DBSS land sales suspended as scheme being reviewed: Khaw

Future land sales under the Design, Build and Sell Scheme (DBSS) have been suspended while the scheme is being reviewed, said National Development Minister Khaw Boon Wan. Mr Khaw shared this on Facebook in a message posted on Saturday.

‘We are reviewing DBSS scheme. Meanwhile, I have suspended future DBSS land sales,’ he said. ‘However, a few DBSS land sites sold last year, like the Centrale 8 site, will launch their sales in next few months. These are old tenders beyond my control.’

Responding to a media query, the Ministry of National Development (MND) also said: ‘MND/HDB is reviewing the DBSS. Pending the ongoing review, HDB will not proceed with the sale of the Bendemeer Road site originally scheduled in 1H 2011.’

Under the DBSS, developers tender for land and have flexibility in designing, pricing and selling the flats. The indicative prices of Centrale 8 created a stir and MND said shortly after that it will be reviewing the DBSS, as part of an overall review of housing policies.

The government has sold several sites under the DBSS. In June, HDB launched a DBSS site at Fernvale Link/Sengkang West Avenue for sale, and was planning to roll out another DBSS plot at Bendemeer Road which would yield about 700 units.

– The Business Times, P1

– Also quoted in The Straits Times, A3, “Govt halts DBSS land sales as it reviews scheme”

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‘$880,000 is fixed in buyers’ minds’

YOU think our new HDB flats are too expensive?

No problem, we’ll slash the price by $102,000.

That was what developer Sim Lian Group did with its latest Design, Build and Sell Scheme (DBSS) project, Centrale 8, at Tampines Central.

It came under heavy fire for unveiling the costliest new HDB five-room flats at $880,000 last Thursday.

On Tuesday, it decided to cut the price to $778,000, citing that the earlier prices were “indicative” and would be firmed up closer to the actual booking date next month.

But the move raised almost as many eyebrows as the original pricing of $880,000.

If the developer can lower the price by as much as $102,000 for the top-end units, was it trying to profiteer from this public housing project, asked some outraged home-buyers.

After all, it will still make a profit selling the units at $778,000 or it would not have slashed 11.6 per cent from the indicative price.

The 178 five-room units in this development are now priced from $685,000 to $778,000 after Sim Lian released what it called the “confirmed price range” of its Centrale 8 units.

Sim Lian is to date the first developer to cite “indicative prices” for a DBSS launch, only to lower them by so much within a week.

When asked about the accusations of profiteering, its spokesman told The New Paper yesterday: “We want to maintain our point that they were (the previous prices) merely indicative.

“We didn’t confirm that we’ll be selling at those prices. It’s not that we had already set the price. It was a range given but it’s not the set price.”

When asked why there was a huge discrepancy between the indicative and confirmed prices, the spokesman declined to comment.

No obligations

Property watchers contacted by TNP said that unlike public housing provider HDB, property developers like Sim Lian are not obliged to sell its flats cheaply. But it should also be reasonable with its prices.

SLP International head of research Nicholas Mak said: “If they are accused of trying to make super normal profits, they will not be the first nor the last developer to do this.”

He compared Sim Lian to developers of high-end projects and luxury brands Gucci and Prada.

He said: “A Gucci bag, in the end, is just a bag. But Sim Lian is selling a product that is a HDB flat, not a luxury product. This may not sit well with some people.”

Mr Colin Tan, a research and consultancy director at real estate firm Chesterton Suntec International, said that it has been long time since such a major boo-boo happened in the property scene.

He said: “It’s made worse because this is public housing. You don’t want a stigma that your flats are too expensive. People won’t want to buy for fear of being branded a fool.

“Even for those who are genuinely keen, they would think twice. The demand is there, it’s a question of pricing. Everyone admitted that it’s a good site.”

Under the DBSS scheme, developers are free to set prices for the finished flats which come with features such as better flooring, built-in wardrobes and air-conditioning.

But these flats are subject to HDB regulations.

ERA Realty key executive officer Eugene Lim said that Sim Lian, as a listed company, has to be accountable to its shareholders.

“They got the land through an open tender process where the highest bidder gets the land. It was a good buy for them,” he said.

“But there’s no moral obligation for them to price the houses low. To them, every project has to make money.

“Even if a developer gets the land cheap, they don’t have to sell (the units) cheap.”

Residential projects typically yield a profit margin of about 20 per cent, he said.

In this case, even if the developer lowers the price of its top-tier units, it will still make money, albeit less.

Mr Lim pointed out that land in Tampines Central is limited, so it was probably an opportunity for Sim Lian to push the price a bit higher.

“Unfortunately, $880,000 is fixed in people’s mind. People will remember this, even though it’s just an estimate,” he said.

Sim Lian said yesterday that it received some 1,431 applications for the project.

This is twice the number of flats available – 708 units of three-, four- and five-room flats.

Its spokesman told TNP that the application numbers were within its expectations as HDB had launched some Build-to-Order (BTO) projects last month that may have affected the demand.

“We’re happy with the results and the numbers. The backlash from the public also had some effect and affected some buyers’ perceptions,”he said.

In comparison, its first DBSS project, The Premiere@Tampines, was nine times oversubscribed in 2006.

The developer said the overwhelming response to The Premiere was because it was the first DBSS project in Singapore.

It drew nearly 6,000 applications for 616 flats with indicative prices ranging from $138,000 to $450,000 .

Sim Lian said the confirmed prices were subsequently lower than the indicative prices but it was unable to give exact figures.

Prices of other DBSS flats such as Natura Loft at Bishan and The Peak@ Toa Payoh rose by up to 3 per cent or $20,000 in comparison to their launch prices, reported The Straits Times in 2009.

Mr Colin Tan said the application numbers for Centrale 8 are decent, given that it’s for a benchmark pricing.

