Developers weigh odds for launches after Ghost Month

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Published August 28, 2008

Developers weigh odds for launches after Ghost Month

Some may want to test market now rather than risk deterioration in sentiment

By KALPANA RASHIWALA


(SINGAPORE) Some developers have been quietly oiling their launch machinery in the past few weeks as they get ready for previews and launches, especially with the Hungry Ghosts Month ending this Saturday.

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Boulevard Vue's facade will be designed by well-known Japanese interior designer Super Potato. The freehold project's 26 apartments (one per floor) are about 4,500 sq ft each, while the two duplex penthouses occupying the top four levels are 8,000-plus sq ft and 11,000-plus sq ft.

With the property outlook expected to worsen before it gets better, there may just be an incentive for some to launch their projects sooner - or wait it out till late-2009/2010, a seasoned property consultant told BT.

Another consultant, Knight Frank executive director Peter Ow, said: 'Whatever name you call it - preview, private invitation, etc, the aim is for developers to test the market. If the response is sufficient at the price they want, they'll begin sales. If the response isn't up to what they want, they won't sell. As a developer, you don't want to risk launching a project, selling a few units and getting stuck.'

Projects that have begun to be previewed this month include Far East Organization's 85-unit freehold Miro at the corner of Lincoln and Keng Lee roads (at an average $1,600 per square foot) and a 54-unit cluster housing project at Greenwood Avenue. Units in the 103-year leasehold development range from 3,000 to 3,700 sq ft.

Over at Nathan Road, Tat Aik Group has been inviting potential buyers to view Nathan Residences, a 91-unit freehold project priced at around $2,000 psf on average.

Keppel Land is also expected to release this weekend in Hong Kong and Singapore about 30-40 units under the next phase of Reflections at Keppel Bay.

The average price is expected to be similar to the earlier phase launched around April last year, at about $1,800 to $2,000 psf. Deferred payment is expected to continue to be offered.

Hong Fok Corporation's 360-unit Concourse Skyline apartments at Beach Road, KepLand's 56-unit freehold Madision Residence near the junction of Bukit Timah and Keng Chin roads, and City Developments Ltd's The Arte at Thomson are understood to be other projects that could hit the market soon.

In the high-end segment - where sentiment is weakest - Far East Organization, which has already sold two units at its 28-unit luxury development Boulevard Vue at Cuscaden Road, opened its showflat for the project recently and is expected to step up marketing activity.

The project's 26 apartments (one per floor) are about 4,500 sq ft each, while the two duplex penthouses occupying the top four levels are 8,000-plus sq ft and 11,000-plus sq ft. Prices for low- and mid-level units in the 33-storey freehold project range from $3,600 psf to $3,900 psf.

BT understands the price tag for the bigger penthouse will likely be around the $4,500 psf mark, working out to an absolute sum of about $50 million. If achieved, the absolute amount would set a new record for a penthouse in Singapore.

Boulevard Vue's facade will be designed by well-known Japanese interior designer Super Potato. BT understands that the unit layouts will be customised to buyers' preference.

A critical factor affecting developers' launch decisions is pricing, given the bearish sentiment.

'Pricing will be more realistic for fresh launches, but for projects released earlier, it would be difficult for established developers to trim prices without upsetting earlier buyers, especially VIPs,' the seasoned property consultant said.

Agreeing, Jones Lang LaSalle Singapore's residential head Jacqueline Wong said: 'Such developers may just hold the remaining units in the project if necessary and have another shot at selling them upon the project's completion. For new projects too, the financially stronger players can hold off developing for a while.

'However, developers who are fairly new or need the cashflow will have to be realistic in their pricing and will be more amenable to negotiating with buyers.'

Another industry observer said that instead of outright price cuts, it may be easier for developers to attract new buyers into existing projects by offering furnishing vouchers, guaranteed yields (for newly completed projects) or arranging for attractive mortgage packages.

A mid-sized developer said: 'We have to accept the fact that prices have to be marked to market; otherwise we can't sell enough units to generate the required cashflow. For sites bought within the past 12 months, developers would need to sell at least 50 per cent of the development to generate sufficient cashflow to finance the project's construction - taking into account high land price paid and rising construction costs, among other factors.'