FRASERS Centrepoint Ltd (FCL) chief executive Lim Ee Seng deems it a “no-brainer” that residential demand will continue to dwindle as buyers become increasingly jittery about job security and property cooling measures remain intact.
His comments followed the dismal showing of the 628-unit Parc Life EC project in Sembawang, which FCL is jointly developing with Keong Hong Holdings. Since its launch during the last weekend of April, some 60 units were sold as of May 8 despite more than 700 e-applications received.
Mr Lim conceded that sales were “not as good as anticipated”, unlike the stronger showing in previous project launches by FCL. “With the current market conditions, I think it is quite inevitable,” he said.
Many potential EC buyers, who fall within the S$14,000 monthly household income bracket, are not only starting their careers but feeling insecure about the jobs market, he opined. “The second reason is that the excessive supply in the Northern corridor of Yishun-Seletar-Punggol because the government has injected a lot of supply of ECs in the market. This has formed a bit of a glut.”
But Mr Lim added that the group is confident of selling all units in Parc Life within a four-year timeframe, though it will be chalking up holding costs in the interim.
Excluding Parc Life, FCL has 400-500 units to clear from existing launches, mainly from North Park Residences.
Observing that some developers have resorted to price cuts to move units, Mr Lim said he is doubtful about the effectiveness of price cuts alone in moving sales given the status quo in cooling measures and uncertainties about the job market.
Still, the group will continue to invest in its home country, even though overseas contribution will make up a larger share of earnings as the domestic market eases. In January, FCL tabled the top bid of S$624 million for a rare condo site on Siglap Road with Sekisui House and Keong Hong. This works out to about S$858 per square foot per plot ratio.
“When we went in, we went in on the basis that we are not going to lose money but margins will be thin,” Mr Lim said. The group will mitigate the downside by controlling costs and having a product that “will be acceptable to the market”.
The site is expected to be launch-ready in about 10 months from the land acquisition, but FCL will review its launch date in view of market conditions.