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Monthly Property Reports April 2008 Slowdown but no reversal for the Singapore market
Monthly Property Reports April 2008 Slowdown but no reversal for the Singapore market | Slowdown but no reversal for the Singapore market |
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The crowds of potential purchasers at show flats have dwindled to a handful of people, most developers who launched projects in the last quarter of 2007 still have many units on their hands and new launches are few and far in between.
Slowdown but no reversal for the Singapore market
by Sonia Kolesnikov-Jessop
The crowds of potential purchasers at show flats have dwindled to a handful of people, most developers who launched projects in the last quarter of 2007 still have many units on their hands and new launches are few and far in between. After the champagne mood of last year, sentiment has turned gloomy. But if potential buyers are waiting for prices to freefall, they could be waiting in vain, property experts say, as developers are expect to sit tight and ride out what is still expected to be brief downturn.
“The slowdown in primary market activity has resulted in a momentary weakening of the home-price growth momentum. But prices for all market tiers are not expected to trend down as healthy economic fundamentals will continue to provide support for prices to at least hold steady in the first half of this year,” says Tay Huey Ying, Director for Research and Consultancy at Colliers International. “In fact home prices are poised to continue their upward trend as soon as global economic conditions improve, hopefully in the second half of the year. There is still great upside potential for home prices in the mid-term,” she adds. Ku Swee Yong, Director, Savills Residential Private Limited suggests that developers who have the financial muscle to postpone the launch of their new projects may seriously consider that option, partly because of the current market mood, but also because of the “tight” situation in the construction industry. “We understand that the government is in the process of allowing more foreign construction firms to set up and work in Singapore. By postponing and waiting until more suppliers from the construction industry are ready, developers will be able to keep construction costs in check. In any case, the bulk of the unlaunched projects are in the hands of developers that have the strong financial capabilities and they are able to hold,” Ku points With the Singapore stock market continuing to suffer this year and the fallout from the US economic crisis showing no signs of abating, property buyers and investors have remained extremely cautious, even at the high end of the market where the property bull run started and has been strongest. Several high-profile launches, like the Marina Bay Residences, Orchard View at Angullia Park and Sandy Island on Sentosa, have all been delayed for the foreseeable future. “I think the delays are affecting more the mid-tier to high-end of the market. There are still some launches for the mass market. In fact, it is quite timely for these developers to launch now, because there is now a much quieter space now, unlike last year when there was a very crowded market. Now, everybody hears you,” notes Richard Leen, marketing director at Genesis-Alliance, which is behind the Sandy Island and Lakefront projects that are now not expected to be launched until the end of the year for the former and 2009 for the later. In February, while announcing record profits for 2007, City Developments Ltd (CDL) executive chairman Kwek Leng Beng announced that some of CDL’s projects would be held off until 2009, if necessary. Yet, CDL is likely to start construction on some of these projects which would mean the company receives more cash upfront when it finally does sell the units as buyers have to put down 30 per cent after foundation work is complete, compared with only 20 per cent if construction has not started. Since the start of the year, some developers have been testing the water with smaller properties away from the prime areas. Waterfront Waves at Bedok Reservoir, which was soft-launched in January, managed to sell 103 out of the 180 units offered. The current average price for the entire development is $801 per square foot, with the spread ranging from around $656 psf to $921 psf. The interest for this property shows there is still a strong demand in the entry-level private property market in selected areas with quality living standards, noted Cheang Kok Kheong, Chief Operating Officer of Frasers Centrepoint Homes, right after the launch. Other projects launched this year include the 47-unit Cosmo at Guillemard Lane in District 14, which attracted good buying interest with an average price of $1,100 and Costa D’Este in District 15, which is selling at $900-$950 psf. Peter Ow, executive director of residential properties at Knight Frank real estate agency, notes that most of these projects have been small and in second tier districts. “The uncertainty in the stock market hits investors the most, and these investors are likely also the potential buyers of high end developments. Hence, high end developments at this point would likely take a back seat and not have much activity until the subprime crisis subsides substantially. The main launches and previews now will be either in the mass market which targets home owners and upgraders who genuinely need housing, or smaller condos by smaller scale developers who may not have deep pockets to hold on to projects without selling,” he said. Ow also noted that buyers are now definitely asking for discounts and not as eager as last year to be invited for previews, while sellers who have bought during the peak of the market are now asking “much more realistic price levels, with some going as far as selling so long as there is no loss.” Tay believes that the primary market activity is likely to remain soft though launch volume in the second quarter may improve over that of the first quarter as developers get a better grip of the market behaviour and firm up their launch strategy for the year. She expects the primary market to turnaround as soon as global economic conditions improve and hopefully that would take place in the second half of 2008. Buyers still have several property launches to look forward to in the first half of this year. CDL has already indicated it will launch units in four projects by June provided market conditions do not worsen. These include 77 freehold units at Shelford Suites in Bukit Timah; 100 of the 228-unit luxurious Quayside Isle @ Sentosa Cove, and 100 units at the 336-unit freehold project on the former Lock Cho apartments’ site in Thomson Road. The fourth project, a mass-market 724 unit condominium, is a joint-venture at Pasir Ris Drive 1, which will be launched in phases. Capitaland has plans to proceed with the launch of two high-end properties, Latitude, located at Jalan Mutiara, and the former Silver Tower site in Cairnhill. Ho Bee is also planning to launch the 151-unit Seascape on Sentosa in the second quarter of this year, confirms Nicholas Chua, Manager, Business Development & Marketing at the company. |
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