Developers with luxury residential projects seem to be delaying the launches and, in some cases, completions as they await the anticipated uptick in the high-end segment, according to a report in Straits Times.
While homes in suburban areas are selling well at record high prices, sales volumes in the luxury sector is anaemic and prices are languishing over the past year.
In a report by property consultancy Savills Singapore, it is noted that prices of new non-landed luxury homes fell 6 per cent to $2,230 per sq ft (psf) in the second quarter, on top of a 5 per cent fall in the first three months of the year.
However, experts note that things might change for posh homes with volumes picking up again now as the price gap between high-end homes and suburban apartments narrows.
Thus the developers have held back their official launches in the meantime as they wait for this turnaround.
One property consultant, who declined to be named, said that one mode of sale considered for luxury projects is the private preview. Some developers are said to have chosen to tap their network of contacts too.
Some projects that have chosen the private route include Tomlinson Heights, Le Nouvel Ardmore and Bishopsgate Residences, he said.
Units in these projects often cost more than $3,000 psf, with overall prices of at least $5 million.
Those selling through official launches are delaying the process until their projects are completed.
An example is Hiap Hoe who said in its second quarter financial statement that it intends to officially launch Skyline 360° at St Thomas Walk and Treasure on Balmoral upon the projects’ completion in the last three months of the year.
The 61-unit Skyline 360° is 56 per cent sold while no units is transacted at the 48-unit Treasure on Balmoral.
Savills’ head of research, Mr Alan Cheong, said some developers have also appealed for a waiver of extension charges.
These fees are incurred by foreign developers who do not dispose of all homes in a project within two years of its completion. Foreign developers refer to any firm with at least one non-Singaporean shareholder or director, and thus includes all the listed developers here.
“Developers with holding power will likely pay to lengthen their sales window while maintaining their current sales prices.
“Some may even choose to pay the additional buyer’s stamp duty and transfer their unsold inventory to an investment company and lease out these units as investment assets while waiting for a price appreciation in the medium term,” Mr Cheong added.
Experts add developers could also choose to delay completions for some projects so they do not get caught by the two-year rule. This is especially so for projects that have not sold well.
But Mr Nicholas Mak, head of research for SLP International, said developers might only be able to slow down construction to a certain extent as the schedule of external contractors and buyer expectations have to be met.
“The reasons behind delaying completion, however, could be to avoid being under pressure to sell, paying holding costs for a completed property and to prevent ageing from setting in,” he added.