Developers delay high-end launches

Some even hold back completion in anticipation of market picking up

Published on Sep 03, 2012

By Esther Teo, Property Reporter

Major upcoming high-end launches

Newly completed high-end projects with unsold units

DEVELOPERS seem to be delaying the launches and, in some cases, completions of their luxury residential projects as they await the anticipated uptick in the high-end segment.

As homes in suburban areas fly off the shelves at record high prices, it is a different picture in the luxury sector with anaemic volumes and prices languishing over the past year.

Property consultancy Savills Singapore noted in a report that prices of new non-landed luxury homes dipped 6 per cent to $2,230 per sq ft (psf) in the second quarter. This is on top of a 5 per cent fall in the first three months of the year.

But things might change for posh homes with volumes picking up again now as the price gap between high-end homes and suburban apartments narrows.

Experts say that developers have, in the meantime, held back their official launches as they wait for this turnaround.

One property consultant, who declined to be named, said that one mode of sale considered for luxury projects is the private preview. Some developers are said to have chosen to tap their network of contacts too.

A fear is that if sales did not come in after a proper major launch, it would reflect badly on the project, said the consultant.

Some projects that have chosen the private route include Tomlinson Heights, Le Nouvel Ardmore and Bishopsgate Residences, he said.

Units in these projects often cost more than $3,000 psf, with overall prices of at least $5 million.

Those selling through official launches are delaying the process until their projects are completed.

Hiap Hoe, for instance, said in its second quarter financial statement that it intends to officially launch Skyline 360 at St Thomas Walk and Treasure on Balmoral upon the projects' completion in the last three months of the year.

The 61-unit Skyline 360 is 56 per cent sold since its soft launch in 2010 but no units at the 48-unit Treasure on Balmoral have changed hands yet.

Mr Alan Cheong, Savills' head of research, said some developers have also appealed for a waiver of extension charges.

These fees are incurred by foreign developers who do not dispose of all homes in a project within two years of its completion. Foreign developers refer to any firm with at least one non-Singaporean shareholder or director, and thus includes all the listed developers here.

"Developers with holding power will likely pay to lengthen their sales window while maintaining their current sales prices.

"Some may even choose to pay the additional buyer's stamp duty and transfer their unsold inventory to an investment company and lease out these units as investment assets while waiting for a price appreciation in the medium term," Mr Cheong added.

Experts add developers could also choose to delay completions for some projects so they do not get caught by the two-year rule. This is especially so for projects that have not sold well.

But Mr Nicholas Mak, head of research for SLP International, said developers might be able to slow down construction only to a certain extent as the schedule of external contractors and buyer expectations have to be met.

"The reasons behind delaying completion, however, could be to avoid being under pressure to sell, paying holding costs for a completed property and to prevent ageing from setting in," he added.

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