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SINGAPORE PROPERTY WEEKLY Issue 385
By Property Soul (guest contributor) take up close to 20,000 unsold units and
another 32,000 new units in the supply
pipeline?
[Editor’s note: This article has been edited to For those of you who haven‟t watched Frozen
make it more compact. You can read the or Frozen II, let my favorite Frozen character
original here.] Olaf tell you the story:“It began with two
sisters. One born with magical powers, and
Where can we find enough homebuyers to
one born powerless …”
In Frozen, Elsa is born with magical powers, The government has implemented nine
while Anna is a powerless ordinary girl. In rounds of property cooling measures from
properties, the government is superhuman September 2009 to July 2018. Each round of
Elsa with godlike power, while developers are new curbs was made effective the next day.
ordinary human Anna with no power. No advance dialogue with developers was
necessary.
In early December 2019 at a gala dinner, the
Redas president admitted that developers The next day after the Redas president
were concerned over the challenging market voiced his concern over supply glut, the URA
situation of high supply and subdued announced three confirmed sites and eight
demand. They wanted to be more proactive in reserve sites for 1H2020 under the
facilitating dialogue with the government. Government Land Sales programme, with the
Redas will form a committee to raise potential to yield up to 6,490 private
concerns with government agencies. (The residential units.
Straits Times, Dec 3)
Anna: Okay, I don’t understand. You’ve been
At the same dinner, Second Minister for hearing a voice, and you didn’t think to tell
National Development Desmond Lee me?
reinforced that continued government
Elsa: I didn’t want to worry you.
intervention is needed to maintain the
Anna: We made a promise not to shut each
market‟s stability to protect homebuyers and
other out. Just tell me what’s going on.
home owners.
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SINGAPORE PROPERTY WEEKLY Issue 385
Elsa: I woke the magical spirits of the CDL believed that, in order to save the
Enchanted Forest. developers, the ABSD timeline must be
extended. However, the government is
Trying to thaw the frozen cooling
unlikely to answer to CDL‟s request, for four
measures
obvious reasons:
The following week the CEO of City
1) If developers cannot clear all unsold units
Developments Limited (CDL) urged the
five years after acquiring the site, they are
government to lengthen the ABSD deadline
required to pay 25 percent ABSD. And CDL‟s
from five to seven or even ten years, citing
chief just reminded IRAS that they are
the reason of worsening supply glut in the
actually paying a total of 31.25 percent with
private homes market. (The Straits Times,
compound interest of 5 percent per annum for
Dec 11)
five years. Why would the government extend
Anna: I know how to free the forest. I know the timeline?
what we have to do to set things right. We
2) When foreign or listed developers are
have to break the dam.
unable to dispose all the units two years after
Olaf: But Arendelle will be flooded.
completion of their new projects, they must
Anna: That’s why everyone was forced out.
pay Qualifying Certificate extension charges.
To protect them from what has to be done.
Computed by the number of unsold units, it is
The dam must fall. It’s the only way to break
8 percent of the purchase price of the land for
the mist and free the forest.
first year extension,
Back to Contents Page | 4
SINGAPORE PROPERTY WEEKLY Issue 385
16 percent for the second year of extension, the developers are taken care of. Why act as
and 24 percent for the third and subsequent Santa Claus to fulfill a developer‟s Christmas
years. Why would the government bother wish?
about 20,000 unsold units and 32,000 new
Developers left to face the music
units in the pipeline?
Developers are blaming the government for
3) Singapore‟s property cooling measures are
the harsh terms of the cooling measures. It
regarded as effective compared with other
looks like the ball is in the government‟s
countries. The government aims to maintain a
court.
stable and sustainable private property
market. Besides, the next election is just But weren‟t these taxes already there when
around the corner. Why the hassle of flipping developers were aggressively bidding
an effective cooling measure to upset voters? government land plots and acquiring en bloc
sites in 2017 and 2018? Hadn‟t they run their
4) The government‟s responsibilities are the
numbers in-house to check the profit margins
sale of land sites, control of developer acts,
before submitting their bids? Weren‟t they
and release of regulations to contain an
aware of the new sites bought by other
overheated market. It is not their job to
developers and the number of new units that
ensure the profitability of developers. The
are coming up in the next few years? Didn‟t
government‟s main concern is whether
they know the number of homebuyers out
homebuyers and local banks are over-
there and see that it would take years to clear
leveraged, but not whether the interests of
Back to Contents Page | 5
SINGAPORE PROPERTY WEEKLY Issue 385
Anna: Wait, what? Crazy? You didn’t say I In November 2019, MAS in its financial
was crazy. You think I’m crazy? stability review warned that a potential
Kristoff: No. I did. You were. Not crazy. oversupply of unsold units could put pressure
Clearly. Just naïve. on the private residential property market. It
could bring down the prices if the demand
To be fair, the remissible ABSD was set at 15
does not rise correspondingly.(The Straits
percent of the land‟s purchase price before
Times, Nov 29)
July 5 last year. An additional 10 percent was
slapped by MAS on the developers after the The peak of new projects facing their 5-year
new curbs. And this was done after the ABSD deadline will come in 2022 and 2023.
government sold all the GLS sites at record But some developers are already giving
high prices to local and overseas developers discounts. Four months before its ABSD
who were busy competing with each other deadline, eCO at Tanah Merah sold its
fiercely to build their land bank. townhouses at $829 psf – a generous 36
percent discount from $1,302 psf a year ago.
Elsa: What were you doing? You could have
been killed! You can’t just follow me into fire. Besides offering attractive discounts,
Anna: You don’t want me to follow you into developers can clear unsold units in bulk. In
fire, then don’t run into fire! December 2019, thirteen semi-detached
Elsa: Don’t you know there’s part of me that houses at Eleven@Holland were marketing at
a guide price of $38 million or $2.9 million per mismatch” and “developers are definitely
house. It‟s a good deal compared with $3.7 to under pressure”.
$4.4 million for houses sold in the same
Remember right after the new curbs imposed
project between 2011 and 2013. After
last July, they were all saying that the number
completion in 2014, seven houses in the
of 50,000 unsold units is “not a cause for
project were sold at $17.5 million or $2.5
alarm – as long as developers space out their
million each in March 2017.
launches before their five-year deadline”. A
Mattias: That was magic. Did you see that? spokeswoman from JLL said then: “We
Yelena: Of course. I saw it. believe a lot of our developers have deep
Kristoff: They’ve been trapped in here this pockets … and there is liquidity and pent-up
whole time? demand in the market.”(Channel NewsAsia,
July 21)
Anna: Yeah.
Seventeen months later, did they wake up
Now what?
one fine day and realize that there is
It is ironic to read the responses of property oversupply in the new condo market? Did
agencies in the article “ABSD „extension‟ may they come to terms with the fact that there
ease property glut but experts flag limp are simply not enough homebuyers, HDB
demand” (The Straits Times, Dec 12). Now upgraders and foreigners to consume all the
they talked about problems of “flagging new units?
demand”, “affordability”, “supply-demand
Non-Landed Residential Resale Property Transactions for the Week of Jan 14 – Jan 21