May 17, 2008

World's tallest condo in US...

...hit by pullout of many S'pore buyers

Two-thirds backed out after US sub-prime crisis took a turn for the worse

By Fiona Chan, Property Reporter

ICONIC STRUCTURE: The 150-storey Chicago Spire boasts a unique spiral-shaped design. Most of the units sold were said to be one- or two-bedroom apartments that averaged US$1 million each, or US$1,000 per sq ft. -- PHOTO: BLOOMBERG NEWS

LOCAL condominiums are not the only ones suffering from the recent sharp downturn in property market sentiment.

Two-thirds of Singapore buyers have backed out of their purchases of units in the much-hyped Chicago Spire in the United States, The Straits Times understands.

The iconic condo in Chicago was well-received when it was launched in Singapore in early March. More than 800 people attended the exhibition at the Four Seasons Hotel, and almost 40 buyers were said to have reserved units.

But more than 20 of them withdrew from their deals subsequently, after the US sub-prime crisis threatened to take a turn for the worse in the weeks following the launch, sources said.

The 150-storey Chicago Spire is touted as the world's tallest condo, and boasts a unique spiral-shaped design.

But this was not enough to hook buyers. A number were apparently spooked by the near-collapse of US investment bank Bear Stearns, which took place a week after the Chicago Spire was launched in Singapore.

These buyers paid a US$2,000 (S$2,762) reservation fee for the units, but were refunded this amount in full, thanks to a cooling-off period that is the standard for US home sales.

Mr Colin Tan, the head of research and consultancy at Chesterton International, said it made sense for the buyers to pull out of their deals.

'Housing prices in the US are coming down, and while some properties may look like a good investment now, you can probably get it cheaper later,' he said.

'It doesn't make sense to buy and hold on to US properties when there are still sub-prime problems.'

Experts said those who had seen their purchases through are likely to be more serious buyers who may, for example, have children studying in Chicago.

Most of the units that were sold were reported to be one- or two-bedroom apartments that averaged US$1 million each, or US$1,000 per sq ft.

About half the buyers were said to be Singaporeans or permanent residents, and the rest were expatriates.

It is understood that to date, about 10 of the Singapore buyers have inked their purchase agreements. At least two of them are believed to be Indonesians.

Sources said the Chicago Spire's exhibitions in Shanghai and Hong Kong, which followed its launch in Singapore, received a lukewarm response as the turmoil in the US financial markets deepened in March.

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