Still no buyers for 1,000 posh homes

[mr funny]

http://www.straitstimes.com/Money/St...ry_605863.html

Nov 22, 2010

not yet sold out

Still no buyers for 1,000 posh homes

By Esther Teo


MANY high-end condominium units are sitting unsold even after completion, as the luxury home market remains quieter than in previous years.

Twelve developments have been completed this year, each with more than 10 units still unsold as of last month, according to new data released by property consultancy CB Richard Ellis (CBRE).

Of these, 10 are in prime areas, with a total of 384 unsold units, CBRE said.

For instance, Wing Tai's Belle Vue Residences in Oxley Walk, which obtained its temporary occupation permit (TOP) in the second quarter, has not found buyers for 61 of its 176 units as of last month.

Paterson Suites, which had its TOP in the third quarter, has 79 units out of 102 yet to be taken up.

Another eight projects are expected to receive TOP soon, each with at least 10 unsold units, added CBRE.

Seven of these are also in prime locations: Districts 9, 10 and 11 - which cover Orchard, Holland, Newton and Bukit Timah - and the Sentosa and Tanjong Pagar areas.

In all, buyers are still needed for more than 1,000 posh homes in projects already completed or expected to be ready by early next year.

Most of these projects were first launched in the property boom of 2007, including Riveria Gardens in River Valley and Marina Collection in Sentosa Cove.

Not all these completed units are available for sale, however.

Experts say that some developers have yet to launch their remaining units as prices are still below their previous peak.

Developers are biding their time, waiting for the luxury market to catch up with or even surpass the historical highs, they say.

CBRE Research executive director Li Hiaw Ho said that developers either slowed down or stopped sales completely when the financial crisis hit Singapore.

When the residential market recovered last year, developers were hopeful that high-end prices would recover and that foreign interest would return.

However, while high-end prices have seen a recovery this year, they are still below the previous peak.

Foreigners are also less active compared to 2007 because the United States and European economies are still weak, he added.

Colliers International's director of research and advisory Tay Huey Ying said that luxury home prices are now just 5.4 per cent shy of their peak in 2007. While volumes are still thin, prices are gradually creeping up, she added.

'Some developers might feel that it is not the right time to launch as demand is still not strong enough to push luxury home prices past their previous peak.'

In boom years, some developers might have bought residential land at 'aggressive prices' and are now waiting for home prices to catch up, Ms Tay added.

Cushman and Wakefield's managing director Donald Han said some of these projects might have seen a significant number of units sold at relatively high prices pre-crisis when they were first launched.

Developers thus had an obligation to these initial buyers not to offload the remaining units at a lower price.

Seeming over-eager to sell could also cause the market to lose confidence in the developer's holding power, he said.

'Once a development has sold about 50 to 60 per cent, it would most likely have broken even and there would be less pressure to dump units,' he said.

'Developers can also choose to keep units to rent out temporarily,' Mr Han added.

Experts added that unlike 99-year leasehold mass market condos that might depreciate after completion, many of the high-end projects had freehold tenure.

Some luxury home buyers are also keen to 'feel and touch' their homes and the quality of the finishes before making such pricey purchases.

This might give completed projects at least some kind of an edge over new launches, they said.

Ms Wendy Tang, Knight Frank director of residential services, added that with prime residential sites hard to come by, developers might also see no urgent need to dispose of high-end projects quickly as it might be difficult to replenish land banks with such exclusive sites.

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[Wild Falcon]

This is what I have been highlighting in the past few months...

Anyway, I'm amused how all the experts come in to defend the unsold units after TOP. It's because the developers don't want to sell huh? How bizarre. Why can't they call a spade a spade and say there is no demand at that price point? It's bizarre they are still encouraging people to buy because prices are still "below the peak" so to speak. Have they even explored the possibility that the 2007 peak prices for luxury homes had been a bubble in the first place? Oops. these experts don't dare to say anything to anger their property developer client.

Anyway, news on the ground is that the developers will rent out the unsold units to tide over cash flows. They cannot find buyers.

[stalingrad]

This is what I have been highlighting in the past few months...

Anyway, I'm amused how all the experts come in to defend the unsold units after TOP. It's because the developers don't want to sell huh? How bizarre. Why can't they call a spade a spade and say there is no demand at that price point? It's bizarre they are still encouraging people to buy because prices are still "below the peak" so to speak. Have they even explored the possibility that the 2007 peak prices for luxury homes had been a bubble in the first place? Oops. these experts don't dare to say anything to anger their property developer client.

Anyway, news on the ground is that the developers will rent out the unsold units to tide over cash flows. They cannot find buyers.

fully agree with you. some of the things those experts say are just silly.

I have said that there is no demand for these "posh" homes. the only way to clear them is to lower the price and let the chips fall where they may, and admit that all those that paid high prices in 2007 were suckers.

