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Thread: Big project launches expected to drive home sales from March

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    Oct 2011

    Default Big project launches expected to drive home sales from March

    Big project launches expected to drive home sales from March

    Buyers will be spoilt for choice; developers sold 433 private homes in Jan, down 28.1% month-on-month

    Sat, Feb 16, 2019

    PROPERTY consultants are expecting the pace of developers' private housing sales volumes to quicken from March as they start rolling out big projects in the suburbs.

    "Buyers will be spoilt for choice this year; attractively priced developments should perform well," said ERA Realty Network key executive officer Eugene Lim

    By some industry estimates, more than 40 projects totalling some 18,000 private housing units could be launch-ready in 2019, although some of the launches could flow into next year.

    "Everybody has to grab buyers, so the first month of a project launch is crucial; after that, the attention of buyers will be diverted to newer launches," said a senior executive from a big property agency who declined to be named.

    "That's why agents have to do the legwork and secure as many buyers as possible for the first-weekend sales of a new project launch."

    The latest data from the Urban Redevelopment Authority (URA) shows that developers sold 433 private homes last month, down 28.1 per cent from the 602 units they moved in December 2018, and also 17.8 per cent lower than the 527 units they moved in January 2018.

    But the latest January showing is "fair performance" when compared with the 324 to 527 units sold in January each year between 2015 and 2018, said JLL senior director (research & consultancy) Ong Teck Hui.

    Developers launched 498 new private homes last month - close to five times the 101 units placed on the market in the preceding month and about twice that launched in January last year.

    Developers launched three new projects in January 2019, all of which are in the prime areas or Core Central Region (CCR) - Fourth Avenue Residences, RV Altitude and Fyve Derbyshire. "Sales volume is usually higher when large-scale projects are launched in the suburban and city-fringe areas since their prices tend to be lower and more buyers can afford these homes," said Orange Tee & Tie head of research and consultancy Christine Sun.

    Analysts also pointed to the relatively small window of opportunity to launch projects in January given the short lead-up to the Chinese New Year festivities in early February. As a result, many developers may have pushed back their launches to avoid disrupting the sales momentum, since sales are typically slower during the festive season, noted Ms Sun.

    As for this month, PropNex Realty's chief executive Ismail Gafoor expects tepid sales peformance amid the CNY period. "Despite the lack of major launches in February, we believe that there will be a positive take-up rate of existing projects, as a result of buyers and investors capitalising on the announcement of the Cross Island MRT stations," he added.

    Property consultants are expecting developers to sell beween 7,500 and 10,000 private homes this year - against the 8,795 units in the previous year.

    Among the bigger projects slated for launch in coming weeks are The Florence Residences in Hougang, with 1,410 units, and the 2,203-unit Treasure at Tampines.

    Said ZACD Group executive director Nicholas Mak: "A large supply of new residential projects is expected to be launched this year. However, there is still underlying demand for private homes given Singapore's healthy labour market and as the risk of rapid interest rate hikes subsides. This underlying demand is mainly held back by the curbs implemented by the government."

    Mr Lim of ERA expects buyers who have a fixed budget to take a longer time to make their decision, athough the desire to buy is still there. "Buyers will now not be forced to chase a rising market as prices are going to be relatively stable . This is unlike in the past when the thinking was: 'If I do not jump in to the market now, prices will go even higher.' ''

    Developers on their part will have to be more realistic about pricing, bearing in mind the cooling measures and substantial launch pipeline, he added. "That said, most developers are not under pressure to chop prices. They can still make a profit but not as much as they may have hoped for when they bought their sites."

    January's top-selling project was Fourth Avenue Residences, with 74 units sold at a median price of S$2,412 psf.

    This was followed by Affinity at Serangoon, where 54 units were sold at a median price of S$1,496 psf; and Parc Esta in Sims Avenue, with 32 units transacted at a median price of S$1,745 psf. All three projects are 99-year leasehold. Meanwhile, Roxy-Pacific Holdings sold 19 units at RV Altitude along River Valley Road at a median price of S$2,858 psf, and 11 units at Fyve Derbyshire at a median price of S$2,382 psf. Both projects are freehold.

    Colliers International head of research for Singapore, Tricia Song said that Fourth Avenue Residences set a benchmark psf pricing for the Bukit Timah enclave for a 99-year leasehold project. "For existing projects on the market, however, developers have kept their selling prices stable, especially for those which have yet to cross 60-70 per cent sales of total units in the project."

    CBRE's head of research for Singapore and South-East Asia, Desmond Sim, noted that based on the URA data, 71.6 per cent of the units sold at Fourth Avenue Residences went for below S$2 million. "These are units with a relatively small median area of 710.4 sq ft, with a median price of S$2,412 psf."

    Mr Ong of JLL noted that the strong sales were achieved at Affinity at Serangoon in January following the announcement of the first phase of the Cross Island Line as the project would be within a short walk to the future Serangoon North MRT station. "This shows that in spite of the challenging market due to the cooling measures, projects having strong attributes, such as proximity to an MRT station, can still attract buyers, provided pricing is realistic."

    He also cited the examples of Parc Esta which is near Eunos MRT station; and Stirling Residences, in the vicinity of Queenstown MRT station, where 22 units were sold last month.
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