MCL Land sells 270 Ripple Bay condos

MCL Land yesterday drew crowds at its Ripple Bay condo showflat in Pasir Ris, selling 270 units in the 679-unit project by about 8pm.

The developer had not crunched its numbers by press time but its CEO Koh Teck Chuan estimates that the average price when sales began in the morning was around $855 psf. As sales progressed, MCL upped prices to around $870 psf on average.

'But we have not done a final tally on our average price,' he said.

A good spread of units - one, two and three bedders - have been sold. Buyers are mostly Singaporeans.

Ripple Bay, which is within walking distance of Pasir Ris Beach, is in front of Far East Organization's 473-unit Seastrand, where units are being offered for about $905 psf on average. Far East released the project in June last year and close to 100 units are still available.

At Flora Drive in the Upper Changi area, Frasers Centrepoint has so far found buyers for 58 of the 120 units released at the 429-unit Palm Isles condo. Sales began on Wednesday evening. The average price is $830 psf, lower than $870 psf at which the nearby Hedges Park Condominium is going for. The 501-unit project, which went on the market in April last year, still has over 100 units available for sale.

All four projects are on 99-year leasehold sites.

When contacted, a spokesman for Tripartite Developers, the developer of Hedges Park, said: 'We currently have no change in plans with respect to pricing and additional incentives at Hedges Park. But we will continue to monitor market trends there.'

Similarly, Far East Organization, developer of Seastrand in Pasir Ris, said: 'There's no plan to lower the price and there isn't any special promotion for Seastrand. However, buyers receive a reimbursement for the standard 3 per cent buyer's stamp duty and a furniture voucher equivalent to 2 per cent of the sale price, as is the case for other Far East projects as well.'

Market watchers note that established developers such as Far East and Hong Leong would be loath to cut prices and risk upsetting earlier buyers of the project. However, as a seasoned property market watcher argues: 'If common sense prevails, for a developer that has sufficient profit margin on its project, it may be time to clear the project at a slightly lower price because subsequent Government Land Sales, if they reflect lower prices, will obviously pose competition. The writing is on the wall.'

For example, next to the Ripple Bay project, a Hoi Hup-led consortium bagged a condo plot in October last year for $361 per square foot per plot ratio (psf ppr) - or about 10 per cent lower than the $402 psf ppr which MCL paid for the Ripple Bay site in May 2011. Far East clinched the Seastrand site for $335 psf ppr in September 2010.

Hoi Hup is planning to launch a 376-unit condo, Sea Esta, on its site around June. Because Hoi Hup paid a lower land price, and will probably do its own construction, it will be able to achieve a lower breakeven cost than MCL's Ripple Bay and hence be in a position to price its project lower. Another point to note is that there are two nearby sites on the confirmed list of the GLS programme for first-half 2012.

In all, there are 20 private condo projects which have yet to be launched on 99-year sites sold under the GLS programme since last year.

No doubt, developers launching projects on these sites will have to size up existing and potential competition in the area.

Projects launched previously have units yet to be sold. And more projects will be released in the market. That creates the impetus for realistic pricing to remain competitive and be able to sell well.

Even so, pricing strategies among developers are by no means uniform.

While the two launches this week point to some players at least being more nimble, BT has learnt of a reverse trend at some other developers - of holding or even marginally increasing price by raising the list price and then packaging in various tiers of discounts to appeal to buyer psychology. The net price, however, could be slightly higher than before.

Talk in the market is that one major player started this practice to draw buyers following the introduction of the additional buyer's stamp duty in early December. Its competitors have begun to follow suit.

Really, there are mixed signals in the market. Some developers may want to price more competitively to sell quickly and move on rather than risk being stuck. Others, especially with well-located projects near MRT stations or if they can differentiate themselves with unique concepts, lifestyle or product positioning, are confident of achieving their price while selling at a steady rate.

Meanwhile, all eyes are on the Urban Redevelopment Authority's flash estimate private home price index for the first quarter. The index has moderated for nine consecutive quarters up till Q4 2011. It rose 0.2 per cent in Q4 over the preceding quarter.

'If the price softening which has set in the secondary market spreads to the primary market, that is, developer launches, you will see impact on the index,' said a seasoned market watcher.

