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Published March 30, 2012
MCL Land sells 270 Ripple Bay condos
Jury out on whether softening secondary market prices are spreading to new launches
By KALPANA RASHIWALA
(SINGAPORE) MCL Land yesterday drew crowds at its Ripple Bay condo showflat in Pasir Ris, selling 270 units in the 679-unit project by about 8pm.
The developer had not crunched its numbers by press time but its CEO Koh Teck Chuan estimates that the average price when sales began in the morning was around $855 psf. As sales progressed, MCL upped prices to around $870 psf on average.
'But we have not done a final tally on our average price,' he said.
A good spread of units - one, two and three bedders - have been sold. Buyers are mostly Singaporeans.
Ripple Bay, which is within walking distance of Pasir Ris Beach, is in front of Far East Organization's 473-unit Seastrand, where units are being offered for about $905 psf on average. Far East released the project in June last year and close to 100 units are still available.
At Flora Drive in the Upper Changi area, Frasers Centrepoint has so far found buyers for 58 of the 120 units released at the 429-unit Palm Isles condo. Sales began on Wednesday evening. The average price is $830 psf, lower than $870 psf at which the nearby Hedges Park Condominium is going for. The 501-unit project, which went on the market in April last year, still has over 100 units available for sale.
All four projects are on 99-year leasehold sites.
When contacted, a spokesman for Tripartite Developers, the developer of Hedges Park, said: 'We currently have no change in plans with respect to pricing and additional incentives at Hedges Park. But we will continue to monitor market trends there.'
Similarly, Far East Organization, developer of Seastrand in Pasir Ris, said: 'There's no plan to lower the price and there isn't any special promotion for Seastrand. However, buyers receive a reimbursement for the standard 3 per cent buyer's stamp duty and a furniture voucher equivalent to 2 per cent of the sale price, as is the case for other Far East projects as well.'
Market watchers note that established developers such as Far East and Hong Leong would be loath to cut prices and risk upsetting earlier buyers of the project. However, as a seasoned property market watcher argues: 'If common sense prevails, for a developer that has sufficient profit margin on its project, it may be time to clear the project at a slightly lower price because subsequent Government Land Sales, if they reflect lower prices, will obviously pose competition. The writing is on the wall.'
For example, next to the Ripple Bay project, a Hoi Hup-led consortium bagged a condo plot in October last year for $361 per square foot per plot ratio (psf ppr) - or about 10 per cent lower than the $402 psf ppr which MCL paid for the Ripple Bay site in May 2011. Far East clinched the Seastrand site for $335 psf ppr in September 2010.
Hoi Hup is planning to launch a 376-unit condo, Sea Esta, on its site around June. Because Hoi Hup paid a lower land price, and will probably do its own construction, it will be able to achieve a lower breakeven cost than MCL's Ripple Bay and hence be in a position to price its project lower. Another point to note is that there are two nearby sites on the confirmed list of the GLS programme for first-half 2012.
Credo Real Estate data shows that in all, there are 20 private condo projects which have yet to be launched on 99-year sites sold under the GLS programme since last year.
No doubt, developers launching projects on these sites will have to size up existing and potential competition in the area.
'You have projects launched before you that have units yet to be sold. And you have projects that will be launched after you. That creates the impetus for realistic pricing to remain competitive and be able to sell well,' says Credo executive director Ong Teck Hui.
Even so, pricing strategies among developers are by no means uniform.
While the two launches this week point to some players at least being more nimble, BT has learnt of a reverse trend at some other developers - of holding or even marginally increasing price by raising the list price and then packaging in various tiers of discounts to appeal to buyer psychology. The net price, however, could be slightly higher than before.
Talk in the market is that one major player started this practice to draw buyers following the introduction of the additional buyer's stamp duty in early December. Its competitors have begun to follow suit.
'Really, there are mixed signals in the market. Some developers may want to price more competitively to sell quickly and move on rather than risk being stuck. Others, especially with well-located projects near MRT stations or if they can differentiate themselves with unique concepts, lifestyle or product positioning, are confident of achieving their price while selling at a steady rate,' says DTZ's South-east Asia chief operating officer Ong Choon Fah.
Meanwhile, all eyes are on the Urban Redevelopment Authority's flash estimate private home price index for the first quarter. The index has moderated for nine consecutive quarters up till Q4 2011. It rose 0.2 per cent in Q4 over the preceding quarter.
'If the price softening which has set in the secondary market spreads to the primary market, that is, developer launches, you will see impact on the index,' said a seasoned market watcher.
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