Undeterred

He said: “Given the outcry, it’s pretty decent. Some of these applicants are obviously not deterred by the pricing.

“But it looks like there’ll be some unsold units given the two-to-one ratio. But having said that, few developers can sell all their units so quickly.”

Researcher K Ang, 38, who checked out the Centrale 8 showflat last week, thinks the adjusted prices are still too high.

He lives in Sengkang with his family of three in a five-room flat and was hoping to upgrade. But he decided against applying because of the prices.

“I still think the developer priced it too high. It’s still not that affordable. It’s like two times the price of a BTO flat but with better furnishing,”he said.

– This article was first published in The New Paper.

HDB land should be reserved for building affordable public housing: Tin Pei Ling

In a Facebook post regarding the controversial Design, Build and Sell Scheme (DBSS) project in Tampines, Member of Parliament for Marine Parade Tin Pei Ling said that “HDB land should be reserved for building affordable public housing, and not apartments that HDB has little influence over.”

Last week, Sim Lian Group announced that the biggest 5-room flats in the 708-unit Centrale 8 will cost $880,000.

In her post, Ms Tin said she was one of the many Singaporeans who were “stunned” by the recent high profile launch.

Minister for National Development Khaw Boon Wan took to his blog last week, saying that DBSS flats are not HDB flats, and that “while HDB flats are designed and priced by HDB, DBSS flats are designed and priced by private developers”.

Ms Tin said in her post: “Questions were raised by many members of the public. Some asked why HDB flats built on HDB lands and eventually to be managed by the Town Councils (i.e. like normal HDB flats) should be priced by private developers. I understand and sympathise with these views.”

“Allowing private developers who had successfully acquired HDB lands to independently price DBSS units may be in line with “free market” principles, but it also means HDB losing control over precious lands that could be better utilized for BTO flats or community facilities.”

“DBSS was meant to offer an additional housing option to Singaporeans – premium but less expensive than private condominiums. It is right to offer tiered options to address the different aspirations of Singaporeans. But the “devil is in the details”, and what might have been a useful housing option in 2005 may no longer be as suitable today. ”

She continued: “Some have pointed out that Singaporeans can choose not to purchase over-priced DBSS flats. But I think the issue is one of principle – given the land scarcity in Singapore, HDB land should be reserved for building affordable public housing, and not apartments that HDB has little influence over. As part of MND’s overall review of housing policies, perhaps it should either let HDB take back the right to price DBSS units, or include a clause to compel price negotiations between HDB and the private developers.”

The developer has since backtracked, slashing $102,000 from the top price after much uproar over the hefty price tag – which it said was only the ‘indicative price range’ for the flats.

Twice as many applicants as Centrale 8 flats

The 708-unit Centrale 8 project in Tampines, has been twice oversubscribed despite record asking price. Some industry observers expressed surprise at this performance; although they pointed out that the no. of times over-subscribed is not a good indicator of how well a development eventually sells.

Analysts claim the two-times over-subscription looked credible, given the uproar over the price and the fact that most applications were put in before the price reduction. Referring to over-subscription being a poor indicator of how quickly the units will be snapped up, analysts will be surprised if Sim Lian will achieve more than 70% sales for the flats.

The analysts claim that buyers will be prudent; if they are offered a flat above their budget and they will reject it. But other analysts believe the price cuts may well produce a much lower rejection rate, as applications had been submitted on the basis of the higher initial asking prices. Dennis Wee Group director Chris Koh said the hype for DBSS flats has died down, but the application rate proves that demand for public housing remains strong, despite a high asking price.

– The Straits Times, P6

$880,000: Priciest flats launched in Tampines

THE most expensive new HDB flats were released for sale yesterday under a Design, Build and Sell Scheme (DBSS) development launched in Tampines.

A five-room flat at Centrale 8 by developer Sim Lian will cost buyers $880,000, a whopping $750 per square foot, an amount often seen on suburban condominiums, reported The Straits Times.

DBSS flats are public housing units designed and built by private sector developers and typically come with more luxurious fittings.

Centrale 8 has 178 five-room units, which measure between 1,163 and 1,173 sq ft each. These units will cost almost twice as much as more standard flats sold in the recent Tampines Build-To-Order (BTO) project, where a 1,216 sq ft unit cost up to $444,000.

The smaller-sized units at Tampines Centrale 8 are not cheap as well – a three-room flat measuring up to 667 sq ft will cost up to $510,000, while a four-room unit taking up 904 sq ft will cost up to $683,000.

The 708 units are expected to be built by 2014.

Previous records for priciest HDB flats had belonged to other DBSS projects such as The Peak@Toa Payoh and City View@Boon Keng. Five-room flats at the two projects were sold at around $720,000.

Despite the hefty price tag, market watchers noted that Sim Lian did not pay a record-busting price for the land – $261 psf per plot ratio (ppr) was paid for the 21,132 sq ft site, reported The Straits Times.

A Sim Lian spokesman explained the rationale for the high pricing and told the newspaper: “The premium is due to its locale in Tampines Regional Centre with mature amenities such as banks, three shopping malls and the upcoming Integrated Lifestyle Hub.

“It is also within walking distance to the existing Tampines MRT Station and the future downtown line 3 MRT interchange.”

However, SLP International’s head of research Nicholas Mak told The Straits Times that while the location is good, it did not justify the high price tag.

“Another side effect is that it might encourage resale flat sellers in the area to increase their prices, as buyers would not need to wait for their units to be built,” explained Mr Mak.

When PropNex chief executive Mohamed Ismail first heard about the prices, he told The Straits Times that he did a double take.

“No doubt it’s in Tampines, which is a mature estate with many good things going for it, but it is still extremely high for a public housing flat,” he said.