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Singapore Property Weekly Market Wrap Week 24: - Jun 9, 2008
Gomes Candice Armindo
En Blocs Beckon Spotlight amid Souring Market
Collective sales are back in the market, with PropNex Realty relaunching 4 en bloc sites. Caenagh Garden, Novena Hill, Seletar Gardens, and Hong Thye have been put up for sale, only that this time, their prices have been cut up to 30% so as to match the current property outlook. A move like this can be described as brave, as other sites that have been relaunched amid a cautious market but have failed to allure the interest of any prospective buyers. (Teo[a] 2008)
Developers themselves are at a loss with what to do with purchased land. The market has already seen some developers back out of their collective sales just when property sentiments began to slide. A few other developers are considering Joint Ventures to alleviate the fiscal constraints while many just let property turn into white elephants, deciding to do nothing until the market shows signs of improvement. None have been so brave as to attempt another purchase, as even if en bloc prices were cut significantly, the demand of the market may not translate into greater sales in the future, thereby engendering thin profit margins.
Developers Yet To Concede Defeat
Although miffed about current market sentiments, some developers have not conceded defeat. Property developers Koh Brothers and GuocoLand’s decision to rent out purchased flats to tenants is one of the ways developers have decided to make the best of a bad situation. Both property developers had purchased collective sales during the en block peak, only to be hit in the face by weakening demand for residential property. Yet, renting out flats they’ve purchased is a viable temporary solution considering the high rentals prevalent in the market. (Teo[b] 2008)
Koh Brothers are currently renting out flats at Licoln Lodge from $2700 to $4500 for larger units. GucoLand on the other hand has three bedroom units at Leedon Heights leased for $2,850, while those at Sophia court are being least from $800 to $4000 a month. (Teo[b] 2008)
The choice to rent out flats has also worked to the benefit of previous owners of en bloc flats. Many owners have yet to find suitable homes to move into, and have continued to rent out their flats from the developers until they do so. (Teo[b] 2008)
It suffices to say that Koh Brother and GucoLand have not yet their investments go stale. Whether other developers sit on the rental bandwagon, remains to be seen.
HDB Flat Applicants in Focus
Ms Kee Lay Cheng, a Deputy Director at the Housing Development Board, made a statement explaining the reasons as to why so many Build- To-Order (BTO) flats were oversubscribed and yet failed to acquire sufficient buyers. HDB’s analysis of feedback from applicants, whom failed to select flats after their turn was due, revealed that many applicants decided to forgo HDB flats as they decided to go for resale flats or flats of their choice were not available. Many also cited that financial constrains were the reason they decided to forgo flat selection. (Kee 2008)
Ms Kee Lay Cheng also reiterates that applicants with special flat requirements could consider resale flats where a CPF Housing Grant of $30,000 to $40,000 is available for eligible flat buyers.(Kee 2008)
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However, rising COV’s may thwart many applicants from looking to resale flats. Moreover, those just missing the eligibility to get CPF Housing Grants may still find themselves in tight monetary positions concerning housing as rising HDB sales prices may be out of the way, and private housing may be considered extremely steep.
Impending Government Land Sales: Which Sites to Attract Buyers?
The Government Land Sales (GLS) programme is to announce the sites that are to be on sale. The success of the sales is highly dependent on whether market needs are to be met. (Rashiwala 2008)
High–end private residential sites are not in demand as the supply is plentiful. A market however exists for mid and mass market residential sites. Sites that are expected to attract buyers are those located near MRT stations, water views, or in close proximity within shopping centres and good schools. Locations within a close radius of MRT’s are also expected to yield higher premiums as transportation costs start to escalate. (Rashiwala 2008)
CBRE recollects the characteristics of residential sites that have been sold through the Government Land Sales confirmed list. They are all locations either located at the fringes of water bodies, such as Lower Seletar Reservoir, or near the sea, and are located near MRT’s such as Khatib, Bradell and Choa Chu Kang. (Rashiwala 2008)
References
Kee, L C 2008, Fickle flat buyers diverting HDB's time, resources, Straits Times, The ( Singapore), June 6
Rashiwala, K 2008, Little choice but to offer less choice sites - Developers fear oversupply; the govt must offer some sites but may not waste prime sites, Business Times, The ( Singapore ), June 6
Teo[a], J 2008, 4 sites relaunched for collective sale at lower prices - PropNex hopes 30% cut in asking price will attract buyers, as demand is 'still there' , Straits Times, The ( Singapore ) , June 5
Teo[b], J, Developers turn landlords as property market stays quiet - With projects held back, firms lease out units bought in collective sales , Straits Times, The ( Singapore ), June 4
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