Developers 'hungry' to launch new condos

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Aug 29, 2010

property

Developers 'hungry' to launch new condos

Host of projects to come on stream when Hungry Ghost Festival ends, but affordability is still key

By Joyce Teo, Property Correspondent


The market for new property launches has slowed this month but should see a rebound after the Hungry Ghost Festival ends on Sept 7.

Developers are already lining up projects for launch, and these choices are expected to range from mass-market homes to high-end ones.

Next month, Hoi Hup Sunway is targeting to launch the 473-unit Vacanza@East - a freehold project in Lengkong Tujoh in the east, near the Pan-Island Expressway.

Hoi Hup said the joint venture bought the vacant freehold site for the project late last year. The condo will have one- to four-bedders from as small as just under 500 sq ft. Prices will start from more than $500,000, sources said.

City Developments and Hong Realty's 642-unit NV Residences in Pasir Ris Grove is also likely to be pushed out next month.

Marketing material shows that the 99-year leasehold condo has one- to four-bedroom units as well as penthouses, with the smallest one-bedders also just under 500 sq ft in size. The material says prices for the two-bedders will start from more than $600,000.

Around the same time, Chip Eng Seng's Oasis@Elias in Pasir Ris is likely to be relaunched at higher prices. The condo had sold for an average of $670 per sq ft in July last year, though its price has since risen to about $740 psf.

Property experts say rising prices have forced buyers to pay more for a private home. But affordability remains the key.

A report by property consultancy DTZ last week said those with public housing addresses are increasingly buying private homes that cost more than $1 million.

Some 43 per cent of buyers with HDB addresses bought homes costing more than $1 million in the second quarter, up from 36 per cent in the first quarter, it said.

This is due to prices having risen almost 20 per cent since the third quarter of last year.

'There is a chance new mass-market projects may be launched at higher psf prices,' said Savills Residential director Phylicia Ang.

'As long as developers keep the total price quantum affordable, there should be demand for these projects.'

Said Mr Peter Ow, managing director (residential services) at Knight Frank: 'The pricing of mass-market projects is constrained by the target market's income level.

'So what developers do is to build smaller units across the board, from the two- to the four-bedroom units. Smaller units help to keep the total quantum price affordable,' he said.

Unlike the previous 2007 boom which was led by the high-end sector, the current buying wave is mainly in the lower-end market segment - which is buoyed by rising public housing resale prices, DTZ said.

The high-end market is quiet given the global economic uncertainty, though a few developers may start launching such projects from next month. These could include Twin Peaks in Leonie Hill, The Peak@Cairnhill in Cairnhill Rise and Belle Vue Residences in Oxley Walk.

Belle Vue Residences was soft launched more than a year ago, and more than 100 of its 176 units have been sold. June caveats showed that three units were sold at $2,064 psf to $2,700 psf.

In the later part of next month, two projects in the mid-tier to high-end category can be expected, Knight Frank's Mr Ow said.

There is the freehold 250-unit Cityscape at Farrer Park by IOI group and Kim Seng Heng Realty. It is likely to be launched at an average of $1,500 psf.

Amara Holdings is also looking to push out its 30-unit Killiney 118, which is within walking distance of Somerset MRT station. This freehold project is expected to go for more than $2,000 psf.

According to CBRE, two executive condominium launches may hit the market come October. These are the 573-unit Esparina Residences by Frasers Centrepoint and Lum Chang Building Contractors, and the 406-unit The Canopy by China-based MCC Land.

Looking ahead, experts expect buying activity in the mass- to mid-market segment to continue, though it is expected to be more selective due to the higher prices.

'Although prices of mass-market homes are peakish, take-up could still be healthy due to the strength of underlying demand for them, if developers do not try to push the price border further,' said Colliers International director of research and advisory Tay Huey Ying.

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