Tuesday, 28 June 2011

A Show of People Power in Singapore

A Show of People Power in Singapore

The recent Tampines DBSS project, Centrale 8, is a good example of the showing of people power in our economy, in particular the housing price.

We all know that when the demand is greater than the supply, the price will go up.  However, in the case of Centrale 8, it is the reverse. Even the demand is greater than the supply, the price goes down.

Tampines DBSS project two times oversubscribed
The controversial expensive Design, Build, and Sell Scheme project at Tampines, Centrale 8, has been two times oversubscribed.
1,431 applications were received for the 708-unit project by the deadline on Tuesday.

But Sim Lian Group, the developer, was forced to lower their indicative selling prices. The company can make more money in an extra of multi-million dollars but chooses to drop their prices by more than 10%.

Tampines DBSS: prices of up to $778k
SIM Lian Group yesterday said that flats at its Centrale 8 public housing project in Tampines will sell for up to $778,000 - lower than the previous indicative top price of $880,000.
(The Business Times)

The developer gave the following reason for lowering the prices:

Sim Lian said that the prices take into account resale prices of HDB flats in the same vicinity (taking into account the age and location); prevailing economic conditions; and the project's proximity to transport network, good public facilities and other amenities.
(The Business Times)

However, when Sim Lian first lunched the project with a top price of $880,000, the company gave the similar reason:   

Kuik Sing Beng, Executive Director at Sim Lian Group, said: "Five years ago, there was no announcement of the new Downtown Line interchange, as well as the new lifestyle hub. Comparatively, they can still afford a condominium in the suburban area, but this is very well-located, with all the new amenities. So I think the prices are reasonable."


The prices are reasonable for both before and after the launch.
There is no financial crisis, no property crash, and no external and unforeseen circumstances; even the pricing reason remains unchanged, so within a short period of one week, the indicative selling prices were forced to reduce.

Why? If I were the shareholder of Sim Lian, I will ask why.  The less income of extra multi-million dollars will result to lower dividend payout in the next AGM.

The answer is most likely to be: People Power.

DBSS prices slashed after uproar

After much public outrage, property developer Sim Lian Group last night announced that they are lowering the prices of its Design, Build and Sell Scheme (DBSS) flats at Centrale 8 in Tampines by up to $102,000.

(The Straits Times)

To be fair to the developer, the $880,000 is just an indicative price.

"It is regrettable that during the application period, the media and members of the public did not take note of our repeated public emphasis that the price range which we had announced was only an indicative price range, and would not be the final sale prices for the respective types of flat units."

(Sim Lian Group statement)

If this is true, Sim Lian marketing and PR departments must be doing some things unusual and made the company looked stupid.   Or, are there any reasons which the company cannot disclose? After all, the piece of land for Centrale 8, is in fact still a HDB land.

Is the government helping you? No.

Singapore's Minister of National Development Khaw Boon Wan has clarified that the S$880,000 five-room flats in Tampines belonged to a different class of housing options.

In his latest blog entry, Mr Khaw said that the "negative reaction from the ground was not surprising", but he added that DBSS flats are of a different class of housing type between HDB flats and executive condominiums and private condominiums.

He explained that DBSS flats are designed and priced by private developers. If there are no buyers, there will be no sales.

If there are no buyers, there will be no sales. However, for Centrale 8, it has been two times oversubscribed.

If this is a private and commercial decision, why should Sim Lian lower their prices?  Perhaps, the company is doing a social good by providing a slightly ‘affordable housing’ in Singapore.

Who give them the pressure? Who make them change their indicative pricing?  If not the government, then it must be from the people.

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