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Thread: Developers trim prices as new reality bites

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    Default Developers trim prices as new reality bites

    Developers trim prices as new reality bites
    New launches priced below expectations as buyers struggle to secure loans

    [SINGAPORE] The impact is now there for all to see. Developers have been trimming launch prices for new private residential projects to adjust to the new market reality in the aftermath of the Total Debt Servicing Ratio (TDSR) framework's rollout in late June.

    A case in point is the 445-unit Thomson Three condo in Bright Hill Drive, being developed by UOL Group and Singapore Land.

    "Without TDSR, we could easily have priced this project at $1,500 psf on average, or even higher. We now expect to price it at a more realistic level, at $1,350-1,400 psf," said Liam Wee Sin, president (property) at UOL.

    The showflat of the project, located at the Upper Thomson Road/Venus Drive corner, will open this weekend, although sales booking will begin two weeks later, on Sept 20.

    "Notwithstanding the recent curbs (TDSR), we still see strong underlying demand for private homes and the overall economic outlook has been more positive recently. However, with TDSR, buyers are now more selective and sensitive to the total price quantum, so developers have to be more realistic in their pricing," he added.

    The TDSR rules require financial institutions, when granting property loans to individuals, to ensure the borrower's monthly total debt repayments do not exceed 60 per cent of his gross monthly income.

    Downward adjustment of developers' earlier pricing expectations is also set to surface for two condo projects where sales begin today - The Skywoods in the Dairy Farm area and The Glades in Tanah Merah. All three projects are 99-year leasehold.

    For Skywoods, "we were looking at nearly $1,300 psf on average pre-TDSR but we'll now release it at $1,250 psf", said Neo Tiam Boon, group CEO of TA Corporation. TA is developing the 420-unit project with Hock Lian Seng Holdings, King Wan Corporation and Far East Distillers. "The issue today is not that there are no buyers. There are a lot of interested people who want to buy, but they could not get a loan.

    "Conservatively, I estimate possibly one-third of those who saw our showflat couldn't secure a bank loan," he added.

    All eyes are also on Keppel Land's The Glades, near Tanah Merah MRT Station. Earlier, agents had been giving average price indications of around $1,400-1,600 psf. KepLand declined to comment on the pricing yesterday.

    Nearby, Fragrance and World Class Land launched Urban Vista in March, achieving a median price of $1,503 psf in that month. "May be KepLand will price Glades a tad below $1,500 psf," suggested a property agent, although there were whispers earlier this week that the pricing may be closer to $1,400 psf, given the challenge of moving the sheer number of units in the project - 726 apartments. "Most of the demand in the Bedok South/Tanah Merah area has probably been sucked by eCO and Urban Vista," said the agent. eCO, along Bedok South Avenue 3 and further away from Tanah Merah Station, was released in September last year, achieving a $1,283 psf median price in that month.

    As developers start lowering their expectations for new launches, it is just a matter of time before this has an impact on earlier launches, acknowledged industry players.

    Knight Frank chairman Tan Tiong Cheng said that of all the cooling measures in the past four years, TDSR has the greatest impact. "It dampens buying as a result of difficulty in getting loans, though interest rates generally are still low.

    "As a result, developers who have already geared up to launch after the Seventh Month are all trying to find the right pricing level," said Mr Tan.

    "Most people can still get loans; just not the quantum they want. As a potential buyer, I have two choices. One would be to compromise and buy a lower-cost or smaller unit. Or if a developer is seen to have dropped pricing from earlier expectations by 5-10 per cent, it may entice me to commit," said Mr Tan.

    A seasoned observer reckons that token cuts of 5 per cent or less may not do the trick in most cases. "But if we see price drops of say 10-15 per cent, a lot of people will get back in to the market."

    Mr Tan expects prices of projects launched less than six months ago to come down to match the new launch prices. "For developers with existing projects on the market, once sales stall, the correct strategy, which some are adopting, is to temporarily close the showflat, as leaving it open will worsen sentiment.

    "They can then reopen a few months later and adjust prices to the new level," said Mr Tan.

    UOL and SingLand paid nearly $720 per square foot per plot ratio for the site of their Thomson Three project. The breakeven cost could be around $1,150 psf. Absolute prices in the project start from $672,000 for a 495-sq ft one-bedder.

    The development, near the future Upper Thomson MRT Station, will include 10 strata semi-detached houses priced at around $3.4-3.5 million each.

    "There's a lack of supply, and pent-up demand in this vicinity. The recent ruling quashing Thomson View's en bloc sale will mean tighter supply in this micro market," Mr Liam said.

