CBRE: More than half of high-end condos unsold

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Published January 8, 2009

CBRE: More than half of high-end condos unsold

It also sees prices falling 10-15% from $2,000-$2,400 in Q4 last year

By KALPANA RASHIWALA


(SINGAPORE) Fifty-five per cent of about 2,200 units in luxury projects launched by developers between 2006 and 2008 remained unsold in November 2008, according to CB Richard Ellis (CBRE).

And the property consultancy firm is tipping a 10-15 per cent fall this year in the price of luxury apartments/condos, which slid to about $2,000 to $2,400 psf of strata area in Q4 last year from $2,000-3,300 psf a year earlier.

The figures refer to existing luxury developments such as Ardmore Park, Four Seasons Park and Grange Residences.

As for new luxury condos/apartments, the average launch price fell to $2,000 to $2,600 psf in Q4 2008 from $2,000 to $4,000 psf in Q4 2007, says CBRE.

Caveats for only 1,096 luxury apartments/condos in prime districts 9 and 10 were lodged in 2008 based on filings by Jan 7, 2009 - a mere 19 per cent and 32 per cent of sales in 2007 and 2006 respectively.

The number of apartments sold for more than $10 million dropped to 82 last year from 143 in 2007. Still, the 2008 figure was above the 22 units sold in 2006.

Most luxury projects launched in 2006 and early 2007 are fully sold, such as Ardmore II and Tate Residences.

But several projects, particularly those released during or after second-half 2007, remain on the market. 'By then, news of the sub-prime crisis had caused the market to pull the brakes,' CBRE said.

In the landed housing segment, the firm predicts a drop of about 10 per cent this year in the price of Good Class Bungalows (GCBs).

Last year, the average price of GCBs rose 20.7 per cent to a record $822 per sq ft (psf) of land area.

'GCB prices recorded very strong growth in 2006-7,' said CBRE director (luxury homes) Douglas Wong. 'This upswing in prices spilled over into the first half of last year. Right up to July 2008, average GCB prices continued to raise the benchmark.

'Also, the capacity of owners to hold prices added to the resilience in this segment in the second half of 2008.'

The highest psf price in a GCB transaction last year was $1,303 for a property in Leedon Road with only 21,097 sq ft of land. In absolute price terms, it fetched $27.5 million.

The all-time record price for a GCB in Singapore is $1,899 psf, set in October 2007 when 32H Nassim Road was sold for $25.5 million.

While the average price of GCBs rose last year, the number and value of transactions fell.

Forty-nine GCBs changed hands for a total of $785 million in 2008, down from 87 worth $1.15 billion in 2007 and 119 worth $1.23 billion in 2006.

CBRE said: 'Going forward, we expect the activity in the luxury residential market to be lukewarm, similar to the pace in H2 2008. Hence, the number of GCBs and luxury apartments transacted will be small.'

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January 8, 2009 Thursday

1,200 luxury homes yet to find takers

CBRE says growing supply overhang may see prices drop by up to 15%

By Joyce Teo, Property Correspondent


A STOCKPILE of up to 1,200 luxury homes in prime districts remains unsold, adding to a growing supply overhang that is likely to drag prices lower this year.

That grim assessment of the very top end of Singapore's property market has been made by leading property consultancy CB Richard Ellis (CBRE).

However, it has also concluded that despite the challenging market conditions, some developers may be able to hold on to projects until the market recovers.

'Developers who are laden with unsold units in projects that were already launched would prefer to focus on clearing them rather than launch new projects,' it said.

'This would inevitably lead to price cuts,' the consultancy added.

CBRE is projecting a decline this year of about 10per cent in the prices of good-class bungalows (GCBs) - the most prestigious bungalow type here - and 10 to 15per cent price falls for luxury apartments.

Last year, 49 GCBs worth about $785million were sold, down from 87 GCBs worth $1.15billion in 2007 and 119 GCBs worth $1.23billion in 2006.

Average prices of GCBs hit $822 per sqft (psf) last year, up from $681 psf in 2007 and $501 psf in 2006.

