Mid-tier glows, luxe fizzles out

A bad month for home sales could be followed by upturn

JANUARY was a ghastly month for the private home market. Sales hit a two-year low, as the prime downtown areas saw zero launches and just about half of all units launched that month ended up finding buyers, according to official statistics released yesterday.

But even though the overall market has kicked off 2009 on a whimper, the mass-market segment may still hold up in the months including February.

According to the Urban Redevelopment Authority (URA), 107 private residential units were sold last month out of a total of 204 units launched by developers. This sale number is the lowest recorded in the last two years, said PropNex, a real estate agency.

And for the first time, there were no units launched in the Core Central Region, which comprises districts 9, 10 and 11 as well as Marina Bay and Sentosa, said Knight Frank consultancy and research director Nicholas Mak.

“This is unsurprising given that present market conditions have prompted a wait-and-see attitude, and thus resulted in the primary market activity for this sector coming to a near-halt,” said Mr Mak.

It was in the non-prime districts that demand was relatively rosy. Mid-tier and mass-market projects saw their January take-ups rise 50 and 30 per cent respectively from December, Mr Mak said.

“Close to 90 per cent of all the transactions that took place were at below $1,000 psf,” noted PropNex chief executive Mohamed Ismail. “This goes to show that there are still buyers for projects in the outer areas .. as long as the quantum value is reasonable, probably not exceeding the $800,000 mark.”

Analysts expect pent-up demand for mid-tier projects to pick up from this month,particularly from HDB upgraders as the resale market for public housing is still healthy.

Two developments have already seen good take-up. Alexis near Queenstown MRT was launched last Thursday and within three days, sold all of its 293 units at an average price of $850 to $1,150 psf. Over in Jurong West, the Caspian condominium has sold 470 out of 712 units at an average of $600 psf.

This means that the sales volume for this month is likely to reach 1,000 units if developers continue to offer the “right product at the right price”, said Colliers International’s research and advisory director, Tay Huey Ying. That would be “a level not seen since August 2007 when developers sold some 1,723 new units”, she said.

“More developers may be encouraged to ride on this buying wave and launch their projects in the second half of the month,”Ms Tay added.

Pricing, however, will be an influential factor. Jones Lang LaSalle’s research head in South-east Asia, Dr Chua Yang Liang, said projects that enjoyed stronger demand in January could have been given a boost by the easing of median prices.

For example, The Aristo@Amber in the Katong area sold at $990 psf last month – down 1.2 per cent from $1,002 in December. Nova 88‘s median pricing also softened 4.2 per cent from $988 to $947 psf. Both enjoyed good sales. At The Aristo@Amber, all 10 units launched last month sold out and another four unsold units from previous months were also taken up, while Nova 88 in the Balestier area sold 16 units out of the 40 units launched.

“There is no doubt that there is an economic downturn but despite this, projects like Caspian and Alexis are faring well in the subdued market, showing that there is cash out there,” said Mr Donald Han, managing director of consultancy Cushman and Wakefield.

Source : Today – 17 Feb 2009

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