Having replenished their land banks throughout the 2016 into 2018 en bloc fever, developers have slowed down into their land-banking activity, together with UOL and City Developments each acquiring only one Government Land Sales (GLS) website in 2019.
New condo developed by Qingjian, a Forett At Bukit Timah developer, target to launch in 2020.
For this, DBS Group Research anticipates developers’ cautious stance in land-banking to last this year, reported Singapore Business Review.
“With the authorities continued to maintain a fairly low source from the first half 2020 GLS, the infusion of new distribution is very likely to become moderate and above time in the expectation of fulfilling the annual demand for private houses,” said DBS analyst Derek Tan.
The increase in Additional Buyer’s Stamp Duty (ABSD) by 15% to 25% and the additional 5 percent non-remittable ABSD also increased the capital devotion as well as significantly raised the danger of developers eyeing to cultivate their land banks.
“Whilst developers may apply for remission of their 25 percent ABSD, expectations of a downturn in sales speed in 2019 may make developers rethink their land-looking (especially for the larger websites ) altogether,” mentioned Tan.
Developers have set aside their desire to expand their land bank and proceeded to clear their inventories over the books instead.
DBS Group Research’s estimates revealed that the majority of the recorded developers that concentrated on clearing their stock achieved a sell-through rate of almost 40% to 50 percent.
Among the exceptions comprise Kingsford, which filed a sell-through rate of 0 percent because of the delay of its own sales license on account of the prior Normanton Park website.
To avoid the increased cost of acquiring land, a few developers resorted to land-banking via mergers and acquisitions (M&A) along with different developers. In fact, 2019 saw over $17 billion value of these deals.
Notable deals include Ascendas Group’s acquisition by CapitaLand and UOL/UIC’s acquisition of the remaining stakes in Marina Centre Holdings, which enabled the consortium to extract value via selective redevelopment by tapping government strategies to improve asset values via increased gross floor area or residential improvements.