Is the HDB making losses because it pays for land at market prices to the Singapore Land Authority (SLA)?

I refer to the article “Bank Negara’s land buy sparks talk of 1MDB bailout” (Straits Times, Feb 9).

It states that “Questions are growing around the Malaysian central bank’s recent purchase of government land for RM2 billion (S$678 million), with observers saying it is unusual for the institution to pay market price for state land.

The hefty price tag has also sparked claims that the government is raiding Bank Negara Malaysia’s (BNM) coffers to bail out troubled state fund 1Malaysia Development Berhad (1MDB), which last December forked out US$602.7 million (S$802 million) to settle a debt with Abu Dhabi’s International Petroleum Investment Company (Ipic).

BNM’s response this week that the buy was an “arm’s length transaction” only fuelled further disquiet over whether the financial regulator should be making such deals at commercial prices.”

Since we are on the subject of “land price” – the HDB charges land at market prices.

Are there any countries that price public housing by charging state land at market prices?

So, when the HDB says that it has lost billions because the more flats it builds and sells – the more money it loses – does it mean that funds may be simply channelled to the Singapore Land Authority (SLA) for the land at market prices?

 

Leong Sze Hian

 

 

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18 Responses to “Is the HDB making losses because it pays for land at market prices to the Singapore Land Authority (SLA)?”

  • karma:

    Your stay Not yours @99 $0
    Your bj not yours,go steal others as directed by that idiot
    Your cPeeF not pupils $$$ as liGirly by total paKar cbCheat
    What yours only left misery…into 50yrs

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  • Fake news from HDB:

    Mr Leong is correct. It is Government policy that its agencies must deal with each other an arm’s length basis. So to build flats HDB needs to buy State Land from Singapore Land Authority (SLA) at a price determined solely by the Government Valuer. The latter uses market prices otherwise it would be considered a draw on Government Reserves. HDB pay cash for the land. Nothing wrong with the above. What HDB does not say is that its loss is actually a big gain for SLA because it never paid for tate Kand. Its cost is ZERO. For the Government as a whole, It makes a huge profit selling HDP flats to Singaporeans.

    After he became PM LHL decided to use HDB to “drain” the CPF accounts of Singaporeans by selling them over-priced HDB flats. Price more than doubled since he became PM. At the same time the CPF Minimum Sum was raised continuously to prevent Singaporeans from taking out their CPF at 55 as before. The goal was to “squeeze” Singapore so they: (1) do not “rock-the-boat”(an oppose PAP); (2) become dependent on PAP handouts; and, (3) will “sell their votes” to PAP much cheaper.

    The coming budget speech will mention giving more to the elderly so taxes like GST have to be raised. No mention will be made of reserves which can be used to fund the increase in spending on the elderly. PAP want to buy votes and will raise taxes to pay for it. PAP is really a bunch of crooks.

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  • oxygen:

    HOW COME MONEY HDB PAID TO SLA supplied by HDB buyers NOT accounted for of land ownership in HDB lease contract as the land tittle passed on to HDB “buyers” in natural legal consequences?

    You mean HDB buyers paid a fortune for the land which is in actuality included in the ordinary contract buy/sell transaction but mysteriously disappeared of title rights and ownership thereafter?

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  • oxygen:

    IF IT IS SO, it is more than shifting profits from HDB to SLA, it is shifting title ownership of the land which HDB buyers paid expensively for!

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  • KNN:

    All along this is how it is done:
    1. MND & HDB plans for new HDB flats; plans are approved by MND minister years in advance.

    2. Closer to implementation stage, BTO process launched, request for state land submitted to SLA.

    3. Land parcel transferred by SLA (previously by Ministry of Law) to HDB at prevailing market price; recorded on each other’s accounts. However this is the important thing — > there is no money involved, it’s merely an accounting entry on both books.

    4. Current resale HDB prices (especially in nearby neighbourhoods) are used as guide prices & adjusted for age of flats; for 4-rm & 5-rm flats a “discount” of about 20%-25% is taken off the adjusted resale price — this is still usually at least 3X the total cost of construction/admin/consultancy/etc.

    5. Discount for 2-rm & 3-rm flats are larger — the selling price of 2-rm BTO can be just 1X or 1.5X the construction cost.

