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Better sales likely despite dismal June launches

Pricing, holidays and simultaneous launches blamed for subdued response during last weekend

Singapore

THE availability of options from upcoming property launches in District 19 this year and benchmark pricing may have caused a slow-down in purchases last weekend.

Of course, one should not rule out the effect of the school holidays on the subdued take-up rates at the latest property launches. The market may also be finding it hard to digest simultaneous launches of large projects in the same weekend.

But most market watchers posit that buying demand remain strong and transactions should pick up after the June school holidays are over.

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"The market is still thirsty for private residential properties," said Savills Singapore senior director Alan Cheong. "It was just that the confluence of a few factors like timing of the launch during the school holidays, the simultaneous launch of competitive projects and the new pricing regime that has temporarily unsettled the market."

To have three mid-to-large sized projects being launched all at one go generates intense competition, he added. "If they had been spaced, it would have created the conditions where sales momentum from one project would roll onto the subsequent launch."

Last weekend, Keppel Land and Wing Tai Holdings sold more than 60 units at an average selling price of S$1,660 per square foot for the 613-unit condominium project in Serangoon, The Garden Residences.

Oxley Holdings sold 112 units out of the 300 that were launched in its phase one launch of Affinity At Serangoon at an average S$1,575 psf, with transacted units said to be evenly spread across various configurations - from one-bedders to four-bedders-plus- study apartments. Affinity At Serangoon has a total of 1,052 units.

Sales in these projects translate to take-up rates of 10-40 per cent. Prior to their subdued showing, earlier launches such as The Verandah Residences, Rivercove Residences (executive condominium) and Amber45 have seen strong take-up rates of above 50 per cent during their weekend launch.

Over at the more upscale Queenstown precinct in District 3, MCL Land sold 102 units of the 309-unit Margaret Ville at an average price of S$1,880 psf last weekend.

Roxy-Pacific Holdings also launched 120 Grange, where 37 units of the 56-unit freehold high-end condominium project along Grange Road were sold at an average S$3,100 psf.

DBS Group Research analysts felt that buyers' attention in Serangoon seemed split between the two large projects, which could have affected their weekend sales.

"Given that both projects are located near a sprawling Serangoon landed estate and a sizeable population living in nearby HDB flats, we believe that inherent demand for upgraders (new families) to be located near existing homes will remain strong," said analysts Derek Tan and Rachel Tan.

Their selling prices, if sustained, may translate into a margin of 14 per cent for The Garden Residences and 19 per cent for Affinity at Serangoon respectively, DBS analysts projected.

There are over 3,300 units in the pipeline that may be launch-ready this year in District 19 from the collective sales and government land sales sites.

"The relatively subdued take-up for Affinity At Serangoon and The Garden Residences, which are just five minutes away from each other, implies that increased options for buyers will slow sales amid rising competition from several projects launched or to-be-launched within the locality," said JPMorgan property analyst Brandon Lee.

Tricia Song, director and head of research at Colliers International Singapore, noted that the slower take-up rates for the two condominium projects in Serangoon last weekend could also be due to their lack of proximity to the MRT station and premium pricing vis-a-vis comparable projects in the immediate vicinity.

"Projects in less competitive locations and of freehold tenure such as Amber 45, Sixteen35, The Verandah Residences, Harbour View Residences appear to do better in terms of the percentage sold. This is partly because of their much smaller project size (57-170 units) and prices were not significantly higher than comparables, except for Amber 45, which is in a popular residential enclave with limited new supply," Ms Song said.

"We expect more attractive choices after June, with major projects such as Park Colonial, The Woodleigh Residences, Daintree Residences, The Jovell, Riverfront Residences, and Stirling Residences, she added. "Take-up rates will largely depend on pricing."

Mr Cheong reckoned that buyers can still afford to buy up to three-bedroom units in the new pricing regime. But given the higher prices at each new launch, "buyers could be caught off guard and would need time to accept the new reality", he said.

Property consultants are expecting developers to launch 14,000-16,000 units this year and sell over 12,000 units, excluding executive condominiums. Their price growth forecasts now range widely from 8 per cent to as high as 20 per cent for this year.

RHB Research Institute Singapore, which expects property prices to grow by 5-10 per cent this year, foresees property prices reaching a peak within the next few years.

"Liquidity from en-bloc, replacement and pent-up demand, should allow the property cycle to last for a few years," it said in a note. "In our view, we are likely to see prices increase up to 20 per cent more from the current value before tapering off."