Shorter leases, resale only to HDB among ideas for prime BTO flats: Desmond Lee
The Straits Times, 24 May 2021, Mon
By Michelle Ng
New flats with shorter leases and limiting resale only to the Housing Board (HDB) are some suggestions being looked at for future public housing projects in prime locations, said National Development Minister Desmond Lee on Monday (May 24).
Another idea is to impose a longer minimum occupation period (MOP) before the units can be sold or rented out.
However, each of these suggestions has its merits and trade-offs, with "no straightforward way", added Mr Lee, who spoke at real estate agency OrangeTee & Tie's virtual business conference on Monday.
Read more at: https://www.straitstimes.com/singapore/housing/shorter-leases-resale-only-to-hdb-among-ideas-for-prime-bto-flats-desmond-lee
In weighing HDB 'lottery effect', Singapore mulls raising subsidies, imposing clawbacks
The Business Times, 24 May 2021, Mon
By Lisa Kriwangko
SINGAPORE is maintaining its stance on building public housing - including rental housing - in very prime locations, like the city centre and the Greater Southern Waterfront, that speaks to efforts to keep society "egalitarian and inclusive" on the housing front, said the country's housing minister.
Given this, and to have these flats in these prime locations remaining affordable, the government may have to provide additional subsidies on top of what it typically provides now, said Minister for National Development Desmond Lee on Monday.
This idea, however, is "easier said than done", said Mr Lee at the OrangeTee Business Conference 2021, because there are many other downstream effects to be considered.
"For example, if we provide more subsidies upfront, then when these flats are sold in the future, their owners stand to benefit a lot more than those who buy flats without these additional subsidies," said Mr Lee in his speech.
"For fairness, we may thus have to find a way to recover some of these additional subsidies provided for flats in prime locations."
Mr Lee's comments come amid concerns on the so-called "lottery effect" for public housing, where Housing Board (HDB) flats built in prime locations are made available to buyers in a ballot, under the Build-to-Order (BTO) scheme. Prices of these flats therefore surge in line with the value of these prime areas.
Concerns over the "lottery effect" also come as there has been a rise of million-dollar HDB flats in recent times.
For perspective, in April alone, 21 million-dollar HDB flats changed hands in the resale market. A total of 82 HDB flats were sold for at least S$1 million last year, compared with 64 in 2019. Most of these million-dollar flats are located in areas such as central Singapore, Bishan, and Queenstown.
But Singapore will continue to build public housing in prime locations to resist global trends of exclusion by housing locations. Mr Lee points out that housing in many global cities, such as New York or Hong Kong, have become so expensive over time, that they are out of reach for the average homebuyer.
"This may have resulted from natural economic forces, supply and demand. But it leads to undesirable social outcomes – the fragmentation of cities and societies, as wealthy households concentrate in the most attractive locations, to the exclusion of everyone else," said Mr Lee.
"Singapore is not immune to these trends. These are very powerful social and economic forces at work. But we are determined to do our best to resist them, to keep our society egalitarian and inclusive.
"We believe that Singaporeans of different income levels should have a chance to live in and enjoy these prime locations. And these prime locations, like other parts of Singapore, should reflect the diversity of our society."
Mr Lee added that Singapore also wants these flats in prime location to remain within the reach of Singaporeans "beyond the first buyer".
"There is no straightforward way to do this, because every measure has its merits and trade-offs."
He said the ministry is engaging widely with Singaporeans to "find a way to balance the many complex considerations".
Suggestions so far - from property agencies, academics, families and young home seekers - have included shorter leases for the new flats and a longer minimum occupation period.
But each idea comes with trade-offs.
For example, in launching flats with shorter leases, which will be cheaper, the government needs to weigh out the needs of subsequent buyers, and ask if the remaining lease would be sufficient to meet their needs.
And while a longer minimum occupation period can emphasise that HDB flats are meant primarily for occupation, not investment, this move may inadvertently hamper homebuyers who have a genuine need to move out as their family’s needs change, Mr Lee said.
"There are also suggestions that the flats should only be sold back to the government, which can then resell them at an affordable price. But it is challenging to ascertain a fair buyback price, and we may want to avoid artificially guaranteeing the values of these flats, which existing flat owners may view as unfair."
