While there is a substantial potential supply of housing units in the market, this has to be balanced against the need to provide continuity in land supply to meet current demand from developers. In both private residential and EC land tenders this year, there is still moderate to firm demand for sites by developers, while land prices have eased. If sites continue to be sold at lower prices, this is likely to lead to lower pricing in new projects and improve affordability for buyers.
MND is expected to trim the non-EC component of private housing land supply by 530 units to 2,000 units in the confirmed list - but to then substantially make up for this by raising supply in the reserve list by 475 units to 5,700 units, predicted one consultant. MND may probably take into account the perception that the market is oversupplied...and seek to assuage the market on the confidence front that they are supplying in quantities that indicate that they are on top of the situation, he added.
In similar vein, an analyst predicts the confirmed list for H2 2015 will supply only 1,000 non-EC units - a cut of about 1,500 units from the current level. However, he expects MND to boost the reserve-list supply to 6,000-7,000 non-EC units from 5,225 units currently. In addition, residential sites are expected to be located in the growth areas of Jurong Lake District as well as Bidadari."
This is echoed by another expert, who forecasts that non-EC private housing supply on both confirmed and reserve lists will remain close to or slightly below the levels in H1 2015 - which was already the lowest in at least five years.
As for EC supply, she argues that there is no urgent need for any more EC sites to be placed on the confirmed list for H2 2015. Nonetheless, the government might keep the EC plot in Yio Chu Kang Road on the reserve list in the upcoming GLS Programme, to let the market decide if more land supply for the development of ECs is needed.
In the office segment, most consultants do not expect to see any sites on the confirmed list for the next half. They predict that the three existing office plots - along Marina View and Woodlands Square as well as the former Beach Road Police Station site - are likely to remain on the reserve list.
One of them observed that until the government gets a better grasp of what future office space users want, they may tend to err on the side of caution and not supply (through the confirmed list). After all, there is no shortage of office space coming on stream from now till 2017.
Agreeing, another noted that the 7 million sq ft net floor area of offices slated for completion between Q3 2015 and 2018 would suggest there is enough supply for the next three years.
However, others added that it would nonetheless be a welcome surprise if the state planners were to identify a prime Marina Bay office site on the market, to allay concerns that the city could face a shortfall in office supply by the turn of the decade.
Some industry players suggest the government could release office sites in suburban locations in line with its decentralisation strategy.
Adapted from: The Business Times, 4 June 2015