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30-01-14, 11:36
http://www.straitstimes.com/archive/saturday/premium/top-the-news/story/luxury-homes-bear-brunt-price-drop-20140125
Luxury homes 'to bear brunt' of price drop
Published on Jan 25, 2014
By Melissa Tan
THE luxury home market is likely to bear the brunt of an overall drop in private property prices this year, consultants said yesterday.
The suburban mass market segment also shows signs of losing steam, which could in turn rein in city-fringe prices, they said.
Most analysts estimate that overall private home prices could fall by between 5 per cent and 10 per cent this year.
Overall prices grew 1.1 per cent last year, well down on the 2.8 per cent rise in 2012, the Urban Redevelopment Authority said yesterday.
Upmarket homes in the city centre will be under the greatest pressure this year, owing to sluggish investor demand, said Jones Lang LaSalle Singapore research head Ong Teck Hui.
Market watchers also said matters could get worse if real estate funds that bought high-end homes in bulk decide to exit their investments seeking higher yields.
As CBRE research head Desmond Sim put it: "If you are a real estate fund in Singapore, you definitely would like to look at other segments."
For instance, United States financial services group Wachovia sold its investment in a freehold Grange Road project back to City Developments (CDL) for a hefty loss estimated to be about $55 million in December 2012.
More recently, the developer of Newton Imperial condominium put 21 unsold units up for sale at a reduced price earlier this month.
However, Mr Sim also said the few funds that own luxury homes here may also opt to hold onto them until some property market cooling measures are lifted.
As for the suburban mass market home segment, which is less driven by investor demand, consultants said that prices could start to soften this year. The segment has "shown signs of losing momentum", said PropNex chief executive Mohamed Ismail.
Mr Ong said buyers could be holding off on purchases in the hope that developers will cut prices at new launches. "If people start cutting prices in the city centre and suburban segment, projects in the city fringe will have to do likewise," he added.
However, others think that the overall private property price index could end up see-sawing based on what new projects go on the market.
Savills research head Alan Cheong said the overall private property price decline of 0.9 per cent in the fourth quarter "may be short-lived".
He pointed out that a major factor for the drop was a 1 per cent slide in mass market home prices.
That segment fell in part because a significant part of mass market new home sales in the quarter came from the launch of the 396-unit The Inflora, which sold out at prices of around $900 psf on average.
However, mass market home prices could stage a rebound in January through March this year from the preceding quarter due to higher prices at popular projects such as The Hillford on Jalan Jurong Kechil, he said.
All 281 units at The Hillford sold out on its launch day earlier this month at an average price of $1,100 psf.
[email protected]
Luxury homes 'to bear brunt' of price drop
Published on Jan 25, 2014
By Melissa Tan
THE luxury home market is likely to bear the brunt of an overall drop in private property prices this year, consultants said yesterday.
The suburban mass market segment also shows signs of losing steam, which could in turn rein in city-fringe prices, they said.
Most analysts estimate that overall private home prices could fall by between 5 per cent and 10 per cent this year.
Overall prices grew 1.1 per cent last year, well down on the 2.8 per cent rise in 2012, the Urban Redevelopment Authority said yesterday.
Upmarket homes in the city centre will be under the greatest pressure this year, owing to sluggish investor demand, said Jones Lang LaSalle Singapore research head Ong Teck Hui.
Market watchers also said matters could get worse if real estate funds that bought high-end homes in bulk decide to exit their investments seeking higher yields.
As CBRE research head Desmond Sim put it: "If you are a real estate fund in Singapore, you definitely would like to look at other segments."
For instance, United States financial services group Wachovia sold its investment in a freehold Grange Road project back to City Developments (CDL) for a hefty loss estimated to be about $55 million in December 2012.
More recently, the developer of Newton Imperial condominium put 21 unsold units up for sale at a reduced price earlier this month.
However, Mr Sim also said the few funds that own luxury homes here may also opt to hold onto them until some property market cooling measures are lifted.
As for the suburban mass market home segment, which is less driven by investor demand, consultants said that prices could start to soften this year. The segment has "shown signs of losing momentum", said PropNex chief executive Mohamed Ismail.
Mr Ong said buyers could be holding off on purchases in the hope that developers will cut prices at new launches. "If people start cutting prices in the city centre and suburban segment, projects in the city fringe will have to do likewise," he added.
However, others think that the overall private property price index could end up see-sawing based on what new projects go on the market.
Savills research head Alan Cheong said the overall private property price decline of 0.9 per cent in the fourth quarter "may be short-lived".
He pointed out that a major factor for the drop was a 1 per cent slide in mass market home prices.
That segment fell in part because a significant part of mass market new home sales in the quarter came from the launch of the 396-unit The Inflora, which sold out at prices of around $900 psf on average.
However, mass market home prices could stage a rebound in January through March this year from the preceding quarter due to higher prices at popular projects such as The Hillford on Jalan Jurong Kechil, he said.
All 281 units at The Hillford sold out on its launch day earlier this month at an average price of $1,100 psf.
[email protected]