Location is still the name of the game when it comes to property sales

Although Verticus At Balestier is priced 20% lower than a nearby project, it sold only 15 of its 162 units in February

Mon, Mar 16, 2020

Siow Li Sen


WHEN it comes to property, it is still location, location and location that usually explains why one project sells like hot cake and another at a sedate pace.

And it's not due to Covid-19. Last month, at The M, in the Ophir-Rochor corridor, buyers snapped up a total of 392 units or 75 per cent of the 522-unit condominium over two weekends of sales.

Over at the Verticus At Balestier - a 162-unit freehold development - in a private preview on Feb 15, only 15 units, including two penthouses, were sold. The average transacted price for the units sold was S$1,991 per sq ft (psf).

This despite the units being priced at least 20 per cent lower than another project in the Balestier vicinity.

Buyers of the Verticus are Singaporeans in the 30-40 age group, according to the developer Soilbuild Group Holdings.

Last year, when the developer was planning its launch, it looked at pricing from S$2,100 to S$2,200 psf as doable, said Lim Han Qin, Soilbuild director.

It took the nearby Neu At Novena - a freehold 87-unit project which is a three-minute walk to the Novena MRT station and sold at an average price of S$2,611 psf - as a reference. Neu At Novena is developed by Roxy Pacific Holdings.

The discount recognised the fact that the Verticus is a 12-minute walk to Toa Payoh MRT station.

"We took Neu At Novena as a pricing benchmark because of the proximity; both are also smallish projects and freehold," Mr Lim told The Business Times. Freehold projects are rare in Singapore as the majority of homes are on 99-year leasehold land, he noted. Buyers flocked to Neu at Novena's Oct 19 launch last year where 44 out of 87 units, or over 50 per cent, were sold.

In one week from launch, almost 65 per cent of total units were sold and Mr Lim has heard that the momentum has carried through with not many units left. According to the Neu@Novena's website on March 13, 86 per cent or 75 out of 87 units have been sold.

The Verticus launched its project last month, "pricing at a very reasonable discount" but found sales slower than expected, despite selling at a 20-25 per cent discount to the benchmark.

In addition to "very attractive pricing", Verticus also "has a tennis court, swimming pool, recreational facilities giving it a full condo feel," he said. "To be honest, we're also trying to figure out why....though we have some ideas," said Mr Lim.

Besides being further from an MRT station, the other factor is that Verticus is in District 12 while Neu@Novena is in District 11, he noted. Districts 9,10 and 11 are regarded as Singapore's most desirable areas for homes.

"We are on the 'wrong' side of Balestier Road," said Mr Lim frankly.

Will Soilbuild lower prices further then?

It's already selling at pretty slim margins, he said. Cost is almost S$2,000 psf and profit margin is 5-10 per cent, he said. "We don't have much to go," he said.

"Developers are well positioned to be cushioned from pressures on profit margins. Generally, developers including ourselves, over the last bull run have build up sufficient buffers in our reserves," said Mr Lim.

The company is owned by his father Lim Chap Huat, who is also the executive chairman of listed-Soilbuild Construction Group and non-executive director of SB Reit Management, the manager of listed Soilbuild Business Space Reit.