Amber Woods
06-09-13, 14:17
Developers trim prices as new reality bites
New launches priced below expectations as buyers struggle to secure loans
[SINGAPORE] The impact is now there for all to see. Developers have been trimming launch prices for new private residential projects to adjust to the new market reality in the aftermath of the Total Debt Servicing Ratio (TDSR) framework's rollout in late June.
A case in point is the 445-unit Thomson Three condo in Bright Hill Drive, being developed by UOL Group and Singapore Land.
"Without TDSR, we could easily have priced this project at $1,500 psf on average, or even higher. We now expect to price it at a more realistic level, at $1,350-1,400 psf," said Liam Wee Sin, president (property) at UOL.
The showflat of the project, located at the Upper Thomson Road/Venus Drive corner, will open this weekend, although sales booking will begin two weeks later, on Sept 20.
"Notwithstanding the recent curbs (TDSR), we still see strong underlying demand for private homes and the overall economic outlook has been more positive recently. However, with TDSR, buyers are now more selective and sensitive to the total price quantum, so developers have to be more realistic in their pricing," he added.
The TDSR rules require financial institutions, when granting property loans to individuals, to ensure the borrower's monthly total debt repayments do not exceed 60 per cent of his gross monthly income.
Downward adjustment of developers' earlier pricing expectations is also set to surface for two condo projects where sales begin today - The Skywoods in the Dairy Farm area and The Glades in Tanah Merah. All three projects are 99-year leasehold.
For Skywoods, "we were looking at nearly $1,300 psf on average pre-TDSR but we'll now release it at $1,250 psf", said Neo Tiam Boon, group CEO of TA Corporation. TA is developing the 420-unit project with Hock Lian Seng Holdings, King Wan Corporation and Far East Distillers. "The issue today is not that there are no buyers. There are a lot of interested people who want to buy, but they could not get a loan.
"Conservatively, I estimate possibly one-third of those who saw our showflat couldn't secure a bank loan," he added.
All eyes are also on Keppel Land's The Glades, near Tanah Merah MRT Station. Earlier, agents had been giving average price indications of around $1,400-1,600 psf. KepLand declined to comment on the pricing yesterday.
Nearby, Fragrance and World Class Land launched Urban Vista in March, achieving a median price of $1,503 psf in that month. "May be KepLand will price Glades a tad below $1,500 psf," suggested a property agent, although there were whispers earlier this week that the pricing may be closer to $1,400 psf, given the challenge of moving the sheer number of units in the project - 726 apartments. "Most of the demand in the Bedok South/Tanah Merah area has probably been sucked by eCO and Urban Vista," said the agent. eCO, along Bedok South Avenue 3 and further away from Tanah Merah Station, was released in September last year, achieving a $1,283 psf median price in that month.
As developers start lowering their expectations for new launches, it is just a matter of time before this has an impact on earlier launches, acknowledged industry players.
Knight Frank chairman Tan Tiong Cheng said that of all the cooling measures in the past four years, TDSR has the greatest impact. "It dampens buying as a result of difficulty in getting loans, though interest rates generally are still low.
"As a result, developers who have already geared up to launch after the Seventh Month are all trying to find the right pricing level," said Mr Tan.
"Most people can still get loans; just not the quantum they want. As a potential buyer, I have two choices. One would be to compromise and buy a lower-cost or smaller unit. Or if a developer is seen to have dropped pricing from earlier expectations by 5-10 per cent, it may entice me to commit," said Mr Tan.
A seasoned observer reckons that token cuts of 5 per cent or less may not do the trick in most cases. "But if we see price drops of say 10-15 per cent, a lot of people will get back in to the market."
Mr Tan expects prices of projects launched less than six months ago to come down to match the new launch prices. "For developers with existing projects on the market, once sales stall, the correct strategy, which some are adopting, is to temporarily close the showflat, as leaving it open will worsen sentiment.
"They can then reopen a few months later and adjust prices to the new level," said Mr Tan.
UOL and SingLand paid nearly $720 per square foot per plot ratio for the site of their Thomson Three project. The breakeven cost could be around $1,150 psf. Absolute prices in the project start from $672,000 for a 495-sq ft one-bedder.
The development, near the future Upper Thomson MRT Station, will include 10 strata semi-detached houses priced at around $3.4-3.5 million each.
"There's a lack of supply, and pent-up demand in this vicinity. The recent ruling quashing Thomson View's en bloc sale will mean tighter supply in this micro market," Mr Liam said.
Separately, UOL last night clinched two wins at the Fiabci Singapore Property Awards 2013 - for its Parkroyal On Pickering in the hotel category and Double Bay Residences condo in Simei in the residential (high-rise) segment.
