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Property News31 Jul 2018

Discounts, launch delays in wake of property cooling measures

ST 20180731 VNDAINTREE 4174132

Slower sales of private property affecting prices, but cuts not expected to be steep

New private property projects after Daintree Residence - the first new launch since the surprise round of cooling measures kicked in on July 5 - are expected to enter the market at slightly lower prices, following slower sales at some projects launched earlier this month, analysts say.

Discounts of up to 5 per cent from expected launch prices and other incentives are being offered to entice buyers in the wake of the higher Additional Buyer's Stamp Duty (ABSD) rates and tighter loan limits. For instance, Parksuites in Holland Grove Road is offering an additional 5 per cent discount "for a limited time only", according to its newspaper advertisement last Saturday.

Some developers are offering higher commissions to agents and employing more sales agencies to reach out to buyers, analysts say.

The Tre Ver in Potong Pasir has employed as many as six marketing agencies for its launch this weekend, OrangeTee & Tie's head of research and consultancy Christine Sun told The Straits Times.

With the escalation of US-China trade tensions, rising mortgage rates and the cooling measures, the feel-good factor is gone from the residential market, said Ms Christine Li, senior director, research, of Cushman & Wakefield.

As a result, developers may either delay launches until demand picks upor set more realistic pricing in the initial launch phase while holding back the better units for higher margins as they clear the stock progressively, she said.

Projects like Park Colonial in Woodleigh, whose showflat doors are now closed, are holding back their next phase of sales for the time being, Ms Sun said.

"They are probably waiting for other upcoming launches in the vicinity such as The Tre Ver and Woodleigh Residences to observe the market performance and pricing of their competitors to decide if they should adjust the pricing of the balance units they hold," she said.

Others, such as The Jovell in Flora Drive and South Beach Residences, have postponed previews initially slated for around mid-July. A spokesman for Hong Leong Group had said in earlier media reports that it is reviewing the launch plans for the two projects.

With no immediate deadline looming for most of the land parcels acquired in the past two years, developers will likely refrain from offering steep discounts as there is no urgency to offload their units, said Ms Tricia Song, Colliers International's head of research for Singapore.

What is obvious is that the sales momentum has slowed, Ms Sun said. "In good times, developers can clear 20 per cent to 30 per cent of total units at initial launches. Now, they are selling slightly more than 10 per cent, but these are at bigger-sized projects."

SP Setia sold 50 of Daintree's apartments in the first phase of the 327-unit project's launch at the weekend, and achieved an average selling price of $1,710 per sq ft, slightly under the $1,800 per sq ft its general manager had quoted ahead of the launch.

Take-up rates in recent launches, such as Affinity at Serangoon and The Garden Residences, have been modest.

Last month, the Oxley-led consortium sold 107 of Affinity's 1,052 units at a median price of $1,584 per sq ft, while Keppel Land and Wing Tai Holdings sold 64 of the 613 units at The Garden Residences at a median price of $1,662 per sq ft.

"The next two months will be a better gauge of the cooling measures' impact as sales are likely to be lower in August as more developers hold back launches owing to the ghost month," Ms Sun said, referring to the Hungry Ghost Festival when many Chinese buyers tend to avoid making major home-buying transactions.

Source: The Straits Times
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