Top Print Edition Stories
Published December 13, 2006

Launches in property hot spots may cool price gains

Districts 1, 4, 9, 10 and 11 expected to make up 52% of total private homes that could be launched next year


(SINGAPORE) Slightly more than half of about 14,700 private homes that could be launched next year will be in the traditional prime districts of 9, 10, 11 and the increasingly popular areas of Marina Bay (District 1) and Sentosa Cove/Harbourfront (District 4), says CB Richard Ellis (CBRE).

This is higher than the estimated 40 per cent share commanded by these five districts out of the estimated total of 10,100 to 10,300 private homes launched this year.

Districts 1, 4, 9, 10 and 11 have recorded some of the most spectacular gains in residential property prices this year.

But some market watchers say the pace of price appreciation in these areas could be dampened by their higher share of launches next year.

At Marina Bay and Sentosa Cove, prices have surged about 40 per cent over the past year, fuelled partly by the 'IR effect'.

In the traditional prime districts, the increase has been lower at 20-30 per cent.

Knight Frank managing director Tan Tiong Cheng says the high proportion of launches in the traditional prime districts of 9, 10 and 11 next year is due to the slew of collective sales in these areas in the past two years.

'So when these sites are redeveloped, these locations will account for a sizeable chunk of new launches,' he said.

Market watchers highlighted one factor that could help offset the dampening effect that new launches could have on prices in districts 1, 4, 9, 10 and 11 - existing stock will shrink over the next 12-18 months as collective sale properties are pulled down for redevelopment.

The price equation also depends on other factors - such as whether en bloc sellers in these districts seek replacement units in the same area or move elsewhere, and also whether the strong wave of foreign buying will continue. But whatever the case, Knight Frank's Mr Tan reckons it may be difficult to escape the fact that more launches in these locations could dampen the rate of price appreciation.

Agreeing, DTZ Debenham Tie Leung's executive director Ong Choon Fah said: 'People will have more alternatives, and they can exercise their choice. However, they may still be willing to pay for a unique development. So prices which new developments will be able to command will increasingly be product-driven, not just location-driven.'

It should also be noted that not all the 14,700 private homes that may be launched next year will in fact be released next year. CBRE reckons the actual figure could be closer to 10,000-12,000 units.

In terms of take-up, CBRE predicts that developers could sell about 8,000-10,000 private homes next year - up from its estimate of 9,200-9,500 for this year.

It also estimates that luxury home prices could rise a further 10-15 per cent next year, after increasing by the same quantum this year.

Islandwide, as measured by the Urban Redevelopment Authority's private home price index, CBRE sees next year's increase at about 5-8 per cent, after this year's 8-9 per cent gain.

CBRE's director (residential project marketing) Joseph Tan says prices will rise next year because land prices have risen by 10-50 per cent and construction costs have gone up substantially.

Key launches in districts 1, 4, 9, 10 and 11 next year will be Keppel Group's Keppel Bay (phase 2), Lippo's condominium at Sentosa Cove, CapitaLand's and Sun Hung Kai's apartment development on the landmark Orchard Turn site and Singapore Press Holdings' freehold condo at Thomson Road.

CBRE's analysis shows that 32 per cent, or around 4,700, of the estimated 14,700 homes that could be launched next year are freehold projects in districts 9, 10 and 11.

Of this figure, the highest concentration will be in the Grange/Paterson area with about 800 units (17 per cent), followed by 650 units (14 per cent) in Devonshire/Leonie Hill.

Then come Kim Seng Rd/River Valley with 640 homes, and Cairnhill/Peck Hay with 630 homes.