Poor housing outlook not deterring land buyers

[CityFarmer]

It is either the international developers are suicidal, or the local developers are staying too long in their comfort zone...

As part of my scuttlebutt activities, I visited two under-construction sites located side by side, regularly for the past one year. One by local big three developer, while the other one by an "international developer".

Few observations:
- The design of the building is vastly different. The local is "typical", while the international is "out-of-box".
- The piling done by local was noisy, and without any observable shielding measures. While the international has done it much quieter. I am not sure the technologies, since I am not in construction line. I saw different machine used for the piling. Shielding measures were taken.

I am yet to reach any conclusion, but by gut feel, the international developers might not necessarily "enjoying" much less than 20% margin that local developers were "enjoying" in the past...

Poor housing outlook not deterring land buyers

SINGAPORE — Billionaire Kwek Leng Beng, head of Singapore’s second-largest listed developer, said last year that skyrocketing prices and restrictive rules made buying residential land here suicidal. That has not stopped international developers from rushing in.

Land prices in some parts of the country are climbing at three times the pace of apartment costs, with plot values rising by an average of 30 per cent each year since early 2011, said property broker Chesterton Singapore, which used government auction data. Singapore’s fourth-quarter home prices slid for the first time in almost two years, as curbs cooled values.

“The increase in land prices has had a tremendous impact on developers’ profit margins,” said Chesterton Singapore Managing Director Donald Han. “Those that used to enjoy margins in excess of 20 per cent will have to contend with narrower returns.”
...
http://www.todayonline.com/business/poor...and-buyers

[corydorus]

Housing is big ticket item which average folks take lifetime to service them .To know the developers can whine for not making 20% margin out of many people pocket is an insult. Even 10% i find is too much. We certainly need more competition to lower social cost.

[Big Toe]

Property developers are businesses, not charities or social enterprise. Competition is good but their aim is the same, to maximize profit the best they can and there is no wrong in doing that. They could be making 800% profit and whine when it drops to 600%(just a ridiculous example), it's just the way businesses are. No one is forced to buy an expensive property, it is mainly the demand that is driving up the prices.

The same can be said of the COE, while it is true that population has increased and the number of COEs have been reduced, it is ultimately the consumers who are driving the prices up. There is still no lack of people willing to fork out $130+K for a "budget" car. Insane but true. Before we look to complain about prices of certain items, we must look at ourselves collectively as a whole.

[pianist]

"look at ourselves collectively as a whole"..i hope that include the govt as well...who ultimately set the pace and tone of almost every goods on the island..
for example, to sell public housing at cost is aka to raiding the govt reserve...
to set a high min price floor for a land before bidding by developers can take place
mark to market many other public gds and services in a bid to recover costs

on the other hand, admit there are many riches here..takefor eg my next door hdb neighbour..knowing coe price is gg up, quickly ask wife and himself each buy a VW and mercedes

[arriyana]

Housing is big ticket item which average folks take lifetime to service them .To know the developers can whine for not making 20% margin out of many people pocket is an insult. Even 10% i find is too much. We certainly need more competition to lower social cost.

It is not particularly fair to say this because property developments carry higher risk than most industry. Each property takes 3 years minimum to complete and is not unlikely that cost could escalate very quickly in short span of time due to resource shortages. A higher margin compensates for risk taken.

[Temperament]

"look at ourselves collectively as a whole"..i hope that include the govt as well...who ultimately set the pace and tone of almost every goods on the island..
for example, to sell public housing at cost is aka to raiding the govt reserve...
to set a high min price floor for a land before bidding by developers can take place
mark to market many other public gds and services in a bid to recover costs

on the other hand, admit there are many riches here..takefor eg my next door hdb neighbour..knowing coe price is gg up, quickly ask wife and himself each buy a VW and mercedes

So you see the book about "The Millionaire Next Door" is realistic but in your case, the next door may be more than a "Millionaire". His showiness and using of money is not like described in the book "The Millionaire Next Door". He may be a "Multi-Millionaire Next Door" who thinks it's O. K. now to spend his money a "bit more"
Just my thoughts.

[corydorus]

Housing is big ticket item which average folks take lifetime to service them .To know the developers can whine for not making 20% margin out of many people pocket is an insult. Even 10% i find is too much. We certainly need more competition to lower social cost.

It is not particularly fair to say this because property developments carry higher risk than most industry. Each property takes 3 years minimum to complete and is not unlikely that cost could escalate very quickly in short span of time due to resource shortages. A higher margin compensates for risk taken.

Look at Tigerair. They have planes that can take many many years to recover their capital. I do not see they have high margin and in fact losing money if they can't do it efficiently. Why ? Competition put them on their toes.

My message is actually directed at more towards regulatory of giving huge benefits rather than developers at the huge expenses on average folks lifetime of saving. Is an enormous social cost to support a few developers.
Why are they doing that ?

[Temperament]

Housing is big ticket item which average folks take lifetime to service them .To know the developers can whine for not making 20% margin out of many people pocket is an insult. Even 10% i find is too much. We certainly need more competition to lower social cost.

It is not particularly fair to say this because property developments carry higher risk than most industry. Each property takes 3 years minimum to complete and is not unlikely that cost could escalate very quickly in short span of time due to resource shortages. A higher margin compensates for risk taken.

Look at Tigerair. They have planes that can take many many years to recover their capital. I do not see they have high margin and in fact losing money if they can't do it efficiently. Why ? Competition put them on their toes.

My message is actually directed at more towards regulatory of giving huge benefits rather than developers at the huge expenses on average folks lifetime of saving. Is an enormous social cost to support a few developers.
Why are they doing that ?

Ha! Ha!
You just forget In Singapore, who is the largest land owner, house owner and developer. That's why.
The same for Public Transport in Singapore. That's why our transport will never be like HK or other city like Beijing or Tokyo.
Profits come first before any other considerations. IMHO.

[Freenasi]

Many people (include PR perhaps) ride on the high HDB resale prices to invest in private properties. The bubble in the private properties is contributed partially by the escalating HDB prices. I think its important that the policies set for HDB is focus on a "home" rather than "asset building". In any case, the HDB asset is destined to one day burst, with the 0 value at year 99.

[freedom]

Housing is big ticket item which average folks take lifetime to service them .To know the developers can whine for not making 20% margin out of many people pocket is an insult. Even 10% i find is too much. We certainly need more competition to lower social cost.

Given 10% profit, will you start a property development project? If you will, why don't you start a property development company and add to the competition? We really need more businessmen like you to depress the price of properties.

If you are not willing to do it, you have no right to ask anyone or any profit-driven company to take the risk you feel not well compensated for.