Minister for National Development, Mah Bow Tan, has announced three changes to the reserve list system under the government’s land sales programme.
With immediate effect, the government has reduced the deposit required on Reserve List sites for successful applicants from the current five percent of the minimum price to three percent, and will be capped at $5 million. This move is intended to lessen the upfront cost and the cash flow burden of the developers.
Mr. Mah said that it will consider launching a site on the Reserve List for sale once it has received sufficient market interest for the site.
A site is considered to have received sufficient market interest if more than one distinct party has submitted a minimum price close to the government’s Reserve Price for the site within a reasonable period.
With this change, a Reserve List site can now be released for sale through public tender even if the application prices are way under the Government’s Reserve Price. According to Mr. Mah, this will also improve the Reserve List system’s responsiveness to dynamic market conditions. This new process will also take effect immediately.
Mr. Mah also said that a wider variety and a larger supply of sites in the Reserve List will be made available during the second half of the Government Land Sales (GLS) Programme this year.
The Reserve List system was initially introduced in 2001. It provides additional sites, in addition to those in the Confirmed List, to ensure that there is more than sufficient supply to meet any surge in demand.
Under the Reserve List system, an interested developer would submit an application to the government for the sale of the site, stating the minimum price to be committed for the parcel of land. The application would be accepted if the minimum price committed meets or exceeds the Government’s Reserve Price. The applicant is then invited to sign an agreement to bid for the site at a price not less than the minimum price and to pay a deposit equivalent to five percent of the minimum price.
A total of 65 sites have been successfully triggered and sold under this system. In 2009 alone, 11 sites for hotel, residential and industrial developments were successfully triggered and sold.
The Economic Strategies Committee (ESC) earlier suggested that the government should review and amend the system to make it easier for developers to trigger sites on the Reserve List. This will also ensure that the Reserve List system remains responsive to dynamic market conditions and business demands.