High-end, completed, leased out

A SIGNIFICANT number of recently built new homes, many of them luxury units, are languishing unsold, as wealthy potential buyers watch nervously as global economic confidence ebbs and flows.

Ever pragmatic, developers have turned to a logical solution to keep the cash coming in: They are leasing out unsold apartments at projects that have been completed.

This way, the developers earn some income until buying confidence returns to this elite part of the market.

About 25 projects have at least 10 units unsold, and a large number are upscale projects in the prime districts of 9, 10 and 11, which include the Orchard, River Valley, Bukit Timah and Tanglin areas.

The figures were released by property consultancy Savills Singapore, and were based on an analysis of the Urban Redevelopment Authority's fourth-quarter data.

Projects with units remaining unsold include Reflections at Keppel Bay, with 290 units unsold; Hilltops in Cairnhill Circle, with 208 units; Scotts Square in Scotts Road, with 74 units; and The Clift in McCallum Street, with 63 units available as at the end of last month.

While upmarket homes were very popular with buyers with the means to buy them during the boom of 2007, the segment has been quiet in recent years, with prices languishing below their peaks and sales slowing to a trickle.

City Developments Limited (CDL) is one developer that has chosen the leasing option. It said that last year it stopped active marketing for its 228-unit The Residences at W Singapore Sentosa Cove and diverted its efforts towards leasing instead. The project has 207 unsold units.

A spokesman said CDL is awaiting the completion of the 240-room W Singapore Sentosa Cove Hotel and the retail component of the Quayside Isle Promenade in August before ramping up its publicity campaigns for The Residences at W.

'When completed, the Quayside Isle will be home to trendy cafes, fine dining restaurants, speciality shops and entertainment spots and bars,' he added.

Keppel Land also said last week that 154 unsold units at Reflections will be set aside as corporate residences while the remaining 136 will be open to buyers.

The average rent for these fully furnished units is about $9,500 a month.

But Keppel said that the decision to set aside units for corporate leasing at Reflections followed a similar move at its previous project, the 969-unit Caribbean at Keppel Bay completed in 2004, where about 170 units were earmarked for lease.

More than 200 units were still unsold when the project was completed.

These units were sold many years after completion at a higher price, as the market moved up, benefiting the company.

However, not all developers are jumping on the leasing bandwagon.

KOP Properties chief executive Leny Suparman said the company has no plans to lease out the remaining units at its 58-unit The Ritz-Carlton Residences in Cairnhill Road, with 39 units unsold.

'The project has been completed for less than six months, and we are continuing to receive much interest from buyers. Therefore, we are not considering leasing at this point,' she added.

Experts add that some developers prefer to keep their unsold apartments empty, as some wealthy buyers prefer purchasing brand-new units.

The leasing out of unsold units is 'feasible', especially in a weakened market where the rental income can partially defray holding costs or delays in developer sales proceeds.

This is typically an option if the developer expects market sentiment for the segment to remain cool for more than six to nine months. A lease of less than one year can then be considered.

If a developer had already recovered its costs but saw further sales to be challenging, it may consider leasing instead to maintain a good cash flow. Developers are unable to cut prices, because that would be shooting themselves in the foot, and other developers and their previous buyers will not be pleased. So leasing becomes the next best alternative.

Source: The Straits Times – 28 March 2012

HDB tightens rules to benefit genuine buyers

EVEN as more is done to create more housing options for households, steps are also being taken to discourage buyers who book flats but subsequently cancel their bookings.

To further discourage such buyers, applicants who cancel their bookings - not due to exceptional circumstances beyond their control - will not be allowed to apply for, or be included as an essential occupier for a new HDB flat, DBSS (Design, Build, and Sell Scheme) flat, executive condominium (EC) unit, or resale flat with housing grants, within one year from the date of cancellation.

This is on top of existing regulations, in which buyers pay a non-refundable booking fee when they select a unit, and a 10 per cent down payment when they sign the agreement.

Separately, the Housing Board said that the income ceiling for two-room flats in mature towns will be raised from $2,000 to $5,000 per month.

The income ceiling for similar flats in non-mature estates will remain at $2,000 to safeguard these units for low-income families.

