MAS cautions developers of overbidding while foreign developers aggressively bid up S’pore land price

At the Monetary Authority of Singapore (MAS) annual report media briefing today (4 Jul), MAS managing director Ravi Menon cautioned developers when making their land bids. He said developers should bear in mind of the land supply that is coming on-stream.

“We are also telling individuals who purchase property to be careful. Interest rates are rising, be cautious of debt-servicing burdens, avoid taking on too much leverage when buying a house,” he said.

“We are also telling the banks to be careful when underwriting, there is euphoria now, everything looks good.”

He added, “Basically, we are sounding caution to everyone to be sober; balance and exercise good judgment.”

Aggressive land bidding by foreign developers

There has been aggressive bidding by developers both in collective sale tenders and government land site bids, especially from Chinese developers.

Two months ago, a land parcel near Queenstown MRT Station attracted a top bid of more than $1 billion, the first time that a purely residential site on the Government Land Sales (GLS) programme has exceeded that price quantum and crossed the $1 billion mark.

The large 99-year leasehold site at Stirling Road was launched for sale by public tender in Apr.

The top bid of $1.003 billion, which translates into $1,050.71 per sq ft (psf) of gross floor area, was submitted jointly by China’s Nanshan Group and Hong Kong’s Logan Property.

The $1.003 billion price tag is also almost 50 per cent higher than the previous record of $682.8 million or $457 psf per plot ratio (ppr).

“The sheer amount of the liquidity in the market, despite the capital controls put in place by the Chinese government, has not seemed to temper the appetite of aggressive Chinese players, as a total of $11 billion went after this plum site (at Stirling Road),” an analyst commented.

The Chinese Nanshan Group has been actively participating in recent GLS tenders in Singapore.

Another property consultant said, “It is quite uncommon for GLS bids for residential land to exceed S$1,000 psf ppr… The good sales performance from nearby condo projects, such as Queens Peak, as well as the recent easing of the Seller’s Stamp Duty have lifted the confidence of bidders when they were bidding for the site.”

In any case, Menon said that the government is closely monitoring developments in the property market.