11
February 2009
Mice
who roar in the property market
Smaller developers show the way while larger ones look to them for cues
(SINGAPORE)
Sales in the property market may have been dismal in the last few months
but some bold developers have continued with launches, registering sales
and perhaps influencing property prices at the same time.
World
Class Land's 38-unit Palmeria in Telok Kurau may be a small niche product,
but WCL still managed to sell 75 per cent of the units at approximately
between $750 psf and $850 psf, a price that apparently sits well with
buyers.
And most of these are small- or medium-sized developers that are, for
want of a better word, rather obscure.
In
the last quarter of 2008, for instance, official market data revealed
that sales volumes were highest for Macly Capital's 104-unit Newton
Edge and EL Development's 200-unit Rosewood Suites with total sales
of around 130 units making up almost 30 per cent of all primary sales
for the whole quarter. Perhaps more important is that both developments
were 'competitively priced'.
On
its marketing strategy, EL Development (ELD) managing director Lim Yew
Soon said that he was aware that there were other developers waiting
to launch mass market projects and ELD simply wanted to get 'the first
mover's advantage'. Mr Lim conceded that pricing for Rosewood Suites
required a bit of guesswork and it was eventually launched at about
$580 psf. But saying that ELD was not looking to start a price war,
he added: 'Being a smaller developer, we are more nimble and able to
survive at lower margins.'
The influence of these smaller developers may be difficult to gauge
but it should be noted that the first launch by a big developer this
year - the 712-unit Caspian by Frasers Centrepoint - was done at an
average price of $580 psf. It has since racked up sales of 334 units.
Could
smaller developers be leading the market at the moment then?
According
to Cushman & Wakefield managing director Donald Han, projects that
have registered substantial sales volumes can certainly have an impact
on property prices which incidentally fell by 6.1 per cent in Q4 2008.
And,
with the big developers staying largely out of the market, Mr Han added:
'You can't really blame the market when there is nothing to buy.'
Knight
Frank director of research and consultancy Nicholas Mak noted that movements
in the market - even small movements - are monitored by all developers,
even the big ones.
Teo
Hong Lim, chief executive of Roxy-Pacific (the parent company of Roxy
Homes), also dismissed the perception that smaller developers are under
pressure to sell because they have less holding power.
Roxy
Homes has launched six small projects with a total of 165 units since
the start of 2008 and Mr Teo said that the cost of its sites are typically
around $300 per square foot per plot ratio. This, together with value
engineering (no basements) and targeted marketing (small units), has
helped Roxy-Pacific rake in $147.9 million in total sales value by the
end of the third quarter of 2008.
More
recently, Roxy Homes launched the 42-unit The Lucent in Telok Kurau
and Mr Teo said it is about 50 per cent sold.
'I
am taking an alternative approach,' explained Mr Teo of his sales strategy.
Still aggressive, Roxy Homes has continued to advertise, spending about
$1 million on ads. The developments, many of which are in Telok Kurau,
are also designed for a specific market. 'We don't over-provide. We
provide buyers with what they want, but not in excess,' he added.
Indeed,
Roxy Homes' sales strategy has put it in an enviable position. Mr Teo
said that with its 88-unit Nova 88 in Balestier, it has exhausted its
land bank and can now look for new sites if the price is right.
Even
more gung-ho is World Class Land (WCL) which recently launched its 38-unit
Palmeria in Telok Kurau on the third day of the Chinese New Year last
month, usually a quiet month for sales. 'Approvals (for sale) had been
granted and the showflat was ready,' said WCL director Daniel Ng.
Palmeria
may be a small niche product, but WCL still managed to sell 75 per cent
of the units at approximately between $750 psf and $850 psf, a price
that apparently sits well with buyers.
Still,
according to PropNex CEO Mohamed Ismail, small- and medium-sized developers
have little impact on prices as 'not only are their developments small
in terms of the number of units, but also, as niche developments, they
cater to a different client base altogether'.
Regardless,
some appear to have taken on the role of 'testing the market' in terms
of ascertaining price thresholds in these uncertain times.
East
Coast Properties managing director Alvin Ng said it has just launched
a small landed housing development called Montclair @ Whitley just 'to
get a feel of the market'.
Over
300 people went to view the showhouse over the first weekend of sales.
However, no sales have been recorded yet. The prices, of course, were
'competitive'.
<<
First
phase of Caspian going for $580 psf average
