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Singapore’s property market becoming a “casino”

Opinion: By rejecting underpriced bids like those for Jurong Lake District, Singapore is sending a clear message: speculative behavior from developers won’t be tolerated. This firm stance is crucial to ensuring corporate responsibility and protecting the long-term health of the economy.

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by Jasmine Lim

A Troubling Trend of Speculative Bids

Singapore has always been a beacon of responsible governance, and its recent decision to reject the underpriced bid for the Jurong Lake District (JLD) mega site exemplifies this commitment to long-term stability. At S$640 per square foot per plot ratio (psf ppr), the sole bid fell well below the anticipated range of S$900 to S$1,000 psf ppr (Business Times, Sep 13, 2024).

Yet, this incident is not unique and it raises a troubling question: Are some property developers acting like market gamblers rather than responsible businesses?

In the case of JLD, strategic partnership was formed among the five major players—CapitaLand Development, City Developments Ltd (CDL), Frasers Property, Mitsubishi Estate and Mitsui Fudosan (Asia), and was it a consequent outcome that resulted in limited competition that encouraged speculative underpricing?

Another recent example is the Media Circle site, where a Frasers Property-led consortium offered a bid of S$461 psf ppr—significantly below market expectations of S$650 to S$1,100 psf ppr (Business Times, Sep 19, 2024).

This bid wasn’t just low—it was almost recklessly so. When companies start to treat the market like a casino, underpricing in hopes of getting a “bargain,” it disrupts market dynamics and generates unnecessary uncertainty.

Market analysts have observed that speculative underbidding can depress overall market confidence, causing unnecessary volatility and eroding the value of strategic assets (Cohen & Han, 2020).

In fact, observations have consistently shown that speculative actions—whether through inflated bids or aggressive underpricing—create chaos in real estate markets.

Such behaviour leads to unpredictable price swings, erodes investor confidence, and has far-reaching effects on the wider economy.

So, when companies like Frasers Property, owned by Thailand’s TCC Group, engage in such repeated speculative actions of recent land bids, it raises serious concerns about their commitment to Singapore’s long-term economic health.

Will Developers Win This Game?

Governments around the world play a crucial role in shaping the property market, especially in times of uncertainty.

In fact, academic studies frequently highlight the importance of government oversight in preventing property bubbles and market crashes. When speculative behaviour takes hold, prices can spiral out of control—leading to a boom-and-bust cycle that benefits no one in the long run.

Singapore’s firm stance in the JLD tender echoes these findings and reinforces its long-held principles of responsible governance. After all, losses in land revenue, which could otherwise be invested in infrastructure improvements, translate into more welfare losses for the whole city (Today, Jan 15, 2020).

By rejecting the underpriced bid in the case of JLD, the government is ensuring that the property market remains stable and secure for both developers and residents.

A healthy property market doesn’t just benefit developers; it supports a healthy property sector, maintains investor confidence, and ultimately strengthens the fabric of society. The government’s move is a critical reminder that land, especially in land-scarce Singapore, should be developed with care and foresight.

Is there a Need for Corporate Responsibility?

It’s understandable that businesses are driven by profits, but there’s a fine line between profit-driven strategies and reckless market manipulation.

When large companies act in ways that destabilize the local property market, it becomes clear that corporate responsibility is being overlooked. They need to realize that their actions don’t just affect their bottom line—they affect the country’s economic stability and the property sector dynamism.

In a rapidly evolving global economy, the government’s role is more critical than ever. Without strong regulatory oversight, speculative behaviour could easily spiral out of control, leading to a housing crisis or economic downturn.

By setting firm boundaries, the Singapore government is leading by example, ensuring that our markets remain stable, resilient, and beneficial for all—residents, businesses, and investors alike.

Singapore Government’s “Over-Invention” An Unwelcomed Move?

Singapore’s approach to land and urban development is a model for the rest of the world. By staying true to its principles of responsible governance, the government has managed to build a property market that is resilient in the face of global economic uncertainty. This is a lesson other nations can learn from—how to balance growth with stability.

At the same time, the government’s decision to reject punting low land bid underscores a growing need for companies to act responsibly.

Academic research shows that unchecked speculative actions in real estate markets have historically led to devastating consequences—from property bubbles to economic crashes (Kindleberger & Aliber, 2011).

We must not let Singapore fall into this trap. Instead, we must continue to hold both local and foreign companies accountable for their actions, ensuring that their pursuit of profits aligns with the broader interests of our nation.

Singapore’s strength lies in its ability to balance free-market efficiency with firm regulatory oversight, and will this series of decisions to reject low land bids prove that we are still on the right path for Singapore’s long-term prosperity?

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