Developers' to remain cautious in aggregating land in 2020

Victor Kang17 Jan 2020

Developers have slowed down in their land-banking activity as they wait for demand for private homes to grow. 

Having replenished their land banks during the 2016 to 2018 en bloc fever, developers have slowed down in their land-banking activity, with UOL and City Developments each acquiring just one Government Land Sales (GLS) site in 2019.

With this, DBS Group Research expects developers’ cautious stance in land-banking to continue this year, reported Singapore Business Review.

“With the government continuing to maintain a fairly low supply in the first half 2020 GLS, the infusion of new supply is likely to be more moderate and over time in the hope of meeting the annual demand for private homes,” said DBS analyst Derek Tan.

The hike in Additional Buyer’s Stamp Duty (ABSD) from 15% to 25% and the additional 5% non-remittable ABSD also increased the capital commitment as well as significantly raised the risk for developers eyeing to grow their land banks.

“Whilst developers might apply for remission of the 25% ABSD, expectations of a slowdown in sales velocity in 2019 might make developers rethink their land-looking (especially for the larger sites) altogether,” noted Tan.

Developers focused on clearing stocks

Developers have put aside their desire to expand their land bank and continued to clear their inventories on the books instead.

DBS Group Research’s estimates showed that most of the listed developers that focused on clearing their inventory achieved a sell-through rate of almost 40% to 50%.

Among the exceptions include Kingsford, which registered a sell-through rate of 0% owing to the delay of its sales license due to the former Normanton Park site. GuocoLand and Allgreen also posted a low sell-through rate of 12% and 13%, respectively, as of the third quarter of 2019.

To avoid the increased cost of acquiring land, some developers resorted to land-banking via mergers and acquisitions (M&A) with other developers. In fact, 2019 saw over $17 billion worth of such deals.

Notable deals include Ascendas Group’s acquisition by CapitaLand and UOL/UIC’s acquisition of the remaining stakes in Marina Centre Holdings, which enabled the consortium to extract value via selective redevelopment by tapping on government schemes to boost asset values via increased gross floor area or residential developments.

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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email


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