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22-10-12, 12:15
http://www.straitstimes.com/archive/saturday/premium/money/story/price-rises-likely-homes-near-completion-20121020
Price rises likely as homes near completion
Greater certainty attractive to buyers but upside not guaranteed: Experts
Published on Oct 20, 2012
By Esther Teo, Property reporter
PROPERTY buyers love to see their new home or investment near completion. But what does it mean for prices?
Experts say that buyer interest in some residential projects slated to be completed within the next year has surged. Prices have risen in tandem, they add. But they warn not all projects enjoy this lift as owner-occupation nears.
Various factors such as the quality of the project, or the nearby amenities, can play a part in just how much upside is likely.
Still, as a general rule, they say that prices tend to rise at projects closer to completion as the physical occupational value of the property is closer at hand.
For investors, there is also less uncertainty over the rentability of the units, they add.
It is also the inflection point when the investment becomes "positive carry", a technical term meaning you start to make some money assuming the rental yield is favourable, said Square Foot Research director Ooi Yi Tung.
A look at nine projects completed from April to last month such as Beacon Heights, 8 @ Woodleigh, Optima @ Tanah Merah and The Trizon found that their average per square foot price rose by 8.3 per cent in the six months leading up to completion.
In the same period, home prices overall rose just 0.3 to 1.5 per cent, Square Foot Research said.
Experts warn that prices can dip if the rental market is not favourable when the project is completed or if the finished product does not meet expectations.
There are concerns, for instance, over shoebox units in suburban areas owing to the recent negative publicity in that segment, Mr Ooi said.
However, during an upswing in the market, most properties usually benefit as prices climb on the back of positive sentiment and a sound economy.
As a result, most projects due for completion soon enjoy higher prices than at launch time.
Mr Chris Koh, director of Chris International, said as infrastructure in the nearby area improves over the years, the value of the projects there is also likely to rise.
"Another phenomenon is that new launches today are priced higher because of higher land cost, material cost and labour cost. So the newly launched project prices have an influence on the prices of projects nearing completion as sellers, buyers and valuers start using these newly launched projects as comparison," he added.
Savills Singapore research head Alan Cheong noted, however, that one factor determining how much prices will increase is the evidence of build quality, which becomes more apparent as the project is close to completion.
Other factors will be the visceral feel if the vicinity will be congested or appear cluttered. Again, this will become apparent only when the development is almost completed, he said.
Some projects due to be completed by the end of next year include Waterview in Tampines, Stevens Suites in Stevens Close and Concourse Skyline in Beach Road.
It seems developers, however, have held their prices for mid- and high-end homes steady even as the project's completion date draws near.
R'ST Research director Ong Kah Seng said the majority of projects that will be completed within the next year have not seen developers radically raise prices since their launch.
In fact, those in the city centre and city fringe areas are still going for very similar prices to when they were launched years ago.
But for suburban projects, the comparison is made more difficult as there is little unsold stock left, he said.
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Price rises likely as homes near completion
Greater certainty attractive to buyers but upside not guaranteed: Experts
Published on Oct 20, 2012
By Esther Teo, Property reporter
PROPERTY buyers love to see their new home or investment near completion. But what does it mean for prices?
Experts say that buyer interest in some residential projects slated to be completed within the next year has surged. Prices have risen in tandem, they add. But they warn not all projects enjoy this lift as owner-occupation nears.
Various factors such as the quality of the project, or the nearby amenities, can play a part in just how much upside is likely.
Still, as a general rule, they say that prices tend to rise at projects closer to completion as the physical occupational value of the property is closer at hand.
For investors, there is also less uncertainty over the rentability of the units, they add.
It is also the inflection point when the investment becomes "positive carry", a technical term meaning you start to make some money assuming the rental yield is favourable, said Square Foot Research director Ooi Yi Tung.
A look at nine projects completed from April to last month such as Beacon Heights, 8 @ Woodleigh, Optima @ Tanah Merah and The Trizon found that their average per square foot price rose by 8.3 per cent in the six months leading up to completion.
In the same period, home prices overall rose just 0.3 to 1.5 per cent, Square Foot Research said.
Experts warn that prices can dip if the rental market is not favourable when the project is completed or if the finished product does not meet expectations.
There are concerns, for instance, over shoebox units in suburban areas owing to the recent negative publicity in that segment, Mr Ooi said.
However, during an upswing in the market, most properties usually benefit as prices climb on the back of positive sentiment and a sound economy.
As a result, most projects due for completion soon enjoy higher prices than at launch time.
Mr Chris Koh, director of Chris International, said as infrastructure in the nearby area improves over the years, the value of the projects there is also likely to rise.
"Another phenomenon is that new launches today are priced higher because of higher land cost, material cost and labour cost. So the newly launched project prices have an influence on the prices of projects nearing completion as sellers, buyers and valuers start using these newly launched projects as comparison," he added.
Savills Singapore research head Alan Cheong noted, however, that one factor determining how much prices will increase is the evidence of build quality, which becomes more apparent as the project is close to completion.
Other factors will be the visceral feel if the vicinity will be congested or appear cluttered. Again, this will become apparent only when the development is almost completed, he said.
Some projects due to be completed by the end of next year include Waterview in Tampines, Stevens Suites in Stevens Close and Concourse Skyline in Beach Road.
It seems developers, however, have held their prices for mid- and high-end homes steady even as the project's completion date draws near.
R'ST Research director Ong Kah Seng said the majority of projects that will be completed within the next year have not seen developers radically raise prices since their launch.
In fact, those in the city centre and city fringe areas are still going for very similar prices to when they were launched years ago.
But for suburban projects, the comparison is made more difficult as there is little unsold stock left, he said.
[email protected]