Cutting luxury home prices can backfire: Wing Tai chairman

Slashing prices is not the best way to increase sales in the luxury home segment despite the current property climate, as developers risk tarnishing the brand image of their offerings, said Wing Tai Holdings chairman Cheng Wai Keung yesterday.

This is one of the reasons the company has not taken that option with its freehold Ardmork Park project, Le Nouvel Ardmore. Wing Tai has sold only three of the 43 units on offer but, under the Qualifying Certificate, it has until mid-2016 to sell all the units.

“There is no point in lowering the price … it’s almost like retail — you don’t see the high-end, luxury products on a fire sale. If LVMH does that, it is destroying its brand. In the high-end (segment), you’re selling a brand image; not for utility. If it’s for utility, you can never sell at that kind of price,” said Mr Cheng.

“We still have one-and-a-half years (for Le Nouvel Ardmore). We will hold our price and wait until that time to make a decision.”

Several developers have in the past months lowered prices of their projects to move units. One of them, MCL Land, cut prices of its Core Central Region project Hallmark Residences by about 10 per cent earlier this year.

With residential property prices here likely to continue trending downwards because of a build-up in supply and an impending rise in interest rates, the company hopes to make further inroads in China and Malaysia — the other markets it has a presence in.

Wing Tai announced yesterday that its net profit had plunged 48 per cent on-year to S$143.1 million in its fiscal fourth quarter ended June. Revenue was 42 per cent lower at S$179.8 million.

For the entire financial year, revenue declined 40 per cent to S$803.4 million, while net profit fell 52 per cent to S$254.4 million.

Source : Today – 29 Aug 2014

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