singapore property weekly issue 121

7/29/2019 Singapore Property Weekly Issue 121

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Issue 121Copyright 2011-2013 www.Propwise.sg. All Rights Reserved.
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CONTENTS

p2 3 Reasons Why Developers Can Sell

At High Prices

p7 Singapore Property News This Week

p13 Resale Property Transactions

(August 28 September 3)

Welcome to the 121st edition of the

Singapore Property Weekly.

Hope you like it!

Mr. Propwise

FROM THE

EDITOR
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SINGAPORE PROPERTY WEEKLY Issue 121

Page | 2Back to Contents

By Property Soul (guest contributor)

Have you ever wondered why new projects

from developers are able to command a

large premium in asking price, sometimes up

to fifty percent higher than recently

completed nearby projects?

An interview with a VIP property buyer

Below is an abstract from my interview with a

VIP property buyer (as compared to the

usual retail buyers).

Me: How do you manage to buy before

everyone else does?

VIP: After developers set the prices, easily

twenty to forty percent higher than nearby

projects,

3 Reasons Why Developers Can Sell At High Prices


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they need to test the water. They will invite us

to a project preview where we can pick our

preferred units. Whatever price we are willing

to pay, the developers can use it to convince

the market that it is a reasonable market

price.

Me: How do you make a profit?

VIP: Say, if we buy at $1,000 per square foot,

developers can sell at $1,100 during actual

launch. Phase two comes a few weeks laterwith prices increased to $1,200, and so on

and so forth. Since we've chosen the best

units, we can offload with at least twenty

percent profit.

Me: And the developer has just successfullyset a new high for property prices in the

district!

There are three major factors that set the

stage for developers to market uncompleted

projects at high future prices (i.e. prices that

already account for future price appreciation

expectations):

1. The advantages of market dominationThe property developer industry is an

oligopoly. It is dominated by a few big players

which are often large conglomerates.

The entry barrier for new players in this

industry is exceptionally high. With limited

supply and high cost of land, it is not easy for

small developers to raise sufficient funds or

obtain financing from the bank. They also

cannot compete with the big guys in terms of

branding and their track record in past

projects.Bigger players have stronger financial muscle

to build their own land bank. They can drive

construction of projects in time to capture a

booming market.


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They enjoy the benefits of economies of scale

or cost leadership from a large number of

ongoing projects. They have a handsome

budget for marketing and for leverage to hire

a good marketing agent. They have enough

cash reserves to hedge against poor sales

during bad times.

It is therefore not surprising to see a high

percentage of private housing projects all

supplied by the top few developers. Theadvantages of market domination allow them

to set their list prices at the highest possible

level and to reap a huge profit.

2. Collaboration among big players

The big players have good connections

amongst themselves to make the most of a

mutually beneficial partnership. They can

collaborate with each other by forming joint

ventures to bid for land parcels, to secure

borrowings from banks, or to diversify their

investment.

Among the top property developers, they can

seek consensus and alignment on manydecisions, for instance:

When to launch or re-launch in a quiet or

recovering market;

Which type of projects to launch in different

locations; and

What projects to hold back to avoid

unnecessary competitions for similar projects.

When they are setting prices for a new

launch, they don't have to make reference to

the average transacted prices of existing

developments in the same district. They can

benchmark against each others list prices in

other districts in order to set their prices at a

new high in a hot market.


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Of course, no developer can move new

properties off the shelves without the support

of local banks to provide buyers the

necessary financing. It is not uncommon to

see developers tying up with a few banks to

offer housing mortgage packages to buyers at

the sales galleries.

In order to secure business from home

buyers, banks work with their valuers to

ensure that the valuation of the uncompletedproperty matches with the selling price, so

that they can disburse the exact amount of

housing loan required by the buyers.

3. Willing sellers, willing buyers

In the past few years, property developers

have paid a high price for land parcels sold by

the government or from en bloc sales.

