Developers' chips are down, but launches go ahead

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Published September 16, 2009

Developers' chips are down, but launches go ahead

Property counters hit, but several projects primed for launching

By KALPANA RASHIWALA AND UMA SHANKARI


(SINGAPORE) Some developers are proceeding with plans to launch their projects despite measures announced by the government on Monday to cool an overheating private housing market.

CapitaLand Residential yesterday began previewing at its office the Interlace condo to former owners of Gillman Heights from whom it bought the site for the 99-year leasehold project. Prices of units range from $850 to $1,150 per square foot, a CapitaLand spokeswoman told BT.

Likewise, GuocoLand is proceeding to preview its freehold Elliot at the East Coast project this weekend at an average price of about $950 psf. Prices of a typical three-bedroom apartment in the development will start from about $1.2 million. The low-rise condo, with a total 119 units, comprises eight blocks which will be five storeys high and a three-storey block.

City Developments is also understood to be rushing to get its showflat ready for a possible preview next weekend of its Hundred Trees condo on the former Hong Leong Gardens site in the West Coast area.

The government's cooling measures include scrapping the interest absorption scheme (IAS) and restarting confirmed list land sales in first half 2010.

'Knowing that the government is coming up with more land, developers who have even marginally profitable projects may want to clear the decks and launch their projects this year,' said Knight Frank chairman Tan Tiong Cheng.

A developer said: 'Most of us feel the impact on demand from the removal of IAS will be more psychological than real as only a minority of buyers have been opting for it in recent months in projects where we charge a price premium for the scheme.'

'Yes, buyers may now take a longer time to make a decision but they will bite if they like the product and if it's priced right,' he added.

Agreeing, Mr Tan said: 'Ultimately if the intention is to sell, they cannot fight the market impression that there must be a price adjustment.'

While removal of IAS will suck out some of the speculative demand from the market, developers remain confident of the fundamentals in the property market, and its attraction to investors in the current low-interest rate environment.

There is also consensus among analysts in stockbroking houses that the government measures will not derail the recovery in the property market. '(The) measures may dampen speculative sentiment but may not stop genuine private home demand if the trajectory of economic recovery continues,' Citigroup noted in a report.

Analysts also observed yesterday that while the increase in private home prices seen in the past few months may have come to a standstill, developers are unlikely to cut prices by much either.

'We believe that developers, buffeted by strong start-of-year sales, are unlikely to cut prices aggressively,' noted DBS Vickers analyst Adrian Chua. 'The key impact would be a slowdown in sales as speculative buying gets flushed out of the market.'

However, property counters such as City Developments Ltd (CDL), CapitaLand and Ho Bee were downgraded by a few analysts. As of yesterday's market closing, CDL has lost 9.4 per cent from its closing price last week. Over the same period, Wing Tai and Allgreen have shed 9.5 per cent, Keppel Land 8.1 per cent, GuocoLand 7.4 per cent, and CapitaLand 4.1 per cent.

The Interlace comprises a total 1,040 units. For the preview that began yesterday, five blocks with 153 units were released. 'The units comprise a selection from a full spectrum of unit types, from two-, three-, three plus study, four-bedroom apartments, townhouses and penthouses. The units range from 807 sq ft to 5,877 sq ft in size.

'These units, located on different levels in the development, also offer various facings - towards the pool, towards the sea, and towards the greenery at HortPark,' a CapitaLand spokeswoman said.

BT understands that the appointed agents for Interlace will begin marketing the project on Friday from a temporary showflat at the corner of Kim Seng and River Valley roads.

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Sep 16, 2009 Wednesday

Govt move has 'no impact' on new launches

No need for price change as few take up absorption scheme, say developers

By Robin Chan


PROPERTY developers were sticking to their prices yesterday following the Government's announcement of a slew of measures designed to cool the market.

At two of Singapore's more eagerly anticipated launches, The Interlace and Hundred Trees, developers said they did not foresee any need for price adjustments.

A spokesman for CapitaLand said it was holding prices at between $850 and $1,150 psf for The Interlace at the former Gillman Heights site.

She noted that less than 5 per cent of buyers at the developer's other new property - The Wharf Residence, launched earlier this year - had opted for the interest absorption scheme (IAS) abolished by the Government on Monday.

The scheme, popular among investors and speculators, allowed buyers to put down a deposit and make no further payments until the property was completed.

City Developments Limited's spokesman Gerry de Silva played down speculation among property agents that CDL's upcoming Hundred Trees site would be priced under $950 psf, saying that no price had been set yet.

Mr de Silva said the government measures would 'have minimal effect on our plans to launch Hundred Trees and other developments'.

He also cited the low take-up rate of IAS among purchasers.

Buyers and analysts hope the measures unveiled by the Government on Monday - which include the removal of the interest-only housing loans (IOL) and a return to a confirmed list for land sales - will help keep out speculators and allow prices to more accurately reflect real demand.

However, analysts such as Citi economist Kit Wei Zheng forecast that even with fewer speculators, demand is likely to remain strong and prices continue to rise, albeit at a slower pace.

He cited recovery in the economy and job market and a shortage of HDB flats as factors keeping up prices.

Prospective homebuyer Clarence Khoo, 36, said he hoped the new measures would help to soften prices, but admitted that it would not affect his decision to buy property as he was buying for the long term.

Another potential buyer, Mr Darien Tan, 32, who works in the marine industry, fears that property developers will continue to keep prices high.

He has been looking for a suitable condominium unit since returning from Australia last year.

ERA Asia Pacific associate director Eugene Lim said there were no hints of buyers opting to let their options on new properties lapse in anticipation of lower prices in the future.

But PropNex chief executive Mohamed Ismail believed that developers would exercise greater caution because overly pricey properties may turn off buyers.

Royal Bank of Scotland analyst Fera Wirawan believed sentiment may be dampened further if buyers anticipate more cooling measures.

She noted that other measures introduced in the past included limiting permanent residents to one property loan, imposing a stamp duty on sellers and introducing a tax on property gains.

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Interlace preview: Gillman owners disappointed

OWNERS of the Gillman Heights Condominium that is being knocked down to make way for The Interlace were disappointed with what they saw at a private preview of the new development yesterday.

Their chief complaint was that the units offered to them had bad facings and that prices were too high. Mr S.T. Soh, 68, said: 'The apartments being offered were either too close to the highway, or were on very low floors facing Depot Road. These are among the worst units in the project.'

Another owner, who wanted to be known only as Madam Koh, had expected lower prices. But even the low-level units were going for a minimum of $1,048 per sq ft (psf), she said.

CapitaLand said the apartments ranged in price from $850 psf to $1,150 psf and represented a full spectrum of unit types from 807 sq ft to 5,877sq ft. Of the 1,040 units at The Interlace, 153 units from five blocks were offered at the private preview. A spokesman said: 'These units, located on different levels in the development, also offer various facings - towards the pool, towards the sea, and towards the greenery at HortPark.'

The purchase of 607-unit Gillman Heights by Capitaland was completed in May, and the owners received between $870,000 and $950,000 for their units. They were also offered first bite to buy a new home at The Interlace.

JONATHAN KWOK