Property developers are no longer bidding wildly at Government Land Sale tenders as the effects of the property cooling measures set in.
This can be measured from the fact that the gap between the top bidder and the next highest bidder for sites with residential components has begun to narrow.
According to an analysis by Jones Lang LaSalle (JLL), the gap peaked in August and early September and declined in recent weeks as the impact of the recent property measures gradually kicked in.
The gap hit 31 percent for the condo plot at Miltonia Close in the Yishun area offered at a tender which closed in August.
A residential-commercial plot next to Bedok MRT Station also had a relatively high winning margin of 21 percent offered at a tender that closed on September 1.
This trend continued in early September, with a condo plot at Jalan Eunos/Foo Kim Lin Road seeing a 26 percent winning margin from top bidder Far East Organization offered at a tender that closed on September 7.
Since then, the margin has dropped to single-digit percent levels, mainly from 1 percent to 4 percent. The winning margin ranged between 1 percent and 17 percent from January 1 to July 31 this year, with the tender for a private condo plot at Yishun Ave 2/Canberra Drive drawing a 17 percent premium from a Far East Organization-Frasers Centrepoint tie-up.
Market watchers said the margin suggested a bullish sentiment in the real estate market at the time that prompted the government to announce the cooling measures on August 30.
“The trend of thinner winning margins reflects a more cautious stance by developers as a result of the latest anti-speculative measures,” said Chua Yang Liang, research head at JLL South-east Asia.
“When there is a bullish market, a more optimistic developer may be keen to pay a higher premium compared to its competitors, but when developers become conservative, there is likely to be a greater consensus of views, including on land prices”, added Mr. Chua.