    6. Larger 4-rm, 5-rm & 3-gen flats help to subsidise the 2-rm flats.

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  • HarderTruths:

    Left hand vs right hand politics my friends.

    This is David Copperfield stuff – now you see it now you don’t.

    If HDB pays SLA and both are government bodies the nett profit the government got from all the different agencies is the real number we should look at – not the individual transactions between agencies.

    So what if HDB is even charged zero by SLA. The prices will still be the sane by some other means. Therefore the nett cash is alwways the same coming out of our pockets.

    Why the big song and dance by highly paid civil servants who can go on $5000 holidays with their family for 3 months to make roti-prata in France?

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  • patriot of Temesak:

    HDB peg StateLand to market value…and the Bastard told a Bunch of Idiotic Professors @ Harvard that the land was PROVIDED FREE to house the people hence,the 80%+ ownership rate…That was during a 2012 [email protected]…the Indonesians were NOT wrong when they spell Lee as Lie…F…..g liar that he is even though DEAD his LEEgacy is prop by the son with Crab crawling all over him and the Load of Crap he spill through his mouth!!!!!!

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  • Rabble-rouser:

    The traditional concept of land as a store of value (wealth) & as an economic input ie. part of the land, labour, capital & management economic input equation that we study in Economics. But this economic equation is under scrutiny in today’s Knowledge Economy. Other than the Primary Industries ie. Agriculture & resource extraction where land is paramount, the bricks ‘n mortar sector is under siege simply because technology have shifted importance from the physical to the digital realm. Instead of office buildings, office workers & a central data system, information & data have gone into ‘cloud computing’; stored in server farms & accessed by mobile workers who don’t need an office. Today’s biggest economic input is ‘Big Data’ – massive amounts of information captured via sensors & through electronic means re: Google & Facebook algorithm & analytics. Smart bots, automation & robotics are replacing labour & routinized work processes. Work as we know has become commoditized & the value of work cheapened to menial level (ie. minimum wage). The only sector still buoyant & immune from this is the innovation & technology sector. But it is highly disruptive & discontinuous. An innovation may be disrupted & render discontinuous by a better innovation re: Myspace killed off by Facebook; Yahoo, Netscape by Google; Blackberry & Nokia by Android & Apple & so on.
    Instead of physical land, the value factor today is intelligent clusters. Look at the number of US cities clamouring to be Amazon’s 2nd HQ city status. Clusters are temporal – knowledge workers want a high standard of living but don’t want to pay a high cost for it! If land & rents are too high, they shift to elsewhere that’s cheaper!
    Authoritarian govt can’t control smart people; they can only control economic inputs like land (through forfeiture & state acquisition) & masses of unintelligent people (repression & propaganda a-la North Korea); control the management of state-controlled institutions & channelled capital flows to their privilege & own benefit. And how many Authoritarian regimes have lasted till today? And with the Internet, how many can last the course? Because you can’t keep people from uncovering the truth re: fake news legislation (or truth suppression?)

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  • opposition dude:

    Ha ha ha still going on with that nonsense about HDB needing to pay SLA for the land to build flats I see.

    So very funny, a non profit organisation needs to pay for the land to build flats on. PAP sure is creative. If HDB was a private developer then I would have nothing to say but it’s not.

    So to maintain the illusion that land price is factored in HDB has become a private developer since god knows when.

    The dafts still can’t quite see through the smokescreen though.

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  • LIONS:

    SLA OR HDB,whats the diff?
    Its the same blardy $uckers?

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  • Much above market price:

    HDB appears to pay land at market prices.
    Actually, they pay land at way above market price.

    This is the reason:
    The so-called market price is determined from sales of much smaller pieces of land for private development. We know private residence is less than 10% of HDB land. If all the land pieces with all the HDB restrictions are put on the market, the real market price will be much lower than the so-called market price.

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  • Wedging your Lacuna:

    Fact : the richest in sg their wealth cums from property bubble.

    It’s fake wealth.

    I hope they all die.

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  • oxygen:

    @ Much above market price.

    BRILLIANTLY PUT – which is why I contended that BTO buyers paid for the land costs.

    Much above market price: HDB appears to pay land at market prices.
    Actually, they pay land at way above market price.

    This is the reason:
    The so-called market price is determined from sales of much smaller pieces of land for private development. We know private residence is less than 10% of HDB land. If all the land pieces with all the HDB restrictions are put on the market, the real market price will be much lower than the so-called market price.