The HDB also said it will be offering 4,640 BTO flats for sale in Choa Chu Kang, Kallang Whampoa, Punggol and Sengkang during the next BTO launch in May.

To meet housing needs, HDB has ramped up flat supply substantially, to the tune of 50,000 units in two years. Some 8,000 flats were launched for sale under the joint build-to-order (BTO) and Sale of Balance Flats (SBF) exercises yesterday.

A total of 4,153 new flats were released in eight BTO projects; 3,825 were SBF units, scattered over 15 mature and 11 non-mature estates.

Of these, 1,739 of the BTO flats in mature estates and 3,609 SBF units will render top priority for first-timers. The Housing Board said 95 per cent of these flats will be reserved for first-timers.

Second-timers on the other hand will have their chance of securing a flat tripled, from 5 per cent to 15 per cent, for the 2,094 BTO flats in non-mature estates.

'Correspondingly, the proportion of these flats reserved for first-timers will be reduced to 85 per cent. Our projection suggests that the chances of first-timers will not be too greatly affected, after successive massive BTO launches in the past one year,' said the Housing Board.

In this launch, 3,174 of the flats will be in mature estates, including 397 studio apartments and 366 units of two-room flats.

Married children and parents hoping to live with or near each other will also be helped via the Multi-Generation Priority Scheme (MGPS) and Married Child Priority Scheme (MCPS).

MGPS, which gives priority allocation to married children and their parents who jointly apply to live near each other, will be launched at Ping Yi Greens in Bedok.

Under the scheme, married children can apply for two-room to four-room flats, while their parents can buy a two-room flat in the same project.

The enhanced MCPS will allow a married child who applies to live with his parents to receive six ballot chances if he is a first-timer, and three ballot chances if he is a second-timer.

Source: Business Times – 29 March 2012

Several housing projects this week

A string of projects is coming on the market this week, and some of them could be priced slightly below nearby projects as developers who fret about further cooling measures by the government try to boost sales following February's record developer home sales.

The projects expected to be rolled out this week include MCL's Ripple Bay condo, within walking distance to Pasir Ris Beach, and Frasers Centrepoint's Palm Isles condo at Flora Drive.

At Hillview Terrace, a consortium that includes Roxy-Pacific Holdings and Macly Group is getting ready to begin selling its Natura project.

Property giant Far East Organization could also release the 416-unit Hillsta project at Choa Chu Kang Road - which will have condo units, Soho-style apartments and strata townhouses - any day now, pending securing the necessary regulatory approvals. All these projects are 99-year-leasehold, except Natura, which is freehold.

Meanwhile, Tuan Sing has sold 90 units at Seletar Park Residence which it released last week. The average price of the five-storey, 99-year-leasehold condo is about $1,100 per square foot (psf). Excluding ground-floor units with private enclosed space and penthouses with roof terraces, the average price would be around $1,200 psf.

Buyers are mostly Singaporeans. The project's 276 units range from one to four bedders. Ground-floor units have higher-than-normal floor-to-floor height of 4.5 metres, making them much sought-after. Absolute prices start from $634,000 for a 528-sq-ft one-bedder on the third floor (reflecting $1,201 psf). Three penthouses have been sold; a typical penthouse of around 2,240 sq ft costs $1.9 million or $840 psf.

Over at the East Village, a freehold mixed development in the Bedok/Upper Changi Road locale, World Class Land is said to have found buyers for nearly all of the 90 apartments and 96 of the 108 shop units.

The apartments are priced at about $1,400 psf on average. Shop units are said to have fetched around $5,000 psf or more.

Investors seeking freehold properties can also consider Natura, a 10-storey freehold residential project at Hillview Terrace said to be priced at about $1,250 psf on average. The project, which will comprise one, two and three-bedroom units and penthouses, has been in the limelight for its smaller-than-usual three bedroom units, which start at 635 sq ft.

Those looking for a dream apartment near the beach may want to check out MCL Land's preview on Thursday of the Ripple Bay, a short walk from Pasir Ris Beach. The average selling price is tipped to be slightly above $850 psf after early-bird discounts, lower than Seastrand behind it. The latter project, which is further away from the beach, was released in June last year, with units sold in that month achieving a median price of $879 psf, according to government statistics based on developers' monthly sales declarations. The following month, the median price rose to $935 psf and the project continues to trade at above $900 psf on average currently.

