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How Much Is the Land Vivian and Shan Are Occupying Really Worth? HDB BTO Prices Provide a Guide

I have still not received any response from the SLA or the Ministers concerned to the questions I have raised about Shanmugam’s and Vivian Balakrishnan’s occupation of two of the biggest residential estates in Singapore, courtesy of the Singapore state. The fact that Shanmugam as Minister of Law heads the Singapore Land Authority, which is responsible for managing state land, including the magnificent mansions occupied by our former colonial administrators. It is worth noting that if you refused to answer questions during an interrogation by the Singapore Police, the judge hearing your case would be entitled to draw a negative inference from your silence meaning you would be more likely to be found guilty. Singaporeans should take note that the Government’s and the individuals concerned’s silence should therefore suggest that everything I have said is likely true or even worse than the picture I have painted.

The PAP Government always claims that high HDB prices reflect the scarcity of land in Singapore. This is of course true though the Government is incentivized to drive up the price of land because this boosts both the theoretical value of its reserves including land and the actual value of the financial reserves because HDB is obliged to pay the “market” price for the land it buys to build new flats. While pretending to be providing Singaporeans with affordable housing the PAP have cynically driven up prices by allowing Singaporeans to use most of their CPF to purchase housing and “subsidising” their purchases with money from the Budget. They also provide grants to HDB to cover its losses caused by the difference in what it pays for the land and what it sells BTO flats for. I have written about this use of fake “subsidies” to divert money from the Budget into the reserves here, here and here.

Also helping to drive up prices is Singapore’s population growth which has resulted in population more than doubling over the last forty years. While only citizens and PRs (inexplicably) can buy HDB, Singaporeans can rent out bedrooms to foreigners immediately and whole flats after 5 years. This of course pushes up rents which raises resale prices. For more on the HDB bubble read what I wrote some time ago here, here and here.

Of course by relentlessly pushing up prices and diverting more and more money into the reserves and away from providing real help for Singaporeans struggling with the cost of living and inadequate social safety nets, the PAP cynically co-opt Singaporean HDB owners who take the Government’s cynically engineered “asset enhancement” strategy at face value. But what more naive Singaporeans see as steadily rising property values is more of a curse than a boon. Not only will HDB be worth nothing at the end of the leasehold, when all the land will revert back to the Government, but tying up the overwhelming portion of Singaporeans’ savings in depreciating housing stock, at least in the long term, means that the increase in wealth is largely illusory. Unless they decide to sell up and emigrate when they retire, a solution that I am sure the PAP would prefer as it would reduce limited healthcare and other welfare costs, Singaporeans face limited options if they want to downsize and cash out as all property has risen in price.

I have brought up the question of HDB because I wanted to look at how much the land Shan and Vivian are occupying is really worth. I have suggested previously that on a crude calculation the land (about 400,000 square feet) could be worth $440 million based on a price of $1100 per square foot. However the price per square foot could be more than $1400 in such a central area in which case the land could be worth $574 million.

However if the land was developed as an HDB estate then the valuation is on a completely different level. Using a plot ratio of 3.5 (the ratio of gross floor space to land area), which seems to be the norm for new HDB estates, though the newest ones can be 4.0 and above, the gross floor area would be 1.4 million square feet. If we use a rough price of $800 per square foot, similar to recent BTO prices before subsidyt for 4 room flats in Bukit Merah, then the total value would rise to $1.15 billion. I have estimated construction costs, which should be subtracted to obtain the development profit, to be about 20% of that figure so the the development profit would be 80% of $1.15 billion or $920 million. I

f the land was developed as luxury condos then the development profit would be much higher. Assuming a sale price of $5,000 per square foot and a plot ratio of 2.5 the total sale value would be $5 billion. Construction costs would of course be higher but likely not more than $500 per square foot so the total development profit would be around $4.5 billion, a truly staggering sum. Are Shan and Vivian really paying the true economic value of the land they are occupying?

The PAP Government has provided no real justification for why it is holding back so much land in the form of former colonial estates when it acknowledges a severe housing shortage in Singapore and when prices keep rising. Certainly the use of the land has not been debated openly in Parliament. On a per capita basis Singaporeans have some of the smallest living spaces in the world at only 258 square feet per capita according to a South China Morning Post survey. While this is bigger than Hong Kong it is dwarfed by 807 square feet for the average American and 454 square feet for the average German and British resident. Even PRC citizens have more living space.

I am not privileged with information as to Shan’s and Vivian’s household sizes but I estimate Shan’s to be no more than 2 people while Vivian’s is 6. That would mean Shan and his wife enjoy 130,000 square feet each while Vivian and his family are more modest, only taking up 25,000 square feet per person. Presumably Vivian’s children are adults so there is no reason for them to enjoy subsidised ultra luxury housing at the expense of the taxpayer. I am not a socialist and there is no reason why those who have accumulated wealth through hard work or innovation should be prevented from doing what they want with their money. But I fail to see why public servants should be secretly subsidised, which my analysis shows they must be, to live lifestyles so completely out of this world compared to the average Singaporean. Particularly as the chief beneficiary appears to have used his position to allocate the cream of residential properties to himself.

Like everything else associated with the PAP Government, from Ho Ching’s compensation to the ruling family’s assets to the size of the reserves, there is just a complete and utter lack of transparency. Muddy waters, as Khaw Boon Wan memorably remarked, provide plenty of opportunities for big fish to hide in. What is especially worrying is that despite using my best efforts, this story does not seem to hold much interest for Singaporeans, It is obviously eclipsed by the excitement over the Assurance Package payouts of supposedly $9 billion to be spread over five years and the recent electioneering cut in prices by the PAP’s monopoly supermarket. I doubt whether the main Parliamentary Opposition will bring this up because they might consider it a bit rude to their friends in the PAP. Unfortunately this seems to be giving the PAP and LHL hope that if they can just keep quiet this will all go away and their hegemonic rule which allows them to quietly appropriate state resources for themselves and their relatives will be safe for the next 50 years.


  1. Thank you for your article. While it is a worthy read, I would like to comment on a few facts which you may be wrong. In a typical sales of a luxury condo in the same area, I would believe a $3500 to $3800 per sq ft sales price is more realistic in today’s market as opposed to the $5000 suggested by you. Additionally, for a luxury condo development, the construction cost cannot be at $500 psf. It is likely to be around $800psf now based on market prices.


    • Thanks for your insight. It still does not alter the fact that the land is being grossly underutilised and this potentially amounts to mismanagement of the reserves.


  2. The highest bidder gets the plot, the highest earners gets the units in a prime HDB area, without complaining, which means ” we” the HDB property economist and adjusters set the price, “you” our supporters with the most desired pays and jobs will be entitled to the HDB property.

    Just got reminded of one of the female opposition party members telling me after a forum, ” money talks” yes indeed money talks.

    Now what we can carry with the 65 generation voice is that, these days the laws were clearly stipulated that no Singaporean couples will be allowed to purchase a HDB house if they hold a property in Malaysia or any other property in private estate in Singapore. Now the question is under the article that everyone should be treated equally before or under the law, shall apply to the bidders who have their own purchased houses, but went to rent out properties costing nearly the price of the house by paying over a period of paid rentals amounting to the original cost of the property.

    Well if you ask me, I would want blk 55, of tanglin halt to be preserved cause that where a humble prime minister goh chok Tong stayed as a young boy, a man who didn’t want to sue JBJ but was to, likewise article of that law applies here, treat each former prime minister’s with equal protection of the law!



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