Valuation Principles Used for State-managed Properties and Sale of Land for Public Housing
Ministry of LawSpeakers
Summary
This question concerns the valuation principles for state-managed properties and land sold for public housing, as raised by Mr Zhulkarnain Abdul Rahim. Second Minister for Law Edwin Tong Chun Fai stated that state assets are transacted at fair market value, determined by professional valuers or the Chief Valuer, to safeguard national reserves. For public housing land, the Chief Valuer assesses market value using comparable open-market transactions and specific site parameters. The Minister clarified that while rental and sale mechanisms differ, both aim to reflect current market rates. Importantly, Build-To-Order flat pricing is decoupled from land costs, as the Housing and Development Board sells flats below market value to maintain affordability.
Transcript
10 Mr Zhulkarnain Abdul Rahim asked the Minister for Law (a) what valuation principles does the Ministry apply for properties that are managed and rented out by SLA; (b) whether these same principles apply to sale of land by the Government, for example, by HDB for public housing; and (c) how do the valuation principles affect the pricing of HDB BTO flats.
Mr Edwin Tong Chun Fai (The Second Minister for Law): State land and buildings are physical assets that form part of our reserves. Whether they are rented out by the Singapore Land Authority (SLA) for a short tenure or sold for longer-term development, the principle is to do so at fair market value. Tendering land sites is one way of establishing fair market value.
For land that is not sold through tender, such as land sold to the Housing and Development Board (HDB) for public housing development, the fair market value is determined independently by the Chief Valuer (CV). The CV takes into consideration relevant resale transactions on the open market and other relevant factors, such as specific parameters of the site.
For state properties rented out by SLA, the market rate is assessed by professional valuers from SLA or its third-party managing agents. Similar to how the CV takes into consideration relevant transactions in his valuation, the professional valuers who value the properties for rental would establish the market rate for the property, taking into account the rental transactions of comparable properties and the market conditions at the time. The properties would then be marketed to secure the best price for the property, which would not be less than the value determined by the professional valuers.
While the valuations in these two examples have different mechanisms, the underlying principle is the same. Whether for short-term lease or a longer-term disposal, the valuation seeks to establish the price that the market is willing to pay in each case, so that the Government transacts at fair market value.
The pricing of Build-To-Order (BTO) flats is completely separate from the pricing of public housing land to achieve fair market value. HDB sells BTO flats at prices that are below market to ensure affordability to flat buyers across different income levels.