    Separately, UOL last night clinched two wins at the Fiabci Singapore Property Awards 2013 - for its Parkroyal On Pickering in the hotel category and Double Bay Residences condo in Simei in the residential (high-rise) segment.

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    it is starting and moving...

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    if land bid continue to be so bullish, how much can one trim?

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    Quote Originally Posted by Amber Woods View Post
    [SIZE=3]
    "Without TDSR, we could easily have priced this project at $1,500 psf on average, or even higher. We now expect to price it at a more realistic level, at $1,350-1,400 psf," said Liam Wee Sin, president (property) at UOL.
    ...
    Knight Frank chairman Tan Tiong Cheng said that of all the cooling measures in the past four years, TDSR has the greatest impact. "
    Sounds like a typical marketing strategy used by all agents...

    and how can TDSR has the greatest impact, certainly ABSD has the greatest impact.

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    if not due to TDSR, buyer would have to pay $100K-$150K more for a 1000 sqft unit for nothing?

    "Without TDSR, we could easily have priced this project at $1,500 psf on average, or even higher. We now expect to price it at a more realistic level, at $1,350-1,400 psf," said Liam Wee Sin, president (property) at UOL.

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    Default Developers trim prices as new reality bites

    http://www.businesstimes.com.sg/prem...bites-20130906

    Published September 06, 2013

    Developers trim prices as new reality bites

    New launches priced below expectations as buyers struggle to secure loans

    By Kalpana Rashiwala [email protected]


    Unique position: There's a lack of supply, and pent-up demand in the vicinity of Thomson Three, says Mr Liam. - PHOTO: UOL

    [SINGAPORE] The impact is now there for all to see. Developers have been trimming launch prices for new private residential projects to adjust to the new market reality in the aftermath of the Total Debt Servicing Ratio (TDSR) framework's rollout in late June.

    A case in point is the 445-unit Thomson Three condo in Bright Hill Drive, being developed by UOL Group and Singapore Land.

    "Without TDSR, we could easily have priced this project at $1,500 psf on average, or even higher. We now expect to price it at a more realistic level, at $1,350-1,400 psf," said Liam Wee Sin, president (property) at UOL.

    The showflat of the project, located at the Upper Thomson Road/Venus Drive corner, will open this weekend, although sales booking will begin two weeks later, on Sept 20.

    "Notwithstanding the recent curbs (TDSR), we still see strong underlying demand for private homes and the overall economic outlook has been more positive recently. However, with TDSR, buyers are now more selective and sensitive to the total price quantum, so developers have to be more realistic in their pricing," he added.

    The TDSR rules require financial institutions, when granting property loans to individuals, to ensure the borrower's monthly total debt repayments do not exceed 60 per cent of his gross monthly income.

    Downward adjustment of developers' earlier pricing expectations is also set to surface for two condo projects where sales begin today - The Skywoods in the Dairy Farm area and The Glades in Tanah Merah. All three projects are 99-year leasehold.

    For Skywoods, "we were looking at nearly $1,300 psf on average pre-TDSR but we'll now release it at $1,250 psf", said Neo Tiam Boon, group CEO of TA Corporation. TA is developing the 420-unit project with Hock Lian Seng Holdings, King Wan Corporation and Far East Distillers. "The issue today is not that there are no buyers. There are a lot of interested people who want to buy, but they could not get a loan.

    "Conservatively, I estimate possibly one-third of those who saw our showflat couldn't secure a bank loan," he added.

    All eyes are also on Keppel Land's The Glades, near Tanah Merah MRT Station. Earlier, agents had been giving average price indications of around $1,400-1,600 psf. KepLand declined to comment on the pricing yesterday.

    Nearby, Fragrance and World Class Land launched Urban Vista in March, achieving a median price of $1,503 psf in that month. "May be KepLand will price Glades a tad below $1,500 psf," suggested a property agent, although there were whispers earlier this week that the pricing may be closer to $1,400 psf, given the challenge of moving the sheer number of units in the project - 726 apartments. "Most of the demand in the Bedok South/Tanah Merah area has probably been sucked by eCO and Urban Vista," said the agent. eCO, along Bedok South Avenue 3 and further away from Tanah Merah Station, was released in September last year, achieving a $1,283 psf median price in that month.

    As developers start lowering their expectations for new launches, it is just a matter of time before this has an impact on earlier launches, acknowledged industry players.

    Knight Frank chairman Tan Tiong Cheng said that of all the cooling measures in the past four years, TDSR has the greatest impact. "It dampens buying as a result of difficulty in getting loans, though interest rates generally are still low.