Likewise, the tight supply and spiraling costs

of construction manpower and building

materials have taken a toll on the bottom line

of developers.

It is arguable that developers have no choice

but to markup considerably to ensure their

profitability, although how big a safety margin

is reasonable is entirely up to their discretion.

After all, if they don't make hay while the sun

shines, who can tell what will happen when

market direction changes?

In the end, the matter boils down to marketresponse and customer acceptance.

Developers can't sell new flats at future prices

if buyers are unwillingly to pay a premium

price.

It doesn't matter whether the selling price is

twenty or fifty percent higher than the most

recent transacted price of a resale flat in the

same area, so long as everyone believes that

the market price will be even higher by the


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time the new flats are ready for occupation.

Believing in the future that is the magic pill

of getting buyers to pay future prices in a

booming property market!

By Property Soul, a successful property

investor and enthusiast who shares her

experiences and knowledge on her blog.

SINGAPORE PROPERTY WEEKLY I 121
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Singapore Property This Week


Residential

TD SR w eakens new privat e home sales

It is reported that the new loans curb curb in

the form of the Total Debt Servicing Ratio

(TDSR) has severely affected recent private

home launches of the Glades in Tanah Merah

and The Skywoods in the Dairy Farm area,

which saw weak and stalled sales since the

first day of booking. Keppel Land sold around

80 units at 99-year-leasehold The Glades

next to Tanah Merah MRT Station, with the

majority of the sales done on the first day.

The average price for the 200 units released

in this 726-unit development ranged from

$1,450 to 1,500 psf. However, the nearby

Urban Vista condo, when released back in

March, saw 220 units being sold by

Fragrance and World Class Land with the

average price of $1,500 psf. The 99-year and

420-unit project Skywoods only sold 35 units

last Friday, then 10 units on both Saturday

and Sunday with the average price for the

first 150 units being $1,250 psf. Skywoods

CEO Neo Tiam Boon admitted that they had

not sold as much as they wanted due to the

TDSR, with many visitors not familiar with the

increased number of documents needed for

loans from banks.

(Source: Business Times)

SINGAPORE PROPERTY WEEKLY I 121


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Ho m eo w ner s s u e d ev el op er o f l ux u ry

S en t o s a C o v e c o n d o

More than 100 homeowners of oceanfront

residential enclave, The Coast at Sentosa

Cove, have filed a lawsuit against its

developer and three contractors due to the

latters failure to fix defects in the common

areas of the 249-unit luxury residential

development. The defects include termite

infestation, flooded staircases, a rottingtimber pool deck, incorrect installation of

electrical fittings, faulty light fixtures, leakages

at walls and through electrical conduits, poor

finishes to walls at apartment entrances. The

developer is revealed to be Ho Bee Cove.

The Management Corporation Strata Title(MCST) council, which filed suit on behalf of

108 owners, said that although more than

$93,000 was spent to fix minor defects,

rectification costs are estimated to be a few

million dollars. In its official statement, Ho

Bee Group said it is a responsible developer

and is willing to fix any genuine defects, and

that the alleged defects were, in fact, caused

by the MCSTs negligence.


Belmont R oad GC B up f or sale at $50m

A good class bungalow (GCB) at 74 Belmont

Road is up for sale at about $50 million, or

$1,890 psf. The property is located on a land

area of 26,455 sq ft and is regular in shape,

with a 16,200 sq ft built-up area of a main

house and a self-contained guest house. The

main house includes formal dining and

entertainment areas, a family room, a master

bedroom and four well-sized bedrooms. The

guest house is linked to the main house by a

sheltered walkway. There is also a 20-metre

mineral water swimming pool.



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The marketing agent for the property is

Savills Singapore, whose deputy managing

director Steven Mind said that the GCB

market remained the buying interest of the

ultra rich with limited supply, strong holdingpower of GCB owners and steady GCB

prices. The average unit price based on land

area for GCBs transacted so far this year

increased by 1.1 percent to $1,387 psf

compared with the average unit price for the

whole of 2012, according to Savills.


