SINGAPORE: Competition is likely to get more intense in the private residential property market, with developers rolling out new projects.
Based on new home sales data for January 2015 from the Urban Redevelopment Authority, there are 20 large developments with a total unsold stock of more than 200 units each – excluding executive condominiums.
They include recent projects like Symphony Suites in Yishun, as well as those launched two years ago, such as The Trilinq in Clementi.
Century 21 Singapore said developers may have to consider offering more discounts in order to move units.
Projects that were launched recently have seen fairly encouraging sales. Kingsford Waterbay at Upper Serangoon sold 140 units during the weekend of Mar 7 and 8, at an average price of S$1,050 to S$1,180 per square foot (psf). Sims Urban Oasis at Sims Drive, meanwhile, sold over 170 units since sales started in mid-February, at around S$1,350 psf on average.
Both developments have over 1,000 units each, and their developers have opted to launch them in phases. Analysts said the positive sales momentum could see more projects being launched.
For instance, North Park Residences in Yishun, as well as Botanique @ Bartley are likely to be put on the market in the coming weeks.
However, the new launches are likely to put more pressure on existing projects with unsold units. Despite weaker sales since the implementation of the Total Debt Servicing Ratio framework in June 2013, many developers have been reluctant to cut prices substantially.
Said Mr Ku Swee Yong, CEO of Century 21 Singapore: “Of this whole list, perhaps only The Panorama in Ang Mo Kio has an obvious drop in prices. What developers have been doing in the last 12 months is that they have been slowly increasing the commission payable to agents, in order for them to swing their clients to these projects.
“Right now, it looks like things will be that way, depending on which developers decide to cut their prices more, then we would see the game changing.”
Meanwhile, Cushman & Wakefield said some developers may also refresh their showflats, offer more attractive interior design or introduce more flexibility to the layout of units in order to woo buyers.
Overall prices of private homes fell 4 per cent in 2014.
Analysts said some home buyers who bought units when the market was bullish may book losses if they choose to sell today.
“We have done a study on some of the outskirts location, in particular, projects that have more than 200 units in development,” said managing director of Chestertons, Mr Donald Han. “Assuming that the buyers have bought in 2Q of 2013 and if that person were to sell in 2015, which is the current market price, there have been few developments. In fact, out of 40 developments that were launched in 2010, about 11 would have suffered some form of paper loss.”
“We looked through the entire database and found that most of the realised losses happened in the CCR (Core Central Region) area, that is the District 9,10, 11, Sentosa and Downtown core,” said director of research at Cushman & Wakefield, Ms Christine Li.
She added: “Some of the projects such as Robinson Suites, it was launched at S$2,900 psf, but currently, it is transacting at S$2,200 psf. Losses range from half a million dollars to close to one million dollars because these units are typically quite small.”
Analysts said prices may recover over time if the projects have strong attributes or when the Government relaxes the cooling measures.
However, Ms Li noted: “There is always a risk associated with property investment. We should not assume that property prices will keep going up, and not come down. It is not a one-way street.”