[hyenergix]

So many people including now developers want to rent out. Do we really have so many people wanting to rent? Many condos and BTO HDBs are going to TOP in 2012 onwards and it will be interesting. Good to accumulate some $ and wait for firesales...

[mantrix]

fully agree with you. some of the things those experts say are just silly.

I have said that there is no demand for these "posh" homes. the only way to clear them is to lower the price and let the chips fall where they may, and admit that all those that paid high prices in 2007 were suckers.

I second the comments. Those so called 'experts' should buy the posh homes themselves since they claim it's 'below previous peak'

I've said many times what used to be prime may not be prime anymore, and you have some forumnites (agent or owner) jumping and comparing with london and such and proclaiming demand is huge etc etc and making widely irrelevant analogies.

No demand = No demand, simple as that. Prime's desirability has fallen relative to its pricing, hence no takers. If the converse is true, there will be surplus of 1000 buyers finding posh homes instead.

[kingkong1984]

fully agree with you. some of the things those experts say are just silly.

I have said that there is no demand for these "posh" homes. the only way to clear them is to lower the price and let the chips fall where they may, and admit that all those that paid high prices in 2007 were suckers.

This is one of your better post. When price corrects such as another financial crisis, what will happen to first buyers? U can get a ferrari but a nissan gtr is comparable if not better in performance? How many would dare to get ferrari even its second hand? Go for mass market like toyota and there will be a lot of buyers. These luxury prices cannot be reduced openly unless its another crisis.

[sleek]

Thought Fund Managers were the buyers for such homes? Any statistics on these?

[rattydrama]

My colleague is a UK resident. She is here for a 2 year project. She mentioned that a lot of people want to stay in London because of work. If one stay outside London, it will take around 1.15hrs to go into London by train and a daily of 2.5-3 hours spent on travelling. Driving is not an option due to congestion. London now charge “congestion charge” similar to our ERP system but understand it is expensive. (Forgot to ask how much!)

Going forward the situation maybe better as high speed train is in operations in selected locations and commuter can reach London within 30 minutes so this has impact the price of the out-skirt property now.

As for the price of the property, the price has dropped sharply since Lehman Brothers time and it is not moving now because it is difficult to get job in London at the moment and nobody wants to buy property.

Housing price has got to do with the economy. If the economy is going to do well, the property price will go up.

In France, the price of property is not moving at all because the government imposes stamp duty for any property sold within 15 years. This measure dissuades people from buying and no one wants to speculate on property. You can guess what will happen to our Property price here. What about if our economy didn’t do well or slowed down?

I don’t think we can compare Singapore property with London property because our Public Transport system and ERP system is still doing a good job. The price differentiation of 8X will not happen in our life time.

I second the comments. Those so called 'experts' should buy the posh homes themselves since they claim it's 'below previous peak'

I've said many times what used to be prime may not be prime anymore, and you have some forumnites (agent or owner) jumping and comparing with london and such and proclaiming demand is huge etc etc and making widely irrelevant analogies.

No demand = No demand, simple as that. Prime's desirability has fallen relative to its pricing, hence no takers. If the converse is true, there will be surplus of 1000 buyers finding posh homes instead.

[mantrix]

My colleague is a UK resident. She is here for a 2 year project. She mentioned that a lot of people want to stay in London because of work. If one stay outside London, it will take around 1.15hrs to go into London by train and a daily of 2.5-3 hours spent on travelling. Driving is not an option due to congestion. London now charge “congestion charge” similar to our ERP system but understand it is expensive. (Forgot to ask how much!)

Going forward the situation maybe better as high speed train is in operations in selected locations and commuter can reach London within 30 minutes so this has impact the price of the out-skirt property now.

As for the price of the property, the price has dropped sharply since Lehman Brothers time and it is not moving now because it is difficult to get job in London at the moment and nobody wants to buy property.

Housing price has got to do with the economy. If the economy is going to do well, the property price will go up.

In France, the price of property is not moving at all because the government imposes stamp duty for any property sold within 15 years. This measure dissuades people from buying and no one wants to speculate on property. You can guess what will happen to our Property price here. What about if our economy didn’t do well or slowed down?

I don’t think we can compare Singapore property with London property because our Public Transport system and ERP system is still doing a good job. The price differentiation of 8X will not happen in our life time.

Good anecdotal points. Exactly reinforcing what I was saying earlier. In Europe, suburbs are really suburbs - few amentities, low accessibility. Whereas in Singapore, our so-called 'suburbia' is only a symbolic name to distinguish the snobs from the masses. However savvier investors nowadays realise our suburbia is, in fact, part of Singapore city itself. As our core business districts expand and diverge, I would be surprised if price differentiation between 'prime' and 'non-prime' is more than 3x in future...