THE government is making sure it doesn't worsen an oversupply situation in the residential and commercial property sectors, going by a sharp tapering of residential supply and a lack of major commercial sites being offered under its land sales plan for the first half of 2016.
But given the limited number of sites under the Confirmed List of the H1 2016 Government Land Sales (GLS) programme, market watchers expect land prices to stay elevated and land-hungry developers to trigger some sites on the Reserve List for sale.
In all, there are four sites on the Confirmed List and 12 sites on the Reserve List. The Confirmed List is expected to add about 1,560 private residential units, including 640 executive condominiums (ECs), and 11,000 square metres of gross floor area (GFA) of commercial space.
This is down 27 per cent from 2,130 residential units under the Confirmed List for the second half of 2015.
Including the 12 sites on the Reserve List, that gets triggered for sale only if a developer's indicated minimum price is acceptable to the government, the H1 2016 GLS programme can yield up to 7,420 private residential units, including 1,460 ECs, and 272,600 sq m of GFA of commercial space.
The Ministry of National Development (MND) pointed out, however, that there is existing pipeline supply of about 73,000 private residential units (including ECs).
"The supply of private housing and commercial space from the GLS Programme, together with supply from projects in the pipeline, will be adequate to meet the demand for private housing and commercial space over the next few years," MND said on Thursday.
Since the second half of 2011, the government has been playing the balancing act of trimming residential land supply under the Confirmed List to prevent a housing glut while keeping sufficient supply through the Reserve List to meet developers' appetite.
SLP International executive director Nicholas Mak said: "The Singapore government is continuing to reduce the supply of Confirmed List residential land parcels for sale in H1 2016 in anticipation of softer demand."
Cushman & Wakefield research director Christine Li saw the latest GLS programme as further showing confidence on the government's part that the past cooling measures and loan curbs have successfully reined in prices and that the government might not be ready to relax property cooling measures yet. "Despite the reduced supply of private residential units, a price rebound is unlikely," she said.
One residential site that stood out on the Confirmed List is at Martin Place near River Valley Road, given the rarity of such sites in District 9 in the GLS programme. The last time a District 9 residential site was launched took place in June 2013 - the site was awarded to Hoi Hup, which is developing Sophia Hills.
Ms Li reckoned that the introduction of the site at Martin Place could be an initiative from the government to replenish development sites in prime residential estates.
Consultants believe the site at Martin Place will draw established players that are able to undertake high-end projects. But they are divided on whether bidding will be aggressive given a supply overhang in Core Central Region. Also to the surprise of consultants, the government introduced a new EC site at Anchorvale Lane on the first-half 2016 Confirmed List despite a large unsold EC inventory in the market.
Some consultants had expected the EC sites to remain on the Reserve List. There are more than 4,100 unsold EC units as at end-November and over 3,000 more EC units that are yet to be launched.
"One possible reason why the government is still selling EC land parcels on the Confirmed List is to prevent EC prices from rising," Mr Mak posited.
R'ST Research director Ong Kah Seng read it differently. He felt there is no major oversupply of ECs, and attributed the large unsold stock to a matter of pricing. "The pricing is sensitive for sandwich-class homebuyers, and it determines how fast the launched stock can be cleared," he said.
With many developers still hungry for land, property consultants believe there is limited downside for land prices given the limited options under the Confirmed List.
It would also be of no surprise that a number of sites under the Reserve List be triggered, said Desmond Sim, CBRE Research head for Singapore and South-east Asia, making reference to the residential site at Stirling Road, the New Upper Changi plot opposite Tanah Merah MRT Station, and the Margaret Drive site.
"Despite the slightly better performing market from a year ago, the overhang still needs time to be absorbed and will be a factor in determining the number and price of bids for each tender," he said. "Overall, the winning margins will be narrow for all tenders."
Of the Confirmed List, consultants expect modest demand for the Jalan Kandis residential site and Bukit Batok West Avenue 6 commercial cum residential site given that both are in far-flung locations and not near to MRT stations.
But Mr Mak felt that the Bukit Batok site, whose 11,000-sq-m commercial GFA is predominantly retail, could still draw the attention of some developers given a lack of a retail mall in that area.
Of the 12 sites on the H1 2016 Reserve List that can collectively yield about 5,860 residential units (including 820 EC units) and 261,600 sq m of commercial space (mostly for office use), two are new residential sites at West Coast Vale and Fernvale Road introduced and the rest are carried over from H2 2015 Reserve List.
The Reserve List includes three sites at Beach Road, Woodlands Square and Central Boulevard for mixed-use developments which will comprise mainly office space.
"These three sites will allow developers to initiate the development of more office space if they assess that there is demand," MND said.
Savills research head Alan Cheong expects high likelihood of the commercial cum residential site at Holland Road on the Reserve List being triggered for sale, given its location and expressions of interest received this year, as well as for the 1.1-ha white site along Central Boulevard, which just had its detailed sales conditions released this week.
Century 21 Singapore CEO Ku Swee Yong said there is clear indication of oversupply in office space, which explains the lack of new office supply in the first-half 2016 Confirmed List. But he felt that smaller sites could still be offered in Woodlands, Paya Lebar or Jurong East on the Confirmed List to keep up with the government's momentum to turn them into regional centres.