SINGAPORE (BLOOMBERG) - Developers' hunger for land is adding to signs that Singapore's housing market is making a comeback after three years of price declines.
As new home sales surge after an easing of property restrictions in mid-March, developers are becoming more aggressive in bidding at land auctions. On average, they have paid a 29 per cent premium, the highest level in at least five years, according to broker Cushman & Wakefield, which makes comparisons with the past prices of similar properties.
"Sentiment has changed," said Mr Christopher Tang, chief executive officer of Singapore at developer Frasers Centrepoint. "The general sense is that the market has bottomed out and like many of the developers in Singapore we are a bit landbank-starved - we are keen to build our land bank."
A land auction last month attracted a record 24 bidders, amid swelling demand from Chinese and Malaysian developers. Home buyers are snapping up units at developments like the Seaside Residences condominium, east of the city. New home sales more than doubled in April from a year earlier, a report on Monday showed (May 15), after a surge in March to the highest level in nearly four years.
While the signs are positive, the scale of any comeback may be limited by government efforts to avoid any renewed overheating of a market that peaked in 2013. While the government tweaked its cooling measures in March, boosting buyer sentiment, it left most of the restrictions in place.
Singapore's efforts contrast with Hong Kong's failure to tame a market where home prices keep hitting records. Singapore's home prices fell 3 per cent last year and have dropped for 14 straight quarters, the longest slide since the data were first published in 1975. The city's next quarterly property-price numbers are due June 15.
"There has been a considerable lift in market sentiment," said Mr Desmond Sim, head of research for Singapore and South East Asia for CBRE Group. "Buyers are more prepared to make a purchase, in view of prices possibly bottoming."
Mr Sim also cited "pent-up demand" from buyers as developers refrained from launching projects in the final few months of 2016. Developers have since plowed back into the market, offering a total of 1,616 units in March, the most since May 2014, according to Cushman & Wakefield.
Among developers, the number of bidders per land tender increased to 13.3 in the first four months of this year from 8.3 in the second half of 2005, according to Cushman & Wakefield. Winning bidders at recent land sales included China Construction (South Pacific) Development Co and Malaysia's SP Setia International Pte.
Correction note: An earlier version of the story stated that Christopher Tang's post is chief executive officer of developer Frasers Centrepoint. This is incorrect. It should be chief executive officer of Singapore at developer Frasers Centrepoint. We are sorry for the error.