H o B e e c r i t i c i z e s d e f e c t c l a i m s b y h o m e

o w n e r s a t S en t o s a C o v e

The developer of the oceanfront luxury Coast

at Sentosa Cove, Ho Bee Investment, has

criticized construction defect claims by more

than 100 home owners as frivolous and that

their estimates of repair cost have been

grossly inflated. The MCST lawyers

previously sent Ho Bee Cove a letter on Feb

20 to demand defects in the common areas

be rectified, which was estimated by theMCSTs building expert to cost more than $2

million. However, according to Ho Bee, its

own building expert, Robinson Jones

Associates (RJA) assessed the alleged

defects to cost no more than $200,000 to be

repaired. Ms. Monica Neo, secretary of the

MCST responded that the costs to repair

defects in the entire estate could now be as

high as $5 million. Ho Bee argued that its

consultants including RJA found many of

these alleged defects not genuine but only

due to fair wear and tear or the lack of

adequate and propermaintenance.




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CapitaLands n ew B is han c on do t o b e

p r i c e d l o w e r t h a n n e i g h b o r S k y H ab i t at

CapitaLands new 694-unit condo project in

Bishan, whose name has not been known,

will be priced lower than its next-door Sky

Habitat. The project has a higher proportion

of smaller units to keep lump sum prices

within the reach of more buyers. The first

phase of units is to be priced from $1,380 to

$1,550 psf. However, CapitaLand declined to

reveal how many or what types of units there

will be or their psf average price until the

starting of the sales bookings. The project

had its showflat open this week. Sales

bookings are available two to three weeks

later. Sales at Sky Habitat took place in April

last year, with 131 units sold at a median

price of $1,583 psf, and at prices ranging

from $1,435 psf to $1,893 psf in that month.


Commercial

S h op h o u s e d eal s s l o w, b u t w i t h s t ead y

p r i c e s

Since the TDSR framework introduced in lateJune, the volume of shophouse transactions

has slowed but their prices apparently are

holding up. According to Savills Singapores

analysis of URA Realis caveats data on Sept

9, the number of caveats lodged for

shophouses decreased from 34 in May to 22in June to 11 in July and only 10 in August,

although more caveats for Augusts

transactions are expected in the next few

weeks. The 21 caveats for July and August

added up to $122.4 million. In Q2 of 2013,

there were 74 caveats lodged totaling $449.5million. For the first eight months of 2013,

transactions reached $1.04 billion, while it

was $1.38 billion for 2012 and $1.15 billion for

2011.



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Between January 2011 and August 2013, the

most active buyers of shophouses are

companies and Singaporeans, followed by

individual buyers from Malaysia. 72 percent of

shophouses acquired by companies were

priced at more than $3 million per transaction,

while about half of Singaporeans' purchases

were in the $1 million to $3 million range.


Cen tu rio n Co rp or at io n w in s b id fo r

W o o d l a n d s s i t e

Mainboard-listed Centurion Corporation,

whose main businesses are in dormitories

and optical discs, has won the bid for a

103,000 sq ft site in Woodlands which will bedeveloped into a workers dormitory. The

dormitory is planned to have 4,100 beds for

workers in the marine, process and

manufacturing industries when completed in

2015. Along with other developments, the

total bed count for the company is expected

to be 54,000 by the completion of the

Woodlands project, up from around 29,000.

The company had been awarded the tender

by JTC Corporation for the plot at Woodlands

Avenue 10. Centurions winning bid was

$80.8 million through an indirectly wholly-

owned subsidiary, beating 12 other bidders.

The acquisition will be funded through internal

resources and bank loans, and no material

impact on the net tangible assets and

earnings per share of the company is

expected for the financial year ending Dec 31.

Shares in Centurion closed one percent

higher at 49 cents on Sept 12.