MCL's Ripple Bay comprises 679 units in four blocks of 12 storeys and three blocks of 13 storeys. One-bedders will make up 18 per cent of units and two-bedders 42 per cent. Facilities will include a tennis court and 50-metre lap pool. Absolute prices start from $415,130 for a 484-sq-ft one-bedder (which works out to $858 psf). Three-bedders begin from $795,500 for a 990-sq-ft unit ($805 psf).

Over at Flora Drive, Frasers Centrepoint is expected to price its Palm Isles project at $850-$880 psf on average. Hedges Park nearby was released in April last year, achieving an $889 psf median price that month. Developer Tripartite last month disposed of eight units at $873 psf median price. Palm Isles' 429 residences will include a low-rise block with 28 'garden homes' each with its own private carpark lots and garden.

Developers are launching projects as soon as possible as some worry that the authorities may come up with fresh cooling measures following the record number of private homes sold in the primary market last month. To ensure a good take-up rate, developers are likely to price new mass market condo launches say about $10-15 psf below existing nearby projects.

There is no necessity for the government to come up with further cooling measures currently as the speculation has been taken care of by the seller's stamp duty, and foreign buying has also come off significantly following the introduction of the 10 per cent additional buyer's stamp duty. There's also plenty of supply.

There will be buyers for new residential project launches on the back of ample liquidity, low interest rates and continued inflation fears.

Demand will be stronger for small units as there are many investors with sizeable bank balances looking to park their money in property.

At Robinson Road, the freehold Oxley Tower, offering strata office and shop units, could go on the market as early as this week, while the 99-year EON Shenton is slated for release next month, offering apartments, strata shops and offices.

Source: Business Times – 27 March 2012

Resale property market slow down

PROPERTY firms and agents are tapping other avenues to remain in business now that Singapore's once-booming resale market - for HDB flats and private homes - has taken a big hit from the Government's cooling measures.

Fresh estimates from agency bosses show the number of resale deals in both markets for the first quarter dropping significantly compared to sales done last year.

But the slowdown in these markets has fuelled activity in others. Sales are soaring at launches of mass-market condominiums. Buyers snapped up a record 3,138 new private homes last month, including executive condo units.

To get a slice of the action, property agencies such as ERA are increasingly looking for direct deals with property developers to market new launches, which also offer their agents an alternative revenue stream.

Agents are also counting on the buoyant commercial and industrial sector, which is not affected by the recent cooling measures. Many of them have diversified into selling such units to make up for lost income from the dampened interest in the residential sector.

Some have also gone into subletting HDB flats to those - many of them foreigners - who would rather rent than buy now.

The Government, in its latest round of cooling measures last December, slapped a 10 per cent additional buyer's stamp duty on all foreigners buying homes, effectively killing a significant source of demand in the private property market, especially for high-end homes.

The Housing Board has also offered a record number of more than 50,000 flats in two years, and raised the monthly household income ceiling to $10,000 to allow more to bid for new flats instead of turning to the resale market.

Data from property agencies ERA Realty put the number of HDB resale deals at 4,000 to 4,500 for January to mid-March.

This is almost 30 per cent lower than the 6,228 deals in the first three months of last year, and 24 per cent less than the 5,921 in the fourth quarter of last year.

The large number of new flats and recent moves by the HDB to set aside a larger number of flats for second-time buyers have reduced demand in the HDB resale market.

As a result, the cash premium paid above a flat's valuation, known as COV or cash-over-valuation, has also dipped.

ERA said, based on their transactions this month, that the median COV across all flat types and towns was about $25,000 - lower than the $35,000 in the fourth quarter of last year.

ERA key executive officer Eugene Lim said, however, that the drop in COV has lured some buyers back into the market, with more units being sold this month compared to January.

Over in the private property market, ERA has spotted a 30 per cent dip in resale transactions for the first three months to date, compared to the fourth quarter last year.

