http://www.businesstimes.com.sg/prem...chine-20140401

Published April 01, 2014

Developers crank up marketing machine

Seminars at showflats, multiple agencies among tools used as launch sales dry up

By Lynette Khoo [email protected]


[SINGAPORE] In yet another sign of tepid private residential sales, the proportion of projects that managed to move more than half of their units in the month of their launch has declined significantly last year.

This has prompted developers and their marketing agencies to deploy more marketing tools to draw more potential buyers to their showflats.

Some developers engage multiple marketing agencies for one project, offer higher commission to agencies for specific projects and discounts to buyers for a limited period. Property agencies have also turned to their favourite tool - holding seminars at show flats to draw in the crowds.

Data collated by OrangeTee Research shows that the proportion of projects with more than half of their total available units sold in the month of launch fell to 21 per cent in 2013, down from 31 per cent in 2012 and below the 27 per cent level seen in the 2009 recession year.

The month of launch is typically crucial for developers to move their units quickly as interest for new launches tend to wear off after the initial weeks of the launch. The subscription rate takes into account the total number of units in each project as developers will roll out more units for sale when there is demand for it.

Going by this measure, 2010 remained a banner year for the private property sector, where 50 per cent of projects launched that year sold more than half of their total available units.

Property consultants believe that the downward trend will continue this year. This is leaving developers scratching for more ideas to entice buyers besides the current price discounts and rebates offered.

"The main factor driving this decline is that the total debt servicing ratio (TDSR) framework and the additional buyers stamp duty (ABSD) is reducing investment demand. Even an HDB upgrader with an outstanding mortgage on his existing flat, who wants to buy a condo unit for his own use, will have his available loan for the condo unit reduced by the TDSR framework," said SLP International executive director Nicholas Mak.

"Under pressure to push sales, some agents may direct clients towards potential projects that pay highest commission or have the best chance of closing the deal, swinging buyers from one project to another because the agents' loyalty is to themselves," he said.

Ong Kah Seng, director of R'ST Research, noted that the restriction of having no shoebox units in Outside Central areas in 2013 also affected the pace of sales in the first month of launch, as shoebox apartments were quickly snapped up in previous years. He predicts that more developers may promise the 'first-year rental guarantee' to buyers because of increased new residential completions in the years ahead.

The slower market pace has already prompted some developers to appoint multiple marketing agents in the hope of pushing sales more quickly.

For The Santorini project in Tampines launched by MCC Land over the weekend, the developer has engaged four marketing agencies that include two of Singapore's largest agencies PropNex and ERA Realty, as well as GPS Alliance and CBRE Singapore.

"Under the current market conditions, working with multiple marketing agencies would help cast a wider net in reaching out to more prospective buyers," a MCC spokesman told BT, adding that this does not translate to higher costs for the developer as fees to marketing agencies is paid upon sales.

It is not common to see four agencies joining forces or having two large agencies for one single project, said Christine Li, head of research at Orangetee. PropNex and ERA each have over 5,000 agents in Singapore.

For Singapore Land's prime 106-unit project Pollen & Bleu at Farrer Drive, the developer has appointed three agencies - Huttons, Savills and CBRE.

Property consultants note that for projects with multiple marketing agencies, it is unclear if each agency would give its fullest commitment. It also requires greater coordination between the developer and its marketing agents.

"There is a point of diminishing returns," one industry veteran noted.

City Developments Limited (CDL) has added two more marketing agents - OrangeTee and SLP Realty - early this year to market its project Jewel @ Buangkok with Huttons. The 616-unit development has so far sold 401 units since its launch in June last year.

Just over a week ago, a parenting seminar was held at the project's showflat with an invited speaker from Touch Family Services. Huttons is soon holding a property seminar at the showflat this Saturday, where the agency's director of business and research, Bernard Lee, will talk about the potential impact of URA draft master plan 2013 on property supply and demand.

CDL spokeswoman said that events held for Jewel@Buangkok and other launches "have been planned with a view towards enriching potential homebuyers' knowledge of and exposure to topics of interest such as property update seminars by industry experts and talks on fengshui".

"Some events such as parenting talks and children's enrichment activities were also organised to coincide with festive celebrations such as Mid-Autumn and school holidays, as a form of outreach and engagement with our customers and their families," she said.

SLP International's Mr Mak will be speaking on URA's master plan for Woodlands at Twin Fountains, an executive condominium project by Frasers Centrepoint. ERA and SLP are the marketing agents for this project.

Elson Poo, general manager for sales and marketing at Frasers Centrepoint Homes, said the talk is meant to "educate people who are not familiar with Woodlands to see the potential of living in Woodlands and hopefully to drive some sales".