Speech by Minister Lawrence Wong at the REDAS 58th Anniversary Dinner

Nov 14, 2017

I am very happy to join you here tonight for REDAS’ 58th anniversary dinner.  

Over the past 50 years, REDAS and our developers have played a key role in building today’s Singapore. They have left a mark in many sectors, ranging from residential, commercial, retail, industrial to hospitality. They have also placed Singapore on the world map for quality developments and the many iconic buildings that dot our city skyline.

Tonight, we recognise REDAS and all of its members, especially the pioneer industry leaders who have dedicated their time and effort to serve the community and the association. I would like to thank all of you for your many contributions in making Singapore what it is today.

Real estate is an important part of our economy. The industry itself covers a broad spectrum, from project development, consultancy and design, to property transactions, as well as property management and maintenance.

Overall, the industry contributes about five per cent of Singapore’s Gross Domestic Product, or GDP. Within the real estate sector, developers account for about $9 billion, or half of the real estate industry’s value-add.

Developers have significant backward and forward linkages with multiple ancillary industries in the real estate sector, be it financing, construction or property transactions.

Real estate and rental prices, and changes in these prices have a direct impact on all Singaporeans. This impacts on asset valuations and wealth of existing property owners. There is also an impact on affordability and the aspirations of many Singaporeans who wish to live in private property.

The Government works very hard to get this balance right. We will continue to stay vigilant and monitor the market closely. We recognise that there will always be ups and downs in the property market. As far as possible, we will make use of the various levers we have to achieve a more stable and sustainable property market.

Private Residential Property Market  

Of late, overall sentiments in the property market have improved. We have been receiving questions on some of the recent market trends. Tonight, I will share three observations about the market with you. 

First, we expect an injection of a large supply of new private housing units in the property market over the next one to two years. A large portion will come from the redevelopment of projects that have been sold en-bloc. At the same time, we are also continuing with supply from Government Land Sales (GLS).

When we take the two together, the number of private residential units available for sale will more than double over the next one to two years. The supply will be more than sufficient to cater to Singaporeans’ housing needs. 

Even as this additional supply is coming on-stream, the market today continues to experience high vacancies. Vacancy rate today is at 8.4 per cent – it has been above eight per cent for almost two years. The last time we had seen such a situation was more than 10 years ago, in 2005. 

In terms of actual physical units, there are currently more than 30,000 vacant private housing units – all still looking for occupants. To put things in perspective, this is more than the total number of dwelling units in the whole of Bishan today. 

I would like to assure Singaporeans who are looking for private homes at this time that there is more than enough supply to meet occupational demand, and that they should do their homework carefully before making their home purchases.

Second, we have observed developers getting more aggressive in their bids for land – both for GLS as well as en-bloc sites. I understand our developers’ desires to replenish their land banks. Developers will have to work out their own bidding strategies and the extent of risk they are prepared to take. 

But developers should remember that under the Additional Buyer’s Stamp Duty (ABSD) regime, they will have to build and sell their units within five years from their land purchase or risk paying penalties. I would like to remind developers to factor that into their bidding decisions.

After securing the land, developers must ensure that they deliver properties with a good quality of workmanship. I am glad that the vast majority of developers are doing so. Many of you work closely with contractors, and recognise that there is a premium for good construction quality. Some of the more progressive developers are even prepared to pay more to contractors to achieve high CONQUAS scores or Quality Mark for their projects. 

We want to recognise such developers, hence we have made the quality scores of developers more accessible. This will allow consumers to easily view and compare the CONQUAS scores of private residential projects between different developers and relative to the industry average. These measures will help buyers identify developers with a good track record of high-quality projects and make more informed purchasing decisions.  

Third, with higher land prices and the ABSD regime, developers’ profit margins may come under some pressure, and there is a risk that this could impact on construction quality. 

As I mentioned earlier, I believe the vast majority of our developers are responsible and will not compromise on quality. But from time to time, we do get feedback about developers who do not meet the quality standards we expect of them. 

I have asked URA and BCA to step up regulatory checks. For developers with a poor track record, we will consider further measures to hold them to higher standards of accountability. For example, we may impose a licence condition for them to obtain Quality Mark certification for their projects. We may even disallow these developers from launching units for sale until we can be certain that they are committed to meeting the standards we expect of them.

In working out these tighter regulatory measures, we are mindful not to take a one-size fits all approach, which may impact all developers. Rather, what we are seeking to do is to differentiate the black sheep from many of our responsible developers who look out for the interests of our homeowners. These are targeted regulatory measures that we will take to ensure any such irresponsible developers would face the consequences.

Transforming our Urban Landscape

Beyond the current market trends, we also need to look further into the future of the real estate industry. We have not reached our physical limits, and we are not done building Singapore. We have many major projects in the pipeline to transform our city, and make it even better. 

How do we create a new and exciting second Central Business District (CBD) in Jurong, as well as regional centres in Woodlands and Tampines? How can we create new concepts for infrastructure which are smarter and more sustainable, that will keep Singapore in the premier league of global cities? How do we prepare for an ageing population and develop new models of integrated housing and elderly care? 

These are some of the major challenges we face, but they also offer exciting new opportunities. We look forward to working closely with REDAS and its members to develop new ideas, strategies, and urban plans.

For example, we have started a nation-wide pilot scheme for Business Improvement Districts (BIDs). The idea behind this is to enable property owners and developers to do more place-making, and create more attractive and vibrant precincts.
We want to encourage more ground-up ideas and innovation.
 
I am glad to announce that URA and REDAS have collaborated to launch the “URA-REDAS SPARK Challenge”. Under the Challenge, we will invite members of public to contribute ideas on how we can improve our built environment to make it even more enjoyable for everyone. We are looking for innovations that can be proto-typed, tested and rolled out in shopping malls. This is a good way to seek public feedback and ideas. Moreover, it is also an excellent start to build on this close collaboration between URA and REDAS. 

I look forward to many more ideas and initiatives to help strengthen this partnership.

Partners in Nation Building

In conclusion, we have done well in our last 50 years. Now, we are embarking on our next phase of nation building. 

This is not just the work of the Government, or REDAS and developers. This is the work of all of us, as we are all on this journey together as part of one Team Singapore.

On the real estate front, REDAS has been and will continue to be a valuable partner to the Government. We look forward to continuing our close collaboration with REDAS to provide better homes for Singaporeans, and make our little red dot one of the best cities in the world.

Thank you very much, and have a good evening.