'There's a mismatch of expectations between buyers, who expect prices to come down and hence make low offers, and sellers who have no urgency to cut prices,' said Mr Lim.

Buyers may also opt for new units because they need to fork out only the initial downpayment - 20 per cent of the purchase price, or higher if the buyer already has an existing home loan.

The buyer can take the next two to three years to shop around for a loan while the project is being completed. Buying a resale unit means having to take a hefty loan immediately.

Sales in the commercial and industrial sector have heated up. Such investments are attractive as interest rates are still low and these units do not come with the tight restrictions imposed on homes.

Smaller agencies, which have also felt the brunt of the slowdown in the resale residential market, are changing course too.

Smaller agencies now focus on the HDB rental market, where the number of units approved for subletting per year shot up from about 15,000 in 2009 to 26,000 last year.

The relaxation of subletting rules in recent years and the reduction of the minimum occupancy period, meaning more flats will qualify to be rented out.

There might not be enough for us to sustain in the resale market, so we have to concentrate on where the possible business avenues might be.

Source: The Straits Times – 24 March 2012

Building boom in Geylang

MENTION Geylang and many think of the red-light district, but the area is in the middle of a building boom, with developers banking on its proximity to the centre of town.

About 1,900 private homes across more than 25 developments will be completed over the next three to four years, and many will be shoebox flats, an increasingly popular choice for Singaporeans, investors and expatriates.

The challenge, as some agents note, is Geylang's seedy reputation.

Occupancy will be tested soon enough when many of the flats, in particular the shoebox units, hit the market.

These are homes ranging from less than 400 sq ft to 600 sq ft, and Geylang will be awash with them.

Centra Studios, a 51-unit condominium in Lorong 25 by Pinnacle Realty, has 40 one-bedroom apartments ranging from 344 sq ft to 527 sq ft, while the 39-unit Prime Residence in Lorong 22 by Springlife Development has 12 one-bedders ranging from 398 sq ft to 409 sq ft, and 20 one-plus-one units from 527 sq ft to 538 sq ft.

Property agents told The Straits Times they are confident that these tiny flats will remain popular because of the location, and they pointed to the high rents as evidence.

One housing agent said: 'Location-wise, going to the CBD (Central Business District) is five to seven minutes' drive. With the upcoming Paya Lebar commercial hub, this whole Geylang, Kallang area will be between the CBD and the hub.'

The rents, which are already 'the highest in the Aljunied area', will either stay at the same level or go even higher in the next few years.

The agent estimated that a one- or two-bedder shoebox unit in Geylang can be rented for about $2,500 to $3,000 a month, with 'rental returns going very high at 6 per cent to 7 per cent because of the location'.

He believes most tenants will be expatriates or childless couples.

Monthly rents hover around $3,000 for Geylang shoebox units.

While there might be an oversupply of such units, demand might be able to catch up as eventually, all homes will be occupied. Once the pricing is right, there will be a buyer for the unit.

A check with the Urban Redevelopment Authority's online system revealed that from last November to January this year, median rents for Lorongs 26, 28, 30 and 34 ranged from $2.90 per sq ft (psf) to $3.33 psf. For a 500 sq ft apartment, this translates to $1,450 to $1,665 rental per month.

It is not known if these rents were for shoebox units. Rents for such units tend to be significantly higher on a psf basis because of their compact sizes.

There are also pitfalls amid the optimism about demand, including concerns that units in this traditional red-light district would draw the wrong crowd.

Units in Geylang all have attached bathrooms. A probable reason for that is they may be used as serviced apartments, dormitories or budget hotels.

Banks may hesitate to lend to investors out of concern over the area's seedy reputation. In official red-light areas, some banks are reluctant to lend their names to such projects due to the risks involved.

Second, the activities carrying out in the area are of questionable legality. This concerns the reputation of the bank and they do not want to be associated with such properties.

The high rental yields may be due only to the lowered capital values of property in the area.

Home prices within Geylang are trading at a 5 per cent to 10 per cent discount as compared to other townships that are of equal distance to the city centre such as Toa Payoh and Pasir Panjang.

One of the reason contributing to the lowering of prices is the seedy reputation of Geylang.

Source: The Straits Times – 23 March 2012