Singapore developers start to dangle discounts to move units

Singapore

MORE discounts are popping up at new private projects as developers try to move sales.

New private home sales in April plunged 58 per cent to 277 from 660 in March. February's sales numbered 976, the highest monthly volume so far in 2020. Developers sold 9,912 units in 2019.

Currently, the discounts offered during the circuit breaker which started in April are small, 1-4 per cent or ranging from a tiny S$3,000 for a one-bedroom unit at Treasure at Tampines to S$100,000 for a terrace house at Riverfront Residences.

Prospective buyers hoping for larger reductions or fire sale prices may be disappointed at the niggardly amounts given that the country is now staring at the worst recession ever, with expected massive layoffs.

But before Covid-19, developers would not need to offer discounts because they were confident their projects would sell given that 2020 started off on a relatively bright note, said Stuart Chng, partner at property investment blog Stacked Homes.

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There was even some anxiety that the government might introduce cooling measures but that eased as the price gain in 2019 of 2.5 per cent had moderated from 7.9 per cent in 2018. Critically, for the fourth quarter of 2019, the overall price index for private homes was up 0.3 per cent, and forecasts then were for prices to rise between 1 and 5 per cent in 2020.

Then the pandemic struck, and sales have stalled with show galleries shuttered from April 7 until further notice.

At the 1,472 unit Riverfront Residences in Hougang, where only 198 units are left, discounts are from S$20,000 for a one-bedroom unit to S$100,000 for a terrace house. These were announced on April 2.

Altogether, there are 21 terrace houses in the mixed-development project of which three have been sold, Mr Chng said.

The larger S$100,000 discount - which works out to 4 per cent - would bring the price down to S$2.3 million is for 11 of the terrace houses, he said.

"For the developer to give discounts when so little units are left is not normal developer behaviour. There was no need to throw discounts to clear units if not for Covid-19," he added.

Developers may sometimes slash prices and/or provide deferred payment schemes when projects are already completed and have obtained the temporary occupation permit which means that buyers can move in immediately.

Over at Treasure at Tampines, a mega project with 2,203 units, 50 per cent are left unsold as at June 9, Mr Chng said.

The small discount of S$3,000 for the one-bedroom unit has worked as none are left, he said.

"Discounts are small because sales are moving, people are biting as these are small units with low dollar quantum," he added.

The one-bedroom unit costs from S$706,000.

At Parc Clematis, discounts start from S$10,000 for the one-bedroom unit to S$60,000 for the penthouse.

There are much bigger cuts elsewhere. The developer of 38 Jervois launched a fire sale early this month, slashing prices by up to S$547,320 so that it will not incur the Additional Buyer's Stamp Duty (ABSD).

The 15 per cent ABSD has to be paid even if only one unit is left unsold, said Joni Lim, spokeswoman of Prominent Land, the developer of 38 Jervois, according to a Business Times report on June 3.

Developers have to sell all units within a five-year period after buying the land or incur ABSD. The ABSD deadline for 38 Jervois is in August.

The discounts range from 13 per cent to 24 per cent for the remaining 16 units in the 27-unit freehold boutique condo which received its temporary occupation permit in March 2019.

In dollar terms, the smallest discount is S$275,900 for the 818 square foot (sq ft) show flat unit which now goes for S$1.82 million, or S$2,223 per sq ft (psf). The biggest discount of S$547,320 is for a 915 sq ft unit on the fourth level, bringing the price down to S$1.92 million or S$2,102 psf.