Basis for Determining Reserve Prices for Sites under Government Land Sales and Industrial Government Land Sales programmes and Statistics on Sites Awarded in Last Five Years
Ministry of LawSpeakers
Summary
This question concerns the valuation of Government Land Sales (GLS) and Industrial GLS sites and the statistics of awarded tenders. MP Mr Chua Kheng Wee Louis enquired about the basis for reserve prices and the performance of winning bids relative to these benchmarks. Minister for Law K Shanmugam stated that reserve prices are pegged at 85% of the market value assessed by the Chief Valuer’s Office. He noted that 17 of 133 sites launched between 2016 and 2021 were not awarded as bids failed to reflect fair market value. Most awarded sites saw winning bids within 15% of the estimated market value, with final decisions based on prevailing market conditions and bid volume.
Transcript
15 Mr Chua Kheng Wee Louis asked the Minister for Law (a) what is the basis for determining the reserve prices for sites under the Government Land Sales (GLS) and Industrial Government Land Sales (IGLS) programmes; (b) for sites that have been put up for sale in the last five years, what is the number of sites that are not awarded as the highest bid is below the reserve price; and (c) what is the average percentage premium of the winning bid versus the reserve price for sites that are awarded.
Mr K Shanmugam: The Reserve Price for sites sold under the Government Land Sales (GLS) and Industrial GLS programmes is pegged to 85% of the estimated market value of each site, as assessed by the Chief Valuer’s Office (CVO), taking into account proposed land use and site-specific conditions, relevant land sale transactions as well as rental and sale transactions of completed buildings. The Reserve Price serves as an internal guide to assess if tender bids are reflective of the fair market value of the land being put up for sale. Bids below the Reserve Price are not automatically ruled out; whether a site is awarded depends on the prevailing market conditions, number of independent bids received and the specific circumstances of each site.
Of the 133 sites launched for tender between 2016 and 2021, 17 were not awarded as the highest bids were deemed not reflective of the fair market value of the land. Of the sites that were awarded, the majority were within 15% of CVO’s estimated market value.