Price cuts for homes in Core Central Region?

Developers in Singapore have been cutting prices for some city fringe and suburban projects.

Property watchers Channel NewsAsia spoke to say price cuts are likely to be done in a “very limited way” in the city area despite a lower take-up rate of new homes there over the past year.

Developers have been launching fewer units in the city area.

For instance, in the first five months of this year, 231 units have been launched as compared to 807 new private homes in the same period last year.

The number of new private homes being bought in the city area is also getting fewer.

For example, from January to May this year, 203 units were bought compared to 1,017 new private homes sold in the same period last year.

Some analysts say the Additional Buyer’s Stamp Duty has played a crucial role in keeping high-end buyers away.

Mr Ku Swee Yong, CEO of Century 21 Singapore, said: “Firstly, they (homes in the city area) appeal to foreigners, and foreigners are not back in due to that 15 per cent tax (Additional Buyer’s Stamp Duty). Secondly, many of these units in the core central region are still designed with large format of 1,500, 2,000 square feet.”

Some developers have turned to cutting prices to attract buyers.

Developer MCL Land of the Hallmark Residences in the Bukit Timah area trimmed prices by some 10 per cent earlier this year.

It has sold about 30 units since.

However, property watchers say developers of these luxury homes are unlikely to go to town offering discounts.

“The Qualifying Certificate (QC) which compels them (developers) to build within five years and sell within two years of TOP (Temporary Occupation Permit) – there is a penalty,” said Mr Ku.

He added: “At this moment, for most developers who are holding on to their stock, paying the penalty is still worthwhile compared to giving a discount. Once you have given a discount on one unit, it hurts the valuation of the remaining units that are unsold.”

Mr Desmond Sim, Head of CBRE Research Singapore, explained: “Generally by not giving direct discounts, it will help overall in the value of the project so at the end of the day, when the market turns, the value of the project is maintained and preserved.”

Developers with deeper pockets, or are not hitting the deadlines stipulated under the QC scheme, may choose other strategies.

SLP’s Executive Director of Research and Consultancy Nicholas Mak said some of the developers of these prime properties may choose to lengthen their marketing period, and in the meantime, turn to other areas for development such as the city-fringe or even overseas projects.

About six projects in the city area will be launched in the next few months, according to Savills Singapore’s latest residential sales report.

This includes the Marina One, a mixed development at Marina Way.

The developer for this project is also behind the 660-unit Duo Residences in Bugis, which sold 600 units in the month it was launched.

The condominium was launched in November last year and according to figures from the Urban Redevelopment Authority, the 600 units were sold at prices between S$1,513 and S$2,596 per square foot (psf).

This compares to an average of S$2,300 psf the other projects in the vicinity were going for.

Source : Channel NewsAsia – 18 Jun 2014

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