Mr Lee added the government will "continue to review the possibilities and refine our model, before rolling it out", citing the "important social reasons" in embarking on this engagement effort.
Meanwhile, given the manpower shortage due to border restrictions amid the rise of Covid-19 cases, BTO projects are expected by the government to be delayed by a further three months. As it is, the earlier expected delay - made known in March this year - was to stretch between six to nine months.
Mr Lee said the government will continue to price BTO flats based on affordability for home buyers and not cost recovery. This means the rise in construction costs will not affect new flat prices significantly. HDB is also working closely with contractors to minimise the delays to the BTO projects, he added.
Mr Lee said that given the "exceptional circumstances" today, property agents should help to facilitate negotiations between clients and buyers or landlords "fairly" for both parties.
It comes as more buyers may need to rent a place temporarily, or extend their current rentals, while waiting for their home to be completed.
To add, others may have sold their existing home in anticipation of their new one, and may need to renegotiate with their buyers to delay the handover date. Another group may turn its interest away from new projects and toward completed ones, fuelling demand for resale flats and possibly a rise in resale prices, said Mr Lee.
OrangeTee & Tie has meanwhile launched a free market-first BTO dashboard, an online tool that first-time HDB flat buyers can access for free to make "informed choices", the agency said. The tool also includes the prices of the surrounding HDB resale flats and private properties of the BTO flats.
Mr Lee also asked property agents to look out for the interests of homeowners and tenants. Some may be facing financial difficulties due to the economic impact of Covid-19, translating to problems in keeping up with their mortgage or rental payments, he said.
"For those who are looking to rent or buy from the market, we hope you can encourage them to consider their housing budget as well as the long term, and not overstretch themselves," added Mr Lee, speaking to property agents.
"Interest rates may seem attractive today, but the economic situation remains uncertain, and a home purchase is a long-term commitment."
Kwek Leng Beng warns of cooling measures if residential property prices continue to rise
The Business Times, 24 May 2021, Mon
By Tay Peck Gek
KWEK Leng Beng, chairman of City Developments (CDL), cautioned that further cooling measures could be introduced by the government to control the prices of residential property if prices continue to rise.
The property magnate's warning came at the mainboard-listed property heavweight's annual general meeting held by electronic means on April 30, minutes of which were filed with the Singapore Exchange on Monday.
He noted that the residential market has been performing well, but flagged that there may come a time that the government could impose further cooling measures, if property prices continue going up.
He further expressed confidence that the office market will continue to improve and noted that the group's Republic Plaza has been performing better than previously, achieving high occupancies.
The chairman also expressed optimism that the hotel industry would be able to recover some time this year, if not next year, with the resumption of air travel between countries being considered.
CDL group chief executive Sherman Kwek said that he was optimistic about the prospects for the group's residential projects and office properties in Singapore. He noted the total residential units sold in the Singapore market had recovered to a healthy level and that, despite of the pandemic last year, had recorded a sales volume on a par with that in pre-pandemic levels.
He said that there was pent-up demand for private residential properties, especially from Housing Development Board upgraders. There is uncertainty surrounding over whether the government would implement new cooling measures, but he sees the overall residential market as remaining very stable.
He also said that despite the current trend of working from home and the proliferation of co-working spaces, the office continues to be a necessary place of gathering for office goers, and that office buildings will continue to play an important role.
In response to a question on unlocking the value of the hotel assets amid the pandemic, CityDev said that Millenium & Copthorne Hotels, the property group's hotel arm, can realise its value in several ways; this include improving the assets' operational efficiency, a straight-out divestment and also repurposing of the sites for uses that can yield better returns.
While CDL is "under no pressure" to divest its hotel assets, the group has received unsolicited offers from time to time. This can result in a significant gain on disposal due to the group's generally low book costs, said CDL. It is thus exploring all options to determine which opportunities provide the best value to the group in supporting its strategy for growth, enhancement and transformation as well as capital recycling efforts.
The counter closed 0.94 per cent higher at S$7.50 on Monday, before the minutes were published.