Developers show restraint in latest GLS tender, despite shrinking unsold inventory

AT last week's Government Land Sales (GLS) tender - for two 99-year leasehold private housing sites - the top bids broke an optimistic streak of rising land prices at state tenders last year.

Among the key factors at play was uncertainty about construction costs - which have been pushed up by a labour shortage as well as supply-chain disruptions affecting building materials. This would have led developers to factor a wider safety margin in arriving at their land bids. Also on the minds of developers are expectations of a rise in interest rates, and the latest property cooling measures unveiled in mid December.

On the other hand, developers' land banks are dwindling and the inventory of unsold private housing units continues to shrink. Owner-occupier demand for private homes remains stable particularly in the mass-market segment, buttressed by HDB upgraders.