Home
buyers will be so spoilt for choice this year that most won't know
where to turn - or which developer's sweetener to take up.
The
launches and freebies are already coming thick and fast with loads of
new projects lined up. The news is less certain for pricing but few
experts expect huge bargains on the horizon.
While some say
prices might stay firm because developers have strong holding power,
others predict price cuts ranging mostly from 3 to 10 per cent -
depending on the segment - although there does not appear to be any
industry-wide price reduction yet, apart from the various sweeteners.
Still,
the Urban Redevelopment Authority's price index inched up just 0.2 per
cent in the three months to Dec 31, suggesting that a turning point
might be around the corner.
But on the supply side, it's all
guns blazing. At least 10 developments were launched in the first two
months of this year, including Bartley Residences, Watertown and
Guillemard Edge, as firms rush to meet buyer demand, stoked by
rock-bottom interest rates.
Property consultancy CBRE said that
up to 48 new private projects - more than 5,000 landed and non- landed
units - may be launched this year. They range from high- end homes in
River Valley, Nassim Hill and Newton to mass-market projects in Yishun,
Bedok, Choa Chu Kang and Pasir Ris. But they do not include recently
sold sites that could be launched by year's end, so the total number of
new projects could be even higher.
Apart from these private
residential projects, at least two more executive condominium (EC)
projects with another 1,100 units are expected to be launched.
So
competitive is the landscape that developers have been pulling out the
stops to lure buyers, with incentives like furniture vouchers and the
absorption of stamp duty thrown in.
The bumper crop of new
launches expected this year stems from the Government's ramped-up land
sales programme (GLS) that began in the second half of 2010 and
attracted keen developer interest. It also comes from the roughly 50
collective sale deals sealed last year.
Like last year, the
bulk of the new launches is expected to be in suburban areas, catering
to first- time buyers and upgraders who have been powering the market
over the past few years.
The pipeline supply of sites and
projects will provide a variety in terms of location and pricing so
buyers will have numerous options to consider, say experts.
Mr
Ku Swee Yong, chief executive of International Property Advisor (IPA),
noted that with average unit sizes shrinking, the number of units
eventually launched on GLS sites might exceed official estimates by 20
per cent or more.
Land parcels that could yield an estimated
7,000 units were placed on the confirmed list of the GLS for the first
half of this year.
Mr Lee Liat Yeang, a partner in Rodyk &
Davidson's Real Estate Practice Group, agreed, saying that developers
are aware of the importance of keeping homes small and hence, overall
prices affordable.
'Some two-bedroom units are smaller than 500
sq ft. These small two-bedders should appeal to investors of projects
within the city or city fringe, who tend to rent out these units.'
Private home prices
Experts
say that price trends are likely to be project-specific, with better
located projects with strong selling points achieving higher prices.
But
while developers will be cautious on pricing, they will push the market
for what it will bear if there is an opportunity or when sentiment is
good, said Mr Colin Tan, research head at Chesterton Suntec
International.
Mr Tan Kok Keong, OrangeTee's head of research
and consultancy, expects mass-market projects in less well-located areas
to be priced at $800 to $900 per sq ft (psf), while better located
projects like Sky Habitat in Bishan could be in the $1,400 to $1,500 psf
range.
IPA's Mr Ku, however, estimates that mass-market home prices will average $1,100 psf in upcoming launches.
Homes in the city centre like Leedon Residences might go for $2,000 psf and up to $4,000 psf for Ardmore 3, he said.
In
the high-end market where sales have been lacklustre, Chesterton's Mr
Tan said that developers will likely try to rent them out or delay
completion as long as they can while OrangeTee's Mr Tan said prices
might fall by 'a single digit'.
'Developers need to sell enough
units to finance their construction costs and do not need to sell out
their projects within a short period from first launch,' added Rodyk's
Mr Lee.
'In short, developers who have done very well in the
past few years have strong holding power and should not panic-sell so
long as they can clear a reasonable percentage of units in each
project.'
Completed projects
Completed projects are an alternative for buyers in urgent need of a new home that's not from the resale market.
The
URA lists 66 projects that are completed but with unsold units as of
the fourth quarter of last year. Most of these projects are in the
high-end segment where sales have been slow. These include Reflections
at Keppel Bay with 290 unsold, Hilltops at Cairnhill Circle with 208 and
Newton Imperial with all its 36 units unsold.
Executive condos
ECs
are an interesting segment to watch as the Government recently lifted
the quota for second-time purchasers. This means that they will now be
able to buy 30 per cent of units in an EC project within the first month
of sale, up from 5 per cent before.
The Government has also said it is ready to supply sites for up to 5,000 EC units this year if demand remains strong.
Credo
Real Estate executive director Ong Teck Hui said that prices for
upcoming EC launches in areas such as Pasir Ris and Yishun can be
expected to range from $680 to $750 psf. While private property prices
remain high, there will be buyers who opt for ECs instead as these are
typically cheaper by 20 per cent or more.
The pool of eligible
EC buyers has also increased with the upward revision of the monthly
household income ceiling last August from $10,000 to $12,000.
'The
main advantage of buying a new EC is the price discount over private
homes when they are bought, and the value boost when they can be sold on
the open market and fully privatised,' said Mr Credo's Mr Ong.
'Depending
on location, the capital appreciation can be significant. For example,
the average launch price of Bishan Loft was $420 psf in 2001 but there
are resale units commanding above $1,000 psf recently.'
ECs are
subject to a minimum occupation period of five years. They can then be
sold only to Singaporeans and permanent residents. They become private
property after 10 years and can then be sold to foreigners.
Deal sweeteners
Developers are also increasingly pushing out new and creative promotions, discounts or freebies to beat the stiff competition.
There
is very often an early bird or VIP preview price which can be up to 20
per cent lower than the list price. This discount gradually gets scaled
back later into the launch, encouraging buyers to commit early. Some
developers have also started absorbing part of the stamp duty to cushion
the impact of the latest cooling measures announced on Dec 8 last year.
Far
East Organization offers furniture vouchers, with the amount based on
apartment size and usually given when a project attains its Temporary
Occupancy Permit. It has also given additional discounts of 1 per cent,
labelled Valentine's Day or Leap Year promotions, for some projects.
Experts
say that some of these incentives are an attempt to boost sales without
dropping the price as doing so might damage the reputation of the
developer and anger earlier buyers.
'There is the good feeling when you have received a deep discount whether real or perceived,' said Chesterton's Mr Tan.
Snazzy
showflats decked out in posh furnishings can also help sway buyers, and
developers are now spending more time and big bucks creating concepts
and designs that appeal to different buyer segments.
The 15,000
sq ft Thomson Grand showflat along Upper Thomson Road, for example,
cost $8 million to build. Its furnishings include Swarovski crystal
chandeliers, Louis Vuitton luggage and Hermes plates - all to project
its luxury positioning.
esthert@sph.com.sg
Source: The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.