    "As a result, developers who have already geared up to launch after the Seventh Month are all trying to find the right pricing level," said Mr Tan.

    "Most people can still get loans; just not the quantum they want. As a potential buyer, I have two choices. One would be to compromise and buy a lower-cost or smaller unit. Or if a developer is seen to have dropped pricing from earlier expectations by 5-10 per cent, it may entice me to commit," said Mr Tan.

    A seasoned observer reckons that token cuts of 5 per cent or less may not do the trick in most cases. "But if we see price drops of say 10-15 per cent, a lot of people will get back in to the market."

    Mr Tan expects prices of projects launched less than six months ago to come down to match the new launch prices. "For developers with existing projects on the market, once sales stall, the correct strategy, which some are adopting, is to temporarily close the showflat, as leaving it open will worsen sentiment.

    "They can then reopen a few months later and adjust prices to the new level," said Mr Tan.

    UOL and SingLand paid nearly $720 per square foot per plot ratio for the site of their Thomson Three project. The breakeven cost could be around $1,150 psf. Absolute prices in the project start from $672,000 for a 495-sq ft one-bedder.

    The development, near the future Upper Thomson MRT Station, will include 10 strata semi-detached houses priced at around $3.4-3.5 million each.

    "There's a lack of supply, and pent-up demand in this vicinity. The recent ruling quashing Thomson View's en bloc sale will mean tighter supply in this micro market," Mr Liam said.

    Separately, UOL last night clinched two wins at the Fiabci Singapore Property Awards 2013 - for its Parkroyal On Pickering in the hotel category and Double Bay Residences condo in Simei in the residential (high-rise) segment.

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    one side trim price other side bid sky high record price bunch of clowns these developers and of course the biggest clowns are people like US who end up buying those properties
    In the final analysis.....its NOT whether you have a diploma,degree,masters OR PHD....its whether you have a HDB/PC/EC or LANDED...

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    Quote Originally Posted by radha08 View Post
    one side trim price other side bid sky high record price bunch of clowns these developers and of course the biggest clowns are people like US who end up buying those properties

    Brudder, u know why they trim prices???? The layouts all done Liao... Then TDSR came out... They no choice have to trim prices...

    So all the newer condos where design layout not done yet, they will trim down the sizes (square feet) to make it 'cheaper' or 'more affordable'.

    It is already happening but it will happen even more moving forward....

    Look at hdb, compare 4 room flats of the past with todays........

    HAHAHAHAHAHA... The future generations need to be smaller size lor...



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    Quote Originally Posted by chestnut View Post
    Brudder, u know why they trim prices???? The layouts all done Liao... Then TDSR came out... They no choice have to trim prices...

    So all the newer condos where design layout not done yet, they will trim down the sizes (square feet) to make it 'cheaper' or 'more affordable'.

    It is already happening but it will happen even more moving forward....

    Look at hdb, compare 4 room flats of the past with todays........

    HAHAHAHAHAHA... The future generations need to be smaller size lor...


    to a certain extend they can reduce to smaller size for newer condo but there is still a limit. average size has to be 700sqf or something like that.

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    Quote Originally Posted by 4wheels View Post
    to a certain extend they can reduce to smaller size for newer condo but there is still a limit. average size has to be 700sqf or something like that.

    Look at hong kong

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    If TDSR works, then I really feel that Singapore property is a bubble as it means the people buying really dun have the cash. It is worrying

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    Thank to TDSR, Singapore property bubbles then are not forming........
    Just Do It! 要拼才会赢!

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    TDSR is to ensure people don't over-commit on property!
    TDSR is to eliminate those not rich ones from competing in property market & from making money from property market! These people should focus & just do well on their job & don't speculate in property! If everybody can easily make money from property with little money down, where is the incentive to work hard?

    Quote Originally Posted by RCT View Post
    If TDSR works, then I really feel that Singapore property is a bubble as it means the people buying really dun have the cash. It is worrying

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    why isn't mnd setting a guideline on developers to declare the live in space, i.e. less off rc and ac ledge.

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    Aren't they suppose to specify in brochure the bedroom size, living area size etc already?

    Quote Originally Posted by kane View Post
    why isn't mnd setting a guideline on developers to declare the live in space, i.e. less off rc and ac ledge.

