No impact likely on prices for projects nearing completion from government's further relief measures
That's because most of these developments which are already majority sold are unlikely to face completion delays: Consultants
Sat, Oct 10, 2020 - 5:50 AM
UPDATED Sat, Oct 10, 2020 - 12:15 PM
Siow Li Sen
RAE WEE
https://www.businesstimes.com.sg/rea...nments-further
THE latest relief measures for developers which offer a further six-month extension for project completion is not expected to impact the prices of projects with completion dates in the next couple of years.
That's because most of these projects which are already majority sold are unlikely to face completion delays, said consultants.
In fact, despite labour and supply chain disruptions due to Covid-19, some projects are ahead of schedule.
Yen Chong, Qingjian Realty (South Pacific) Group deputy general manager, said Le Quest received its Temporary Occupation Permit (TOP) in the first half of 2020. The 516-unit Le Quest was launched in August 2017 and its TOP was scheduled for November 2021.
"We have successfully handed over units to homebuyers, even during the 'circuit breaker' period when we could not do so face-to-face. Homeowners were understanding of the limitations that we faced. The mixed-use development is also completely sold, moving our last residential unit in August," added Ms Chong.
Qingjian Realty is still on track to deliver JadeScape which is expected to receive its notice of vacant possession in January 2023, barring further disruptions due to the current pandemic, she noted. "We are almost 85 per cent sold, with 1,020 units of the total 1,206 units sold."
Seaside Residences is currently on schedule for completion in the second half of 2020, said a Frasers Property spokesperson. About 97 per cent of the 841 units at Seaside Residences have been sold.
The Tapestry which has an indicative TOP in Q1 2021, has six units left unsold. (see amendment note) The 861-unit project is developed by City Developments.
Usually developers have enough buffer to cover completion towards the tail-end of construction, said Alan Cheong, Savills Singapore executive director.
"I think there will be minimal delay. Developers will be able to deliver in 2021," said Mr Cheong, referring to projects with a 2021 TOP.
The Building and Construction Authority issues TOP on completion of building works and the project can be handed back to the developer. But buyers have to wait for a date of vacant possession - usually several months after TOP - to get their keys to their new homes.
On Thursday, the government said property developers hit by disruptions to construction timelines due to Covid-19 can take up a set of additional temporary relief measures with immediate effect.
These are:
- a further six-month extension of the project completion period (PCP) for residential, commercial and industrial development projects;
- a further six-month extension for the completion of residential development projects in relation to the remission of the Additional Buyer's Stamp Duty (ABSD) for housing developers; and
- an extension of the PCP by up to six months for residential development projects under the Qualifying Certificate (QC) regime for foreign housing developers.
Tay Huey Ying, JLL Singapore head of research and consultancy, said that projects facing ABSD deadlines in 2020 and 2021 (after factoring in the earlier six-month extension announced in May 2020) are either already fully sold or are largely sold.
"Any price pressure to clear inventory in these projects due to the latest non-extension of ABSD sales deadline is unlikely to adversely impact the pricing of the general new sales market. This is especially assuming that demand for new homes which have rebounded after the circuit breaker period with full-year 2020 developers' sales potentially drawing close to the 9,912 new units sold in 2019 in spite of the deep recession we are currently in will endure into 2021," said Ms Tay.
Christine Sun, OrangeTee & Tie head of research and consultancy, also does not think there will be a major impact on prices for projects that have sold at least 50-70 per cent of their units.
Projects are usually released for sale in batches, to see buyers' reception to prices, and adjusted accordingly.
When the ABSD deadline looms, developers usually will let the remaining units go as special "star buys".
Lee Nai Jia, deputy director of the Institute of Real Estate and Urban Studies, said without the extension, some of the projects will incur the additional buyers' stamp duties or QC charges, affecting the bottomline of developers.
"This will place greater pressure on some developers to increase revenue, hence sales. Under current market conditions, they will need to lower prices in their projects. The extension provides some slack for the developers to meet the deadlines, and this reduces pressure on their revenue," he pointed out.
The latest extension will not have direct effect on overall prices yet, according to Nicholas Mak, ERA Realty head of research and consultancy.
"Because many of the projects, they still have sufficient runway... they still have another three years or so to clear all their units, so it's not reaching a very critical level yet," added Mr Mak.
Amendment note: An earlier version of this article incorrectly stated that The Tapestry will receive its Temporary Occupation Permit (TOP) this quarter. The indicative TOP is in fact in Q1 2021.
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