PROPERTY
KRISANA GALLEZO
High-end developers lower prices under market pressure
T
he introduction of the Additional Buyer’s Stamp Duty (ABSD) in December last year brought the high-end market into a stalemate but a silver lining was seen over the last few months with the increase in sales across all segments. The surge, however, appears to be driven by the lowering of high-end property prices as developers heed the market call for markdowns. Surging sales in Q2 According to Savills Research & Consultancy, sales for high-end homes post-ABSD plunged to a three-year low of 453 non-landed units in Q1. It almost doubled to 914 units the following quarter. Notably, Savills said that demand for ultra-luxury homes priced above S$3,000 per sq. ft. (psf) also rose to 31 units in 2Q12 from just 11 units in 3Q11. Among them, two transactions were recorded at Scotts Square – one sold for S$4,566 psf in May and another for $4,803 psf in June. A newly launched project, Twentyone Angullia Park, also garnered keen market interest with five transactions completed over the last 3 months at prices between S$3,950 and S$4,338 psf.
“Sales for high-end homes post-ABSD plunged to a three-year low of 453 nonlanded units” MayBank KimEng meanwhile said that new home sales in the Core Central Region have shown initial signs of renewed interest, with 403 units sold in 2Q12, compared to 129 units in the previous quarter. Softening prices driving demand According to Savills, the ABSD and the consequent stall in demand for high-end homes have prompted some sellers to adjust their asking prices down. Compounded by a surge in luxury home completions over the past year, prices of some homes have softened recently with corrections between 10% and 30%. Some developers have also handed out perks such as rental guarantees and furniture vouchers to attract buyers. “With the rapidly narrowing price gap between homes in the suburban and prime areas, luxury homes are beginning to appear attractive. Some older condominiums in the prime districts are also gaining their fair share of attention, especially the larger, freehold units which are reasonably priced,” said Savills.
Krisana Gallezo Senior Reporter krisana@charltonmediamail.com
Non-landed luxury home sales by sales type, 2007-2012 New sale
70%
Resale
Sub-sale
60% 50% 40% 30% 20% 10% 0%
2007
2008
2009
2010
2011
2012
Source: URA, Savills Research & Consultancy
Jones Lang LaSalle also pointed out that Singapore is only among the few in Asia whose luxury residential prices fell in 2Q. Hong Kong prices in the same segment edged up during 2Q12 by 2% qoq because of more active mortgage lending by banks and improved market sentiment. Average prices in Singapore’s luxury prime market meanwhile declined by 2.9% qoq on the back of ongoing rental declines and property cooling measures in place.
Posh properties’ price pressure
Slew of property launches Property launches are back in full swing after a lull last year. Eight major projects, yielding about 1,200 new units, had been launched since the beginning of this year, of which the largest was the 510-unit V on Shenton developed by United Industrial Corp. The take-up for some of these projects was healthy thanks to attractive prices ranging from S$1,400 to S$2,800 psf. For example, the 75-unit 1919 was almost completely sold within its first month of launch, while Eon Shenton recorded a 73% take-up in the first two months after launch. Savills also noted that competing alongside these new projects are many other completed developments launched between 2007 and 2009 whose sales suffered after the onset of the global financial crisis. According to Savills, as many as 4,000 luxury condominiums were completed over the past year, which constitutes about 7% of the total nonlanded stock in the luxury market. Of this, 16% or over 600 units remain unsold. This brings the total unsold stock in the prime segment to 12,855 units, comprising 731 completed units and 12,124 uncompleted units, half of which are launch-ready. SINGAPORE BUSINESS REVIEW | OCTOBER 2012 23