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Red as h ead s ees o p p or tu n it ies f or t he

p r o p e r t y s e c t o r

Speaking at the Real Estate Developers'

Association of Singapore's (Redas) mid-

autumn celebration, its president, Chia BoonKuah said the future shines bright with

exciting possibilities for the property sector

even when the market takes its course

through the cycle of business. In spite of the

policy measures affecting the property market

introduced this year, interest from foreignplayers, including both developers and private

equity players, in buying development land in

Singapore remains unabated as they believe

in the future ofSingapore. Given this, Redas

would increase its public engagement in

areas such as offering ideas to the authoritieson new plans for Tanjong Pagar and Paya

Lebar.


http://propertymarketinsights.com/


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Non-Landed Residential Resale Property Transactions for the Week of Aug 28 Sep 3

NOTE: This data only covers non-landed residential resale propertytransactions with caveats lodged with the Singapore LandAuthority. Typically, caveats are lodged at least 2-3 weeks after apurchaser signs an OTP, hence the lagged nature of the data.

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

1 THE CLIFT 506 1,190,000 2,352 99

5 ONE-NORTH RESIDENCES 980 1,530,000 1,562 99

5 CARABELLE 1,744 2,337,000 1,340 956

5 CARABELLE 1,302 1,620,000 1,244 956

8 PARC SOMME 581 860,000 1,480 99

9 HELIOS RESIDENCES 1,668 5,280,000 3,165 FH

9 VISIONCREST 915 2,100,000 2,295 FH

9 SCOTTS HIGHPARK 3,466 6,800,000 1,962 FH

9 THE BAYRON 872 1,500,000 1,720 FH

9 THE BAYRON 904 1,545,000 1,709 FH

9 THE BAYRON 1,432 2,330,000 1,628 FH

9 THE BAYRON 1,432 2,320,000 1,621 FH

10 HOLLAND RESIDENCES 980 1,870,000 1,909 FH

11 BIRMINGHAM MANSIONS 1,711 2,220,000 1,297 FH

12 AVA TOWERS 1,281 1,166,000 910 FH

12 PUBLIC MANSION 1,959 1,480,000 755 FH

14 GRANDLINK SQUARE 1,109 1,120,000 1,010 FH

15 AALTO 1,528 2,550,000 1,668 FH

15 RIVEREDGE 1,066 1,510,000 1,417 99

15 NEPTUNE COURT 1,270 1,150,000 905 99

15 NEPTUNE COURT 1,636 1,450,000 886 99

16 WATERFRONT KEY 915 1,235,000 1,350 99

16 THE BAYSHORE 1,227 1,280,000 1,043 99

17 FERRARIA PARK CONDOMINIUM 958 950,000 992 FH

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

17 BALLOTA PARK CONDOMINIUM 1,281 960,000 749 FH

18 LIVIA 915 950,000 1,038 99

18 LIVIA 1,259 1,260,000 1,000 99

19 FONTAINE PARRY 2,120 2,238,000 1,055 999

19 CHUAN PARK 1,173 1,148,000 978 99

21 THE CASCADIA 1,098 1,725,000 1,571 FH

21 FREESIA WOODS 1,432 1,965,000 1,373 FH

21 SIGNATURE PARK 1,055 1,145,000 1,085 FH

21 ROYAL COURT 1,270 1,298,000 1,022 FH

22 THE LAKESHORE 926 1,158,000 1,251 99

22 THE CENTRIS 1,313 1,480,000 1,127 99

23 CASHEW HEIGHTS CONDOMINIUM 1,658 1,700,000 1,026 999

23 HILLVIEW REGENCY 1,119 1,120,000 1,000 99

23 REGENT HEIGHTS 1,023 935,000 914 99

23 REGENT GROVE 1,173 900,000 767 99

26 CASTLE GREEN 1,173 1,030,000 878 99

27 ORCHID PARK CONDOMINIUM 1,206 950,000 788 99

27 YISHUN SAPPHIRE 1,378 1,020,000 740 99

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