Tag Archives: Wheelock Properties

New home sales shoot up in May

New private home sales in Singapore almost doubled month-on-month in May to record 1,470 units, according to latest data by the Urban Redevelopment Authority (URA).

Including executive condominiums (ECs), the number of units sold increased to 1,528 units last month from just 797 in April.

However, compared to May 2013 when 1,912 units including ECs were sold, the year-on-year decline is 20 percent.

Meanwhile, 1,790 new private homes were launched to buyers in May, approximately three times more than the 600 units released in the month before.

“The sudden flurry of launches could be due to developers timing their launches just before June school holidays and World Cup, when many buyers go on holidays, or get distracted by soccer matches, thus putting off their housing purchases,” revealed an OrangeTee report.

According to JLL, most of the buying activity took place in the Outside Central Region (OCR), accounting for 64 percent of sales, while the Rest of Central Region (RCR) and Core Central Region (CCR) accounted for 34 percent and two percent respectively.

The best-selling project last month was Coco Palms in the OCR, which sold 590 units at a median price of $1,018 psf. This was followed by Commonwealth Towers (RCR) which moved 275 homes at $1,626 psf, while The Panorama (OCR) found buyers for 100 units at $1,241 psf after developer Wheelock Properties relaunched the condominium at a discount.

Alice Tan, Head of Research at Knight Frank Singapore, said sales of units in the three developments constituted about 65.6 percent of total new sales volume.

Desmond Sim, Head, CBRE Research, Singapore, noted that there is an underlying demand for housing and newly launched projects with attractive attributes will sell.

“To date, some 3,963 new homes have been sold in the first five months of the year. In the absence of more mass market launches, we envisage that the whole year’s take-up will be in the region of 8,000-9,000 units,” said Sim.

Source : PropGuru

Unsold homes big drag on developers’ coffers

DEVELOPERS have collectively paid up to $55.1 million in extension fees for unsold units in their private condo projects since 2012. They could potentially fork out another $80.7 million to extend the sales period for another year if they do not sell their inventory by year-end, according to a study by OrangeTee Research.

“As the penalty amounts to millions of dollars per project, we believe that it will incentivise some developers to reprice some of these projects to move sales in the near term,” said OrangeTee research head Christine Li.

A total of 24 condo projects, mostly high-end ones, are still not fully sold two years after receiving their temporary occupation permits (TOPs) between 2010 and 2012, the study showed. Under the government’s Qualifying Certificate (QC) rules, developers have to pay extension charges to extend the sales period after two years of the project’s TOP.

All developers with non-Singaporean shareholders or directors need to obtain QCs to buy private land for new projects because they are deemed “foreign developers” under the Residential Property Act (RPA). This means the QC rules apply to all listed developers. Privately owned Far East Organization and Hoi Hup are among the few developers exempted from the rules.

Given that the QCs allow developers up to five years to finish building a project and two more years to sell all the units, the heat is on developers to clear their stock by the deadline.

To extend the sales period, developers pay 8 per cent of the land purchase price for the first year of extension, 16 per cent for the second year and 24 per cent from the third year onwards. The charges are pro-rated based on unsold units over the total units in the project.

Such fees drove luxury residential player SC Global to delist from the Singapore Exchange last year after sales slowed significantly due to the government’s property cooling measures.

Analysts warn that more extension charges will kick in. The charges paid up so far are just the tip of the iceberg as projects built from land acquired during the 2006-2007 en bloc fever have just crossed a seven-year mark, they say.

“More developers are caught between a rock and a hard place” as they have to decide whether to pay the extension charges or cut prices to move the units, said SLP International executive director Nicholas Mak.

If they pay for extension charges, there is also the question of whether they can recover these costs later on, he said. This is why some developers of luxury projects are resorting to selling the units in bulk to mega investors.

OrangeTee’s study of the 24 projects excluded three projects whose land costs could not be determined. It tracked sales of projects through caveats lodged, which it conceded could be lower than actual sales.

At the end of the first quarter of this year, there were 10,295 unsold units in the Core Central Region (CCR), 8,089 in the Rest of Central Region (RCR) and 12,433 in the Outside Central Region (OCR).

Based on URA caveats, there are 71 unsold units in Wheelock Properties’ Scotts Square that TOP-ed in 2011 and 16 unsold units in Wing Tai’s Helios Residences, which also TOP-ed in the same year.

“As unsold inventory builds up, there will likely be more bargains in the market if developers want to avoid paying penalties to extend the sales period, especially high-end developers who have already paid premium prices for their lands,” Ms Li said.

The study excluded the fees that developers need to pay to extend the completion of projects beyond five years, as they can typically extend without paying the charges “based on technicalities”.

Even in a more optimistic scenario where developers manage to sell 20 per cent of the remaining units for the rest of this year, further extension charges to be paid by developers by end-2014 will amount to around $68.3 million.

Some market watchers noted that the QC rules should mark a distinction between larger and smaller projects, given that it takes a longer time to move all the units in large projects in a difficult market as the current one.

Century21 chief executive officer Ku Swee Yong said that demand for high-end projects had been hit hardest by higher additional buyers’ stamp duty (ABSD) since January 2013 and a borrowing cap under the total debt servicing ratio (TDSR) since June last year.

Even if a developer decides to set up an investment company to buy the units and rent them out, the company could be hit by a 15 per cent ABSD and is restricted by a loan-to-value limit of 20 per cent.

While there is good reason for having QC rules to regulate foreign participation in the housing market, these rules were in place before the ABSD and TDSR. “It is about time we review these measures,” Mr Ku said.

Source : STProperty