    But where is the land component of legal tittle and ownership in the HDB lease contract signed with buyers – disregarding whatever clever accounting entries (of “cash transfer”) made between HDB and SLA in CONCEALMENT COVER?

    IT IS SILENT ON THIS LEGAL AND VALUE ACCOUNTING.

    oxygen: IF IT IS SO, it is more than shifting profits from HDB to SLA, it is shifting title ownership of the land which HDB buyers paid expensively for!

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  • Conflict of Interest:

    And his wife happens to be the head of TH, which uses money “derived” from CPF, so that they can claim that they do not use our CPF money.

    Fake news from HDB:
    Mr Leong is correct. It is Government policy that its agencies must deal with each other an arm’s length basis. So to build flats HDB needs to buy State Land from Singapore Land Authority (SLA) at a price determined solely by the Government Valuer. The latter uses market prices otherwise it would be considered a draw on Government Reserves. HDB pay cash for the land. Nothing wrong with the above. What HDB does not say is that its loss is actually a big gain for SLA because it never paid for tate Kand. Its cost is ZERO. For the Government as a whole, It makes a huge profit selling HDP flats to Singaporeans.

    After he became PM LHL decided to use HDB to “drain” the CPF accounts of Singaporeans by selling them over-priced HDB flats. Price more than doubled since he became PM. At the same time the CPF Minimum Sum was raised continuously to prevent Singaporeans from taking out their CPF at 55 as before. The goal was to “squeeze” Singapore so they: (1) do not “rock-the-boat”(an oppose PAP); (2) become dependent on PAP handouts; and, (3) will “sell their votes” to PAP much cheaper.

    The coming budget speech will mention giving more to the elderly so taxes like GST have to be raised. No mention will be made of reserves which can be used to fund the increase in spending on the elderly. PAP want to buy votes and will raise taxes to pay for it. PAP is really a bunch of crooks.

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  • N.Jungne:

    Very simple let’s use dialect “sit-poon seng-lee, Chenghu mana ai cho”. Gabramen where got run losing business.
    Already asking for DONATIONS & VOLUNTEERS to help that Indian/Malay woman, you say lor.

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  • pap selected INDIAN president:

    asset enhancement of HDB. remember the pap FAKE news.

    how 70% sheep is conned. HDB is now declared by pap to be consumption.

    HDB value goes to zero at end of lease. not more than a few years ago pap clown was still lying to 70% sheep about monetizing HDB to live out remaining years when jobless. NOT more than 3 years ago.

    AT the stroke of pap pen, HDB from asset becomes consumption.

    UNLESS 70% sheep wakes up quickly their children shall suffer. paying higher and higher rental upfront to HDB for smaller and smaller spaces.

    ++++++++++++++++++++++++++++++++++++++++
    pap clown what a hypocrite. besides lying INDIAN is malay. pap clown talks about kinship. wonder why his own blood brother and own blood sister are thinking when pap clown opened his Lj mouth to FAKE news 70% sheep about kinship. truly a lying hypocrite of the LEE degree almost same league as departed pap evil lky. WTF.
    ++++++++++++++++++++++++++++++++++++++++

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  • oxygen:

    @ Much above market price.

    PEASANTS PAID FOR THE LAND, but no possession & title of legal ownership. Therefore cannot en bloc – unlike private property.

    The land price charged (hidden) is way over priced to extract peasants’cash and CPF money. If you used CPF money to pay for the HDP purchase, they CHARGED YOU interest costs for using (in reality) your OWN money – nothing is spared in this wealth and retirement money extraction. Paikar said CPF is not your money even though it is attached to your name, it is impliedly YOUR LIABILITY owed to unidentified creditors WHICH MUST PAY INTEREST for its use.

    Peasants – of which 70% is unsophisticated of the scam of asset enhancement politics just sucked the licking bottom juice. Most still haven’t woke up that property market is a bubble and its price escalation is a MIRAGE of wealth fiction (you sell higher, you pay even higher still for the necessary owner-occupation of the next one)

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  • Do more for the Citizen:

    I suggest that the Government pay 50% of the original HDB price to the Owner at the end of the tenure of the Flat.
    Reason is the land costs .The land now go back to the Government.
    Only fair and it will help many at their end period of their life..

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