http://www.straitstimes.com/archive/...rices-20131109
Alex Residences latest to cut prices
It follows similar move at Sky Vue as debt-to-income cap makes impact
Published on Nov 09, 2013
By Melissa Tan
THE Alex Residences condominium is the latest to cut prices as developers struggle to move units in a weak property market.
The 429-unit project near Redhill MRT station will launch at an average $1,650 per sq ft (psf) when sales begin next Saturday, SingLand said.
This is cheaper than the deve- lopment's next-door neighbour Echelon, which launched last December and is fully sold. Units there went for an average $1,795psf, Urban Redevelopment Authority (URA) data shows.
"Under normal circumstances, Alex Residences should have been priced above Echelon," said Mr Michael Ng, group general manager of UIC, SingLand's parent company.
But a debt-to-income cap introduced in late June under a total debt servicing ratio framework has made it difficult for would-be buyers to get financing, noted Mr Ng, who was speaking at the project's showflat yesterday.
He said about 150 units at the 99-year leasehold development would be released in the first phase and nearly 90 per cent of them will cost less than $2 million each.
Prices start at $760,000 for a 474 sq ft one-bedder and go up to slightly above $2 million for a 1,044 sq ft three-bedroom unit. The project is expected to be completed in February 2019.
Mr Danny Yeo, group managing director at the project's marketing agency Knight Frank, said in a statement that average resale prices of completed units in the Alexandra Road and River Valley area have climbed about 9 per cent annually for the past two years, while average rents have risen by 4 per cent to 6 per cent.
SingLand paid $970 psf per plot ratio (ppr) for the Redhill site last December, which translates to a breakeven price of about $1,450 psf ppr.
The land cost was much higher than the $754 psf ppr a City Developments consortium paid for the Echelon site in December 2011.
The price cut at Alex Residences follows a similar reduction in September at CapitaLand's 694-unit Sky Vue project in Bishan.
Sky Vue moved 410 units on its first day of sales at an average $1,500 psf - cheaper than the average $1,589 psf at the neighbouring Sky Habitat.
Prices could also be lowered slightly at the launch of the 660-unit Duo Residences in Bugis, though developer M+S is keeping mum.
Consultants had expected the 99-year leasehold project near Kampong Glam to be priced above $2,000 psf on average, given its location and the fact that it is part of an integrated development.
However, agents told The Straits Times yesterday that average launch prices could be in the region of $1,700 psf to $2,000 psf instead.
Priority sales will be on Thursday, with public balloting on Friday. M+S declined to comment.
Market watchers noted that it was difficult to assess launch prices in the Bugis area as there were few comparable projects nearby.
One of the nearest is the 360-unit Concourse Skyline in Beach Road, which was launched in September 2008 and is only around 67 per cent sold, according to URA data.
The average price of new sales at the 99-year leasehold Concourse Skyline since 2008 is $1,596 psf.
Buyer interest has been high at both Alex Residences and Duo Residences, though it remains to be seen whether that will translate into actual sales.
Knight Frank declined to disclose how many cheques had been collected for the Alex Residences project, but said that about 1,500 people visited its showflat last weekend.
The Duo showflat was also packed when The Straits Times visited last Saturday.
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