So the much anticipated public secret is out – Draft Master Plan 2013. What hope is in store for the public and developers at large? Similarly, what disappointments come with it? To be honest, it is difficult to come to grips with this new release because of the information overload. However, we can embark on a cursory analysis of this new release because certain things are still easily subject to commonsense and logic.
According to the Urban Redevelopment Authority (URA), the Master Plan translates the broad and long-term strategies of the Concept Plan into detailed plans for implementation over 10 to 15 years. The umbrella Concept Plan then is the strategic land use and transportation plan that guides Singapore’s development over the next 40 to 50 years. Therefore, looking at this, we know what the Master Plan is not. It does not state the price level of the developmental process.
That price will be set during the implementation stage when Government Land Sales (GLS) sites are released for development. Also accompanying the GLS programme is the Development Control procedures that act as a guardian to ensure adherence to the strategic planning strategies.
Therefore, even if the Master Plan had say zoned the Bidadari Estate or intensified the development of Holland Village for residential and commercial uses, the fact of the matter is that if the price level is not stated, then it only means that greater supply under the GLS tendering system would imply elevated real estate prices. To generate demand for those properties, population, money creation and deposits will have to match up in order for the social and financial system here to remain healthy. With the TDSR framework in place, we now have a mechanism to retard unbridled private residential real estate demand. That will in effect affect the decisions of developers and policy makers on the pace of the GLS programme.
Ideally speaking then, the economy also has to grow first before these sites can be put up for tender. Otherwise, it will be a case of “the tail wagging the dog” in the economic scheme of things which in turn dims our productivity focus and also raises the percentage of real estate-related lending to overall lending. In that case, the excitement shown by the public of the future that is in store for them will have to be tempered with reality.
Viewed in this light, the 2013 Master Plan or for that matter any future Master Plans should never be interpreted as a supply programme meant to control asset prices. The Master Plans ultimately have to take a back seat to the real economy where jobs have to be created and real income increased beforehand so as to grant our economic participants the affordability to turn an aspiration to real fundamentally sound ownership.
This article was contributed by Alan Cheong, Head of Research at Savills Singapore.