Redas president urges government to review property cooling measures

By Amy Tan / EdgeProp Singapore | February 22, 2019 2:30 PM SGT
The new president of the Real Estate Developers’ Association of Singapore (Redas), Chia Ngiang Hong, called for a review of property cooling measures at the industry association’s annual Spring Festival Lunch held at Shangri-La Hotel on Feb 19. The guest-of-honour was Finance Minister Heng Swee Keat.
Chia, who is also the group general manager of City Developments Limited, says that although the government formulates public policies, the private sector could help “make the policies better and more targeted”.
From right: Redas president Chia Ngiang Hong; Finance Minister Heng Swee Keat; Kwek Leng Beng, Redas’ honorary patron; Augustine Tan, Redas’ immediate past president; and Cheong-Chua Koon Hean, deputy secretary (special duties), Ministry of National Development at the Redas Spring Festival Lunch on Feb 19 (Credit: Samuel Issac Chua/EdgeProp Singapore)
For instance, Chia raises the issue of the additional buyers’ stamp duty (ABSD) for developers. As of July last year, the ABSD paid by developers on land acquisitions was doubled from 15% to 30%, with a 5% that is paid upfront and non-remittable. The time frame to develop and sell all residential projects – regardless of size – has also been capped at five years.
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“This policy has pushed all developers to exhaust their inventory at around the same time, and could partly account for the land price escalation in 2017 and 2018 because everyone basically ran out of inventory at the same time,” Chia shares.
While excessive land banking ought to be discouraged, Chia calls for “some flexibility” in the five-year time frame to sell out projects.
This could help curtail “the bundling of the project development cycle” that saw developers replenishing their landbank at the same time.
“If the ABSD on land purchases is not reviewed, we can expect a repeat of the 2017–2018 ‘land grab’ situation in four to five years’ time,” he cautions. “When the price of the raw material goes up, we can expect the price of the end-product to increase as well.”
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Chia also suggests that the government review the loan-to-value (LTV) limits for first-time homebuyers so that young Singaporeans can fulfil their aspirations of owning a private home. He adds that the government can also make it easier for HDB upgraders to own private homes by reviewing the timing of the upfront payment for the ABSD so as to ease their cashflow planning.
“As a long-term stakeholder in Singapore’s success, Redas wishes to facilitate a stable and sustainable property market, especially when over 90% of Singaporeans are homeowners,” he says.
Market to drift sideways
Looking ahead, Chia expects the market to drift sideways this year, amid slower GDP growth and prevailing cooling measures.
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In 2H2018, market sentiment was affected by the impact of policy overhang coupled with global economic challenges, notes Chia. Residential transaction volumes fell 17% for the year. “The surprise cooling measures also rattled the Singapore financial market and property stocks were heavily punished,” he adds.
At the end of 4Q2018, there was a total of 54,332 uncompleted units including executive condominiums (ECs) in the pipeline, according to URA data. Of these, 35,649 units were unsold, compared with 31,295 units in 3Q2018, which was a q-o-q increase of 13%.
“Adding this number to a potential supply of 9,800 units including ECs from Government Land Sales and awarded en bloc sale sites that have not been granted planning approval yet, 45,449 units are estimated to be available for sale in the next two years,” says Chia.
Amid a subdued market outlook and the increase in ABSD for land acquisitions, he expects developers’ appetite for land acquisitions to be lacklustre. This is evident in recent en bloc tenders that have closed without any bids, he says.
Growth in office, hospitality
On the other hand, Chia sees opportunities for growth in quality office spaces, after several years of contraction. The office sector saw recovery in 2018, buoyed by growth in the tech sector and expansion of co-working space operators in the CBD.
At the same time, new office buildings are equipped with advanced technology while older buildings are being refurbished and repositioned to meet market demands.
The hospitality sector is expected to continue performing well, with the completion and opening of Jewel Changi Airport this year.
Consequently, Chia expects hotel revenue to rise further, but cautions that tourist arrivals could be affected by geopolitical and macroeconomic uncertainties.
Collaboration with the government
To create opportunities, Chia higlights Redas’ commitment to working closely with the government on the next phase of nation-building.
To this end, the industry association has put forth a Redas Position Paper advocating “deeper engagement and mutually beneficial collaborative partnerships with the various partners in the value chain”.
In the past years, Redas has actively participated in various Industry Transformation Maps (ITMs) and new initiatives. For instance, it has collaborated with URA for the URA-Redas Spark Challenge, which sought ideas and feedback from the public on how to improve their physical surroundings.
The industry association is also keen to collaborate with the government on its move to reinvent Singapore as a Smart Nation.
Redas’ Chia says: “It is thus imperative that we look at how we can harness technology and innovation to connect all sector stakeholders to achieve the ultimate goal of improving the liveability and sustainability of our built environment.”
Integration of online-offline models
During his speech, Minister Heng acknowledged the role Redas plays in Singapore’s nation-building journey. This year marks the 60th year of Redas, which was established in 1959.
“Urban development would not have been possible without the support, capital and expertise of private developers and companies,” says Heng. “For example, many of our private housing, office towers, hotels and retail developments are built by the private sector.”
Heng says he expects integrating online and offline experiences to be a major theme in many real estate developments. He cites the example of Funan that is being transformed from an IT mall into an “experience mall”. Owned by CapitaLand Mall Trust and managed by CapitaLand, it is slated to open in 2Q2019. Funan will be an integrated development with a mall, two Grade-A office blocks as well as The Ascott’s lyf, its brand of co-living serviced residence designed for millennials.