http://www.businesstimes.com.sg/arch...light-20140610

Published June 10, 2014

Let there be light

By Kalpana Rashiwala

[email protected] @KalpanaBT


[SINGAPORE] No official statistics are available on vacancy rates in individual completed condominium projects. But BT's lensmen put together a snapshot of "dark condos" in Singapore when they photographed a selection of projects between 8pm and 9.30pm on weekdays in the last week of May, before the start of the school holidays - and it's a telling picture.

Nine of the 10 projects featured here were completed, that is, received Temporary Occupation Permit (TOP), between January and September last year. The 10th, Hilltops, was completed in 2011.

While a rise in vacancies can be seen as overcapacity reflecting a ramp-up in completions since last year and fervent property investment demand post-global crisis, other factors may also be at play for specific projects.

The 10 projects photographed are mostly in the Core Central Region, though a few are in city-fringe or suburban areas.

While the developments have a fair proportion of dark, or apparently unoccupied, units, the degree varies, as do the likely causes.

In a few cases, high vacancy is linked to low or even zero sales. In most cases, however, even where the condos had a high sales rate or were completely sold, there is sometimes noticeable vacancy.

In some cases, this may be due to a substantial time lag - as long as eight months in one case - between the project's TOP date and the handover of units to buyers as developers continued to add the finishing touches to meet the expectations of well-heeled buyers.

Projects with a large number of units may also have a longer handover process. That would have caused a delay in these buyers occupying the units or leasing them out.

Prime-district properties may have drawn a high proportion of well-heeled foreigners, notably Indonesians and Chinese who treat these properties as holiday homes and hence occupy them only occasionally during their visits to Singapore - instead of renting them out.

Let's take a closer look.

In the Sentosa Cove waterfront housing district, the 302-unit Cape Royale, which received its TOP in August last year, is mostly empty.

Its developers, IOI Properties and Ho Bee Land, have made a strategic decision not to launch the 99-year-leasehold project for sale given current soft condo prices on the Cove. Instead, they began leasing out the units in November - an option open to them since private housing sites at Sentosa Cove do not come under Qualifying Certificate (QC) rules, which stipulate deadlines for the completion and sale of private housing projects undertaken by foreign developers. These are defined as developers with even one non-Singaporean shareholder or director.

Currently, Ho Bee and IOI have leased out about 65 units at Cape Royale at gross monthly rents of between $7,000 a month for a three-bedder of 1,679 sq ft to $16,000 for a four-bedder apartment of 2,508 sq ft. As more units are leased out in coming months, lights will shine out of more units at Cape Royale.

It's a somewhat similar story for SC Global's Hilltops on Cairnhill Circle. The developer, which has been delisted and is fully owned by Singaporean interest, is free from QC rules. It has been focusing on corporate leasing for the 241-unit freehold project, having sold about 60 units so far. Rental rates of up to $9 per square foot (psf) a month have been achieved.

With large freehold sites around Orchard Road expected to become more scarce over time, SC Global plans to retain most of the development for long-term investment and to provide recurring income.

Two other Cairnhill projects - The Laurels and The Vermont on Cairnhill - also appear to have noticeable vacancy rates. All but two of The Laurel's 229 units are sold, while 121 of the Vermont's 158 units have been sold. Vermont's developer, Bukit Sembawang, explained that though the project obtained its TOP in August 2013, handover of units took place only between late January and April.

"We wanted to spruce up the common areas, especially the landscape works within the development. We also commissioned an interior designer to do enhancement works for the function rooms and lift lobbies as well," added Bukit Sembawang's spokeswoman. She said another reason most units are still unoccupied is that most buyers are renovating them.

At Goodwood Residence, buyers took possession of the units five months after TOP as developer GuocoLand added the finishing touches to the individual units as well as the overall estate. Of the 132 units GuocoLand has sold in the 210-unit project, 26 have been sold since the start of this year.

The majority of Goodwood Residence buyers are understood to be foreigners, some of whom may be treating their apartments as holiday homes.

At The Vermont, too, nearly half or 48 per cent of buyers are foreigners. "Cairnhill area is traditionally favoured by the Indonesians due to its proximity to Orchard Road and easy access to medical facilities in the vicinity," said Bukit Sembawang's spokeswoman.

As for The Laurels, Sing Holdings CEO Lee Sze Hao told BT that "many of our buyers are foreigners who may not reside in Singapore and only occupy the units occasionally".

At the fully sold, 642-unit NV Residences in Pasir Ris, residents have moved into nearly 70 per cent of the units. It has been observed that a number of buyers stay in their units only on weekends as they do not urgently need to move into the condo.

Some buyers are thought to have purchased their apartments for investment or as a second home. NV Residences' 642 units comprise one-bedders to penthouses.

In Depot Road, CapitaLand and its partners obtained TOP for The Interlace in September last year. As at end-April 2014, 858 of the 1,040 units have been sold, of which 658 buyers have moved in.

A CapitaLand Singapore spokeswoman said: "Sold units were progressively handed over to the owners . . . starting from end-September 2013. Due to the sheer size of the development, the handover process took longer than usual - close to four months. . . This is considered quite an achievement considering we have to go through multiple processes of defect inspection and the accompanying rectification works for such a large number of units." Interlace does not have one-bedders.

In River Valley, RV Edge also has noticeable vacancy. The 108-unit freehold project comprises mostly small units, the tiniest of which are 366 sq ft. Its developer launched the project in January 2010, selling 91 units in that month at a median price of $1,696 psf.

At Marina Bay Suites, where a fire in January drew attention to the condo's high vacancy despite the project being mostly sold, currently 202 of the project's 221 units are sold. The 99-year-leasehold condo received its TOP a year ago.

A spokesman for the developer said 30 per cent of the sold units are vacant. Even for the remaining 70 per cent that are occupied, many residents are foreigners and expats who travel frequently.