New launches priced below expectations as buyers struggle to secure loans
[SINGAPORE] The impact is now there for all to see. Developers have been trimming launch prices for new private residential projects to adjust to the new market reality in the aftermath of the Total Debt Servicing Ratio (TDSR) framework's rollout in late June.
A case in point is the 445-unit Thomson Three condo in Bright Hill Drive, being developed by UOL Group and Singapore Land.
"Without TDSR, we could easily have priced this project at $1,500 psf on average, or even higher. We now expect to price it at a more realistic level, at $1,350-1,400 psf," said Liam Wee Sin, president (property) at UOL.
The showflat of the project, located at the Upper Thomson Road/Venus Drive corner, will open this weekend, although sales booking will begin two weeks later, on Sept 20.
"Notwithstanding the recent curbs (TDSR), we still see strong underlying demand for private homes and the overall economic outlook has been more positive recently. However, with TDSR, buyers are now more selective and sensitive to the total price quantum, so developers have to be more realistic in their pricing," he added.
The TDSR rules require financial institutions, when granting property loans to individuals, to ensure the borrower's monthly total debt repayments do not exceed 60 per cent of his gross monthly income.
Downward adjustment of developers' earlier pricing expectations is also set to surface for two condo projects where sales begin today - The Skywoods in the Dairy Farm area and The Glades in Tanah Merah. All three projects are 99-year leasehold.
For Skywoods, "we were looking at nearly $1,300 psf on average pre-TDSR but we'll now release it at $1,250 psf", said Neo Tiam Boon, group CEO of TA Corporation. TA is developing the 420-unit project with Hock Lian Seng Holdings, King Wan Corporation and Far East Distillers. "The issue today is not that there are no buyers. There are a lot of interested people who want to buy, but they could not get a loan.
"Conservatively, I estimate possibly one-third of those who saw our showflat couldn't secure a bank loan," he added.
All eyes are also on Keppel Land's The Glades, near Tanah Merah MRT Station. Earlier, agents had been giving average price indications of around $1,400-1,600 psf. KepLand declined to comment on the pricing yesterday.
Nearby, Fragrance and World Class Land launched Urban Vista in March, achieving a median price of $1,503 psf in that month. "May be KepLand will price Glades a tad below $1,500 psf," suggested a property agent, although there were whispers earlier this week that the pricing may be closer to $1,400 psf, given the challenge of moving the sheer number of units in the project - 726 apartments. "Most of the demand in the Bedok South/Tanah Merah area has probably been sucked by eCO and Urban Vista," said the agent. eCO, along Bedok South Avenue 3 and further away from Tanah Merah Station, was released in September last year, achieving a $1,283 psf median price in that month.
As developers start lowering their expectations for new launches, it is just a matter of time before this has an impact on earlier launches, acknowledged industry players.
Knight Frank chairman Tan Tiong Cheng said that of all the cooling measures in the past four years, TDSR has the greatest impact. "It dampens buying as a result of difficulty in getting loans, though interest rates generally are still low.
"As a result, developers who have already geared up to launch after the Seventh Month are all trying to find the right pricing level," said Mr Tan.
"Most people can still get loans; just not the quantum they want. As a potential buyer, I have two choices. One would be to compromise and buy a lower-cost or smaller unit. Or if a developer is seen to have dropped pricing from earlier expectations by 5-10 per cent, it may entice me to commit," said Mr Tan.
A seasoned observer reckons that token cuts of 5 per cent or less may not do the trick in most cases. "But if we see price drops of say 10-15 per cent, a lot of people will get back in to the market."
Mr Tan expects prices of projects launched less than six months ago to come down to match the new launch prices. "For developers with existing projects on the market, once sales stall, the correct strategy, which some are adopting, is to temporarily close the showflat, as leaving it open will worsen sentiment.
"They can then reopen a few months later and adjust prices to the new level," said Mr Tan.
UOL and SingLand paid nearly $720 per square foot per plot ratio for the site of their Thomson Three project. The breakeven cost could be around $1,150 psf. Absolute prices in the project start from $672,000 for a 495-sq ft one-bedder.
The development, near the future Upper Thomson MRT Station, will include 10 strata semi-detached houses priced at around $3.4-3.5 million each.
"There's a lack of supply, and pent-up demand in this vicinity. The recent ruling quashing Thomson View's en bloc sale will mean tighter supply in this micro market," Mr Liam said.
Separately, UOL last night clinched two wins at the Fiabci Singapore Property Awards 2013 - for its Parkroyal On Pickering in the hotel category and Double Bay Residences condo in Simei in the residential (high-rise) segment.