Last year is not a good year to remember for developers. Having only sold 4,351 residences in 2008, it signified the least figure within 10 years – plunging beyond the recent depression of 5,520 and 5,156 units in 1998 and 2003, respectively.
The 2008 sales of 8,200 houses were also notably lower than the yearly 10-year average from 1998 to 2007.
Developer sales ended weakly in the final month of 2008, recording just 131 dealings – at least five per day. However, in December, the quantity of licenced projects for sale increased to 8,350 houses, up from 6,512 houses in November.
There were just 157 new units launched last December, the least figure since the developer data became available during the middle of 2007. Li Hiaw Ho, the executive director of CBRE Research, said, “It shows that developers kept their launch activity to a minimum as they monitored the market.” Nevertheless, not all the developers were holding back.
Macly Capital managed to sell 43 units of the Newton Edge, comprising 104 units located on Makeway Avenue at an average price of $1,200 per square foot. Mr. Li stated the project’s strength lay in the inexpensive amount of $500,000 to $900,000 for all units because of their minor sizes that vary from 440 square feet to 915 square feet.
Pricing is probably a factor. A previous report from UBS said that Newton Edge had a price way under that of VIVA located at Suffolk Walk, where 15 houses were vended in the third quarter of 2008 for almost $1,550 per square foot.
The Ritz-Carlton Residences of Hayden Properties also accumulated good sales at discounted prices. There were eight units sold at an average price of $3,086 per square foot.
David Neubronner, sales and marketing director of Hayden Properties, stated that the purchasers are comprised of project directors and shareholders, with a single third-party transaction only. “The purchase prices by the related parties are preferential rates, and the purchase price paid by the third party reflects current market pricing,” he said.
He also explained that the house, which the third party bought, was situated on a lower level and had a price of $3,700 per square foot, a low of 8 percent from the preliminary launch value of $4,000 per square foot.
Tay Huey Ying, research and advisory director for Colliers International, stated that the Rest of Central Region‘s mid-tier projects dominated launches last December, revealing 72 percent of the units released during the month. ”This, following the domination of high-end projects in recent months, could be an indication of the weakening holding power among small and mid-tier developers,” she added.
Rest of Central Region projects that were sold during the month took in 10 units located at Nova 88 at an average price of $988 per square foot and nine units from The Aristo @ Amber at an average price of $1,002 per square foot.
”This decline in demand has led to the contraction in the islandwide URA Property Price Index (PPI) of some 5.6 per cent as the market attempts to generate more activity through price reductions,” Chua Yang Liang, the head of research and local director of Jones Lang LaSalle, stated. ”Historically, take-up has been leading the PPI. On the back of this contraction in take-up in Q4’08, we can expect the PPI to contract further, possibly by another 5-7 per cent in Q1’09.”
Nonetheless, some developers are still continuing to arrange developments for release.
UOL will be launching a 646-unit project located at Simei Street 4, advertised as a luxurious condominium for developers in the first half of year 2009.
In addition, Frasers Centrepoint also prepares to launch a project on Boon Lay Way. The spokesperson said, “Caspian, our 712-unit development on Boon Lay Way, is launch-ready. At this point, we are still finalising several details, with regard to the actual launch period, pricing, etc. and will announce them once we are ready.”
The Far East Organisation is also getting ready to commence a project in Choa Chu Kang before the year ends.
Particularly, all these projects will take place in the Outside Central Region, where prices of properties are not predicted to go down as notably as in the high-end and mid-tier segments.