The top-priced GCB deal last year was a 52,528 sqft Leedon Park property sold for $43.2million in May. On a psf basis, the most expensive deal was at $1,303 psf for a Leedon Road property, also in May.

CBRE said GCB prices hinge on the location and land characteristics.

Given the current downturn, buyers will be looking to pay competitive prices for GCBs, but fire sales will be hard to come by as most GCB owners have the capacity to hold, said director of luxury homes Douglas Wong.

The luxury apartment market also saw a drastic fall in sales last year, with just 1,096 caveats lodged. Government data showed this worked out to just 19per cent and 32per cent of sales in 2007 and 2006 respectively, said CBRE.

Caveats lodged for high-end apartments worth $1million to $3million stood at 777, which is about 22per cent of the 3,566 caveats lodged in 2007 and 29per cent of caveats lodged in 2006.

But a considerable number of more expensive homes were sold last year, with 82 caveats lodged for apartments worth $10million and above, though 63 were units in Nassim Park Residences. This compares with 143 in 2007, 22 in 2006 and none in 2004-2005.

Price-wise, new luxury projects saw average launch prices drop to $2,000 psf to $2,600 psf by the end of last year, from $2,000 psf to $4,000 psf in 2007.

Prices of existing luxury developments, such as Ardmore Park and Grange Residences, hit $2,000 psf to $2,400 psf, from $2,000 psf to $3,300 psf in 2007 and $1,600 psf to $2,000 psf in 2006.

Most of the luxury projects launched in early 2007 have been fully sold. But several projects remain on the market, especially those launched in the second half of last year when the sub-prime crisis hit.

As of last November, only 41per cent of units offered at these launches had been sold.

This year, luxury sales activity is expected to be lukewarm, similar to the second half of last year, said CBRE.

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Thursday, January 8, 2009

Nearly half of recent launches still unsold

En bloc projects being leased out instead of getting rebuilt

ESTHER FUNG

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MANY new homes recently built for the well-heeled in Singapore are sitting empty.

Only 45 per cent of the luxury projects launched since June 2006 have been sold as of November last year, according to property consultancy CBRE.

This period saw the roll-out of 20 projects in this segment, which has a total of 2,209 units, some of which have yet to be launched.

Faring worse are high-end projects launched since the second half of 2007, during the period of peak property prices. Only 33 per cent of the 1,233 units have been sold.

“Several projects remain on the market, especially those that were launched in the second half of 2007 and thereafter. By then, news of the sub-prime crisis had caused the market to put on the brakes,” CBRE said in a report released yesterday.

Some developers have seen poor sales, while others held back on the number of units rolled out.

Some projects launched over the past two years — such as: Belle Vue Residences, The Orange Grove, The Ritz Carlton Residences and The Hamilton Scotts — have over 90 per cent of their total units unsold.

This year, luxury apartment prices may drop by 10 to 15 per cent, predicted CBRE, while prices of Good Class Bungalows could decline by 10 per cent.

Already, the segment’s average launch price has dropped from $2,000 to $4,000 per square foot (psf) in 2007 to a range of $2,000 to $2,600 psf last year, CBRE estimated. It added that developments like Ardmore Park, Four Seasons Park and Grange Residences saw prices drop to $2,400 psf last year from as high as $3,300 psf in 2007.

In light of the weak market, several developers have delayed the redevelopment of their en bloc projects, by renting out units. These include collectively-sold developments like Grangeford Apartment in Leonie Hill Road, Lucky Tower at Grange Road, and Leedon Heights, said CBRE.

“Most developers will start to launch when the market begins to recover, “ CBRE said of en bloc redevelopments. “Developers who are laden with unsold units in projects that were already launched would prefer to focus on clearing them rather than launching new projects and add to supply.”

There were only seven residential collective sales last year, compared to 150 in 2007, DTZ Research said. “With high construction costs, financing difficulties and weak market sentiments, developers are shunning residential collective sales.”