Factors Accounting for 74% Increase in Land Development Costs for HDB BTOs
Ministry of National DevelopmentSpeakers
Summary
This question concerns the 74% increase in HDB land development costs from $1,816 million in FY2020/21 to $3,167 million in FY2021/22. Mr Leon Perera asked about the factors behind this growth, specifically the impact of land acquisition costs versus the volume of flats built. Minister Desmond Lee attributed the increase primarily to a 66% rise in units delivered to buyers, alongside a 5% increase in average per-unit land costs. This per-unit rise was driven by a higher proportion of completions in mature estates like Queenstown and Toa Payoh, as well as more large flats in non-mature estates. Total costs are influenced by land location, prevailing market values at purchase, and the total volume of flats completed and delivered annually.
Transcript
39 Mr Leon Perera asked the Minister for National Development (a) what factors accounted for the approximate 74% increase in land development costs for HDB BTOs, from $1,816 million in FY2020/21 to $3,167 million in FY2021/2022; and (b) what proportion of the increased spending was due to a higher cost of acquiring land as opposed to a larger volume of flats built or other factors.
Mr Desmond Lee: The total land development cost of HDB’s Home Ownership Programme in a given financial year depends on several factors, including the location of the land parcels, the prevailing market value of these land parcels when they were purchased, and the total number of flats completed and delivered to buyers from these land parcels.
A large part of the increase in total land cost between FY2020/2021 and FY2021/2022, is due to the increase in the number of units delivered to buyers in FY2021/2022. In FY2021/2022, 13,506 units were delivered to buyers, a 66% increase as compared to the 8,124 units delivered to buyers in FY2020/2021.
On average, the land development cost per unit has increased by 5% between FY2020/2021 and FY2021/2022. The increase in the per unit land development cost can be attributed to the increase in the proportion of units delivered in mature estates, which tend to have a higher per unit land cost compared to non-mature estates, and the increase in proportion of larger flat types in non-mature estates delivered in FY2021/2022, which translated to a higher per unit land cost in non-mature estates. For example, there was a higher number of units delivered in mature estates such as Queenstown and Toa Payoh in FY 2021/2022 compared to FY 2020/2021.