Demand for mass market projects shifts into higher gear
Developers not keen to release high-end projects in shaky market,
say analysts
February
16, 2008
DEVELOPERS'
housing sales figures for January reflect a change in strategy to
focus more on mass market projects.
Despite the still lacklustre figures for overall developer launches
and sales last month, an analysis by Knight Frank shows the number
of private homes (excluding executive condominiums) launched and sold
in January in the Outside Central Region (covering traditional mass-market/suburban
locations) rose 190 per cent and 123 per cent respectively from December
2007.
In contrast,
launches and sales in the Core Central Region and Rest of Central
Region fell in January, compared to December.
Given
the dearth of activity in high-end locations, the Core Central Region
suffered the biggest drop in median prices for units transacted during
the month, with the figure halving to $1,623 per square foot in January,
from $3,200 psf the previous month.
Elsewhere,
median prices held steady, edging up 1.6 per cent to $1,053 psf in
the Rest of Central Region and $811 psf in the Outside Central Region.
The median prices include private homes as well as ECs.
Property
consultants expect developers to continue to push out mass market
projects, since demand fundamentals are stronger in this segment than
the high-end sector, where buying traditionally emanates more from
speculators.
'Despite the more dismal global economic outlook, the employment rate
in Singapore is still high and this will continue to support demand
for mass market homes,' says Colliers International director of research
and consultancy Tay Huey Ying.
'As for
high- end/luxurious projects, developers are quite cautious and not
so prepared to release them amid the current, uncertain market conditions.
They will want to wait for better conditions before they launch these
projects,' she said.
Monthly
data from the Urban Redevelopment Authority (URA) show developers
sold a total 316 private homes (excluding ECs) in January, up slightly
from 305 units in December, which was the lowest figure since URA
began publishing developers' monthly sales figures and prices in June
2007.
However,
Colliers' Ms Tay says that stripping out the bulk sale of 97 units
at Goodwood Residence in December, the January sales figure was roughly
a 52 per cent improvement from December.
January
volume was boosted by the launch of new projects like Waterfront Waves
at Bedok, which sold 79 units during the month, and Wilkie 80, which
saw 50 units sold.
'We observed
that luxury prices remained firm despite a decline in sales volume.
In the prime districts, units in Grange Infinite, Helios Residences,
Hilltops and Scotts Square were sold at median prices between nearly
$3,300 psf and $3,700 psf.
'At Sentosa
Cove, units in Marina Collection and Turquoise were sold at above
$2,650 psf,' says CB Richard Ellis executive director Li Hiaw Ho.
However,
Knight Frank director (consultancy & research) Nicholas Mak points
out that the number of homes priced above $4,000 psf sold by developers
has fallen from 72 units last July to five units in December.
In January,
there was not a single primary market transaction in this price range.
Colliers'
analysis shows the highest priced home sold in January was a $3,671
psf unit at Scotts Square, compared with $5,146 psf in December achieved
at The Ritz-Carlton Residences, and the record $5,600 psf achieved
for a unit at The Orchard Residences last October.
The number
of new private homes (excluding ECs) developers launched in January
sank to a low of 410 units, about 8 per cent less than the 446 units
in December and about a fifth of the high of 1,885 units in August
last year.
Property
consultants suggest developer sales in February may be lower than
those in January because of the Chinese New Year.
'However,
developers are likely to maintain prices at current levels as they
monitor the market situation,' CBRE's Mr Li says.
(Source: The Business Times)
