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Private sector sets to play bigger role in future development plans

By By The Edge Property

November 18, 2016 1:00 PM SGT

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The private sector and the government would need to strengthen their collaboration in order to ensure future development plans for Singapore could be realised, says National Development Minister Lawrence Wong at the Real Estate Developers’ Association of Singapore (Redas) 57th anniversary dinner on November 17.

Wong highlighted several key proposals that are currently being considered by the Committee on the Future Economy (CFE). These are the Master Developer concept, setting up of Business Improvement Districts (BIDs), expanding space options and developing infrastructure to support a digital economy.
The “Master Developer” partnership model is being studied as a possible approach to develop new districts, as it will provide developers more flexibility. Wong cited Marina Bay as example, where the Government offered larger sites for tender.

"It allows the developer to optimise different land uses and build in a more integrated manner. It will also help to mitigate the risk by giving developers options to phase out the projects," says Wong.

Such an approach is already being used in London, where private firms work with the local authorities as master developers in areas such as Canary Wharf and King’s Cross Central, adds Wong.

Another partnership model being studied is "Business Improvement Districts (BID)". These are bodies or associations formed and funded by businesses located in a defined commercial area to make it even more attractive. These districts are already operating in countries such as Germany, Japan, Britain, New Zealand, Australia and the United States. Wong highlighted one such precinct association here, called Singapore River One, was formed by businesses located along Boat Quay, Clarke Quay and Robertson Quay.

Redas president Augustine Tan says it is timely to step up cooperation with the public sector in view of the challenges ahead. He highlighted the fact that all property sectors - office, residential, retail and industrial – are facing challenges like oversupply, sliding rentals, lacklustre demand and rising vacancies.

"The weak market will cause asset values and rentals to keep falling, and create financial stress on businesses, which will inadvertently affect employment," notes Tan.

Even though there was a pick-up in sales of new private homes in recent months, Tan stressed that it is still too early to conclude that recovery in primary sales take-ups and prices will be sustainable.

He highlighted one key concern, the fees developers need to pay if they are unable to sell all the units in their projects within the stipulated timeframe under Qualifying Certificate (QC) rules and Additional Buyers Stamp Duty (ABSD) remission claw-back.

According to Tan there are about 500 unsold units across 12 projects as at the end of October. These will be affected by QC charges to the tune of about $47 million by year’s end. He also shared there are about 4,000 unsold units in 42 developments which will be affected by the ABSD remission claw-back by 2018.

Wong acknowledged that currently there are challenges facing the property market.

“We know and understand that the sentiments are weak, that there are challenging times ahead and the Government has assured Singaporeans that we are indeed monitoring the economic situation very carefully and we will be ready to respond with changes,” says Wong.

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