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    Quote Originally Posted by felicia_sg View Post
    TDSR is to ensure people don't over-commit on property!
    TDSR is to eliminate those not rich ones from competing in property market & from making money from property market! These people should focus & just do well on their job & don't speculate in property! If everybody can easily make money from property with little money down, where is the incentive to work hard?
    Very well said. This group should never be lured into that market at the first place, it is liked ended up on wrong gambling table with too high minimum bet…hah.

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    Most probably developers will trim costs by using cheaper materials and less labour resulting in longer wait for top.


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    clear marketing strategy to bluff the people by saying... if not for TDSR we would have priced it more...

    but who knows ? it is highly hypothetical...

    just mind-games...

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    Quote Originally Posted by CSR999 View Post
    clear marketing strategy to bluff the people by saying... if not for TDSR we would have priced it more...

    but who knows ? it is highly hypothetical...

    just mind-games...

    999 is indeed an experienced investor.

    Yes! The trim price message is pure marketing.
    Dont need to say so much just look at the crowd in the showflat today!

    The marketing has been so well done that they should make a movie out of this connery!

    This is certainly one of the effects of the silly Jurong condo!

    In everyone's mind, paying $1,4xx for Thomson is certainly very very worth it considering those Jurong folks paid $1,5xx !!!

    Are you ready for the Jurong Wave back into CCR ?

    DKSG

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    Quote Originally Posted by DKSG View Post
    999 is indeed an experienced investor.

    Yes! The trim price message is pure marketing.
    Dont need to say so much just look at the crowd in the showflat today!

    The marketing has been so well done that they should make a movie out of this connery!

    This is certainly one of the effects of the silly Jurong condo!

    In everyone's mind, paying $1,4xx for Thomson is certainly very very worth it considering those Jurong folks paid $1,5xx !!!

    Are you ready for the Jurong Wave back into CCR ?

    DKSG

    Are you trying to make him sound experience after 6 posts in this forum because he gave you an opportunity to take another shot at J Gateway?

    And you were saying that property prices in Singapore will rise as a result of J Gateway? Have you felt the effect yet?
    "Never argue with an idiot, or he will drag you down to his level and beat you with experience."

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    Quote Originally Posted by kane View Post
    why isn't mnd setting a guideline on developers to declare the live in space, i.e. less off rc and ac ledge.
    HK already set a rule on show flats : BARE unit only.

    Try that on these SG new launches. It will knock some sense into "innocent" buyers.

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    Quote Originally Posted by amk View Post
    HK already set a rule on show flats : BARE unit only.

    Try that on these SG new launches. It will knock some sense into "innocent" buyers.
    Dun sabo leh, brother...

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    people are sold to the fact of good urban planning . If ponggol 21 n jurong lake D is not done properly with massive jam, then its going to be a failure.

    with the new hospital there , looks like lta has to step up on looking at the roads immediately.

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    Quote Originally Posted by amk View Post
    HK already set a rule on show flats : BARE unit only.

    Try that on these SG new launches. It will knock some sense into "innocent" buyers.
    Developer with just throw in more standard features and fittings to differentiate themselves
    "Never argue with an idiot, or he will drag you down to his level and beat you with experience."

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    Quote Originally Posted by amk View Post
    HK already set a rule on show flats : BARE unit only.

    Try that on these SG new launches. It will knock some sense into "innocent" buyers.
    Don't need to go to such extreme, but at least all walls and doors with the "correct" thickness and material used must be shown at show flats. How come it is still not enforced here?
    “其疾如風,其徐如林,侵掠如火,不動如山,難知如陰,動如雷震”

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    Quote Originally Posted by samuelk View Post
    people are sold to the fact of good urban planning . If ponggol 21 n jurong lake D is not done properly with massive jam, then its going to be a failure.

    with the new hospital there , looks like lta has to step up on looking at the roads immediately.
    Traffic jams already happening in a lot of major roads and expressway everyday whether there is flood or not.
    “其疾如風,其徐如林,侵掠如火,不動如山,難知如陰,動如雷震”

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    LTA looking into putting up a few ERPs in JLD to regulate traffic! Fastest solution that can still make money! 1stone 2 bird!

    Quote Originally Posted by samuelk View Post
    people are sold to the fact of good urban planning . If ponggol 21 n jurong lake D is not done properly with massive jam, then its going to be a failure.

    with the new hospital there , looks like lta has to step up on looking at the roads immediately.

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    His 6 posts more valuable than your >3,000 posts!

    Quote Originally Posted by Ringo33 View Post
    Are you trying to make him sound experience after 6 posts in this forum because he gave you an opportunity to take another shot at J Gateway?

    And you were saying that property prices in Singapore will rise as a result of J Gateway? Have you felt the effect yet?

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