The participation of foreign developers in Government Land Sales (GLS) tenders has softened this year, on the back of the cooling residential market.
JLL data shows the percentage of foreign bidders for private residential GLS plots fell to 14.8 per cent this year so far, from 21.7 per cent last year. Foreign bidders entered the fray in 2010, when the figure rose to 14.1 per cent from 5.5 per cent in 2009.
The high level of participation by foreign bidders last year seems to be an outlier, bolstered by the resilience of the market then despite several cooling measures, said JLL assistant manager of research June Yang.
But the total debt servicing ratio framework from June last year “clearly has a lingering impact” which could have moderated foreign developers’ interest, she said. “As some of the foreign developers participating in the local scene are relatively new, there could be a stronger reason for them to take a more cautionary stance on development.”
Six of 14 winning bids last year, or 43 per cent, involved foreign developers, including those in joint ventures with local firms. This year, two of nine winning bids involved foreign developers.
The spike in foreign participation in 2010 came as some Chinese developers ventured abroad, in the face of strong competition in China and falling demand caused by property curbs brought in by Beijing, said SLP International executive director Nicholas Mak. A notable rise in Housing Board flat resale prices also fuelled upgraders then, said R’ST Research director Ong Kah Seng. “It is easiest for foreign developers to target the lower-tier private residential segment as they have not established themselves.” This year’s fall in foreign participation is also due to falling demand for suburban homes, he said.