Strategies to thrive in an uncertain property market

The Business Times - March 21
As the adage goes: when the going gets tough, the tough get going. Since the new property cooling measures were implemented in July 2018, the residential property market has become more muted. Developers - many with new launches waiting in the wings - probably had to rethink their plans and re-evaluate market dynamics. More than half a year since the measures hit the market, it appears developers have taken them in their stride.

In recent months, developers have rolled out new projects cautiously - taking care not to flood the market with new supply. To this end, several residential launches have done relatively well. Spacing out new launches will continue to be important this year, particularly with more developments in the launch pipeline.

Tricia Song, Head of Research:
In 2019, we estimate that developers could potentially sell 9,500-10,000 new homes amid the varied launch pipeline and gradual market acceptance of the new cooling measures. This would be slightly higher than the new home sales last year at 8,795 units. Price-wise, we anticipate a slower rate of growth at 3 per cent for the full 2019, barring any unforeseen events or policy shifts - down from the 7.9 per cent increase in 2018.

Developers could adopt the following strategies to stand out and achieve a win-win outcome in this environment: sensitive pricing and creative concepts; curate an optimal unit mix and unit size; and innovative marketing campaigns.

Treasure sells 272 units on launch weekend

The Business Times - March 25
Singapore’s largest condominium Treasure at Tampines moved 272 units at an average S$1,280 per sq ft (psf) over its launch weekend.

That translates to about 12 per cent of the 2,203 units in all, and about 56 per cent of the 490 units developer Sim Lian launched over the weekend.

The performance, which experts deemed as "credible", is likely to be monitored closely by developers of other upcoming mega-launches like Amber Park and Normanton Park.

Tricia Song, Head of Research:
We think the takeup of 272 units or 12% in a single weekend is commendable given the current sentiment and the large number of choices available. We estimate the average selling price and quantum placed it among the cheapest private residential launches since Parc Botannia, which was also launched at an average selling price of SGD1,280psf in November 2017. We expect takeup to continue improving progressively across most reasonably-priced and attractive projects, and pave the way to better sales for 2019 over 2018.  We expect full year developer takeup at 9,500 units, up 8% over 2018’s 8,795 units.  

Kuok Group plans mall and 480 apartments on Pasir Ris site

The Business Times - March 23
The Allgreen Properties and Kerry Properties tie-up that clinched the 99-year leasehold white site next to Pasir Ris MRT station is planning to develop about 480 apartments above three levels of retail space.
Its winning bid of nearly S$700 million works out to S$684.48 per square foot per plot ratio (psf ppr), based on a total gross floor area of 1.02 million sq ft.

The commercial and residential development will be integrated with a bus interchange, a polyclinic and a town plaza, offering seamless connection to public transport services and amenities for residents. The completed development will also serve as a community focal point.

Tricia Song, Head of Research: 
Excluding the public facilities, the unit land price based on a lower gross floor area of 832,480 sq ft works out to SGD840.86 psf ppr, which is in line with our and market expectations. We estimate this could imply an average selling price of SGD1,250 psf for the residential units and a capital value of SGD2,300 psf for the commercial component. This is the first mixed development in Singapore for Allgreen since Great World City which opened in 1997. The retail component offers exciting opportunities to tap a growing residential catchment near the MRT station, while navigating potential competition from the Jewel at Changi nearby.