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Thread: Is the market losing steam?

  1. #1

    Default Is the market losing steam?

    From the 4 launches, only 120 Grange breached 50% take up rate by pricing below nearby projects. The other 3 projects (Margaret Ville, Affinity and The Garden Residence) were rather dismayed with their pricing all above nearby projects.

    Developers paying top price for lands may be in for a rough ride ahead. For example, CDL paid about $1600 psf ppr for Amber Park (D15) in an en bloc sale. Can CDL price it new launch at $$2400 psf when nearby is selling around $1600 psf?

    https://sbr.com.sg/residential-prope...ekend-launches

    Home buyers ditched costly units during weekend launches
    Only one out of four launched projects this weekend, 120 Grange, sold over 50% of its units.


    During the weekend, four residential projects were launched concurrently as developers attempt to clear part of their inventories ahead of the one-month-long school vacation and a sizeable launch pipeline by competitors (14,000 units) over the next 6-12 months, JP Morgan said.

    According to JP Morgan economist Brandon Lee, the sales take-up was mixed, with the better-located and better-priced projects (namely Margaret Ville and 120 Grange) achieving more decent take-up rates.

    Only 120 Grange was able to breach a 50% take-up rate with 30-40 units sold (54-71% take-up). It is a freehold 56-unit high-end condominium along Grange Road owned/developed by Roxy-Pacific Holdings. Its average pricing is $3,000 psf ($2,980-$3,070 psf), which is relatively lower than nearby projects’ $3,200-$3,500 psf.

    Margaret Ville, a government land tender site, sold 100-130 units (32-42% take-up) with an average price of $1,900 psf ($1,830-$1,980 psf), which is relatively higher than nearby projects’ $1,600-$1,800 psf. It is a 99-year leasehold 309-unit mid-end condominium along Margaret Drive developed by Hongkong Land's MCL Land.

    Meanwhile, 110-140 units were sold (11-14% take-up) at Affinity At Serangoon (formerly Serangoon Ville), a 99-year leasehold 1,052-unit mass market condominium along Serangoon North Avenue 1. Average pricing is $1,550 psf ($1,480-$1,580 psf), which is relatively higher than nearby projects’ $1,200-$1,400 psf.

    Also read: 1052-unit Affinity at Serangoon to launch preview in 26 May

    There were 60-90 units sold (10-15% take-up) at The Garden Residences, a 99-year leasehold 613-unit mass market condominium along Serangoon North Avenue 1 owned by a 60:40 JV between Keppel Land and Wing Tai Holdings. Average pricing is $1,750 psf ($1,680-$1,820 psf), which is relatively higher than nearby projects’ $1,200-1,400 psf.

    Lee noted that three out of the four projects achieved record-high pricing for their respective locations as developers continue to target a 15-20% PBT margin despite getting land at a competitive price. "Similar to past launches, the smaller units with lower absolute price quantum continued to sell better, which suggests to us buyer profile is dominated by investors," he added.

    The economist explained that the relatively subdued take-up for Affinity At Serangoon and The Garden Residences, which are just five minutes away from each other, implies that increased options for buyers will slow sales amid rising competition from several projects to be launched within the locality.

    A similar trend could also come up in nearby Potong Pasir/Woodleigh area in July to August 2018, as several projects rather close to one other will be launched, namely The Woodleigh Residences, Park Colonial, Jadescape and The Tre Ver.

    "We think developers may need to re-tweak their selling strategies ahead as buyers are now presented with a surfeit of options, which could result in less-than-optimal take-ups for some projects," Lee said. "We continue to prefer less resi-focused developers in view of possible cooling measures in 2H2018 and slower-than-expected take-up in 2H2018 launches."


  2. #2

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    My reading of the market is that foreign developers started buying up land last year because the Singapore property market was relatively cheaper than HK and China despite all the cooling measures still in place. When the government reduces the SSD to 3 years, developers took the opportunity to stir up the market and suggesting that more measures would be relax since the market had been on a decline since 2013.

    For fear of losing out, local developers also jumped in to buy up land believing that with high price point, they could still pass on the cost to buyers since all developers have to sell at much higher price.

    It will be interesting to see how the market plays out over the next one year.


  3. #3

    Default

    They will need 2 quarters of poor sales before they realized they have over paid for their land and start to write down their projects.


  4. #4

    Default

    Selling higher psf compared nearby. Sales consider no good..?


  5. #5

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    Quote Originally Posted by jwong71 View Post
    Selling higher psf compared nearby. Sales consider no good..?
    Some see half empty, others see half full.


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