Straits Times: Luxury homes reeling in buyers at attractive prices

By Esther Teo

The property boom has still not lifted luxury home prices back to their 2007 levels, although units in up market projects are attracting buyers.

It is far from a bargain-basement situation but developers are having to keep their expectations in check, and having to offer attractive prices.

Take Bukit Sembawang's Paterson Suites, which was completed in the third quarter. There were 41 new units sold at a median price of $2,661 per sq ft (psf) last month.

In July a 2,164 sq ft flat went for $7 million - or $3,232 psf.

Yet in July 2007, five units were sold at a median price of $3,369 psf.

The Straits Times understands that 38 of the 41 units were sold to a handful of private investors, mostly foreigners. Each bought several units and received a slight discount.

Three units of Hasetrale Holdings' 8 Napier in Napier Road fetched a median price of $3,348 psf last month. In 2007, some flats went at close to $4,000 psf. 

In 2007, Macquarie Global Property Advisors paid $136 million for 19 units at 8 Napier at an average price of $3,550 psf.

Experts said luxury home prices are about 5 per cent shy of their 2007 peak.

Colliers International's director of research and advisory, Ms Tay Huey Ying, said that if prices continue to strengthen, even at a moderate pace, developers will be encouraged to gradually off load more units.

'But this will probably not be on a massive scale because developers are conscious of the strength of the high-end market and are likely to space out their launches evenly and in small volumes,' she added.

Some investors have also opted to buy landed homes instead, as the limited supply of such property means the sector is more resilient to volatility.

Experts added that while it is still early days, there could be increasing pressure on developers to lower prices should the high-end segment continue to languish below its peak - both in terms of price and volume.

Jones Lang LaSalle's head of research for South-east Asia, Dr Chua Yang Liang, said smaller developers with reduced holding power and completed projects on hand would be most affected.

Larger developers could always lease out unsold units, he added.

Urban Redevelopment Authority data for private home sales last month showed that 213 homes in the core city centre region were sold, out of 338 launched - the highest number launched for the segment since March.

This brought total home sales in the city centre this year to 3,741 out of 3,867 units launched as of the end of last month.

These numbers are in line with last year's 3,825 units for the entire year but short of 2007's 5,454 units sold.

CNA: Private home sales up in November

Private home sales up in November

Dec 15

SINGAPORE: Private home sales in November rebounded about 80 percent on-month to hit 1,909 units - the second highest in 11 months.

That brings the total number of homes sold so far this year, to 15,025, surpassing the 2007 sales record of 14,811 units.

The surge in November sales comes just three months after the government introduced its latest round of measures to cool the property market.

Lakefront Residences in Jurong was the most popular property selling over 437 units at $1,075 per square foot last month.

Coming in second was Waterview in Tampines, which sold 376 units at $903 per square foot, while Spottiswoode Residences followed with 258 units sold at $1,853 per square foot.

This buying fever in November caught many analysts by surprise.

Tay Huey Ying, Director (Research and Advisory), Colliers International, said: "It just goes to show or prove that a lot of investors are still viewing property as a safe place to park their wealth in spite of the high exposure to policy risks.

And I think another driving factor for November's high sales volume could also be foreign purchases, diverted from the HDB resale market, as well as from Hong Kong and China, in light of their recent property curbs.

With high sales volume, with feverish buying fever, there is bound to be some upward pressure on prices although the ramped up government land sales programme could put a check on the rate of price growth.

If what is driving the November sales happens to be foreign purchases, who may not be too bothered about potential launches, potential supply, then I think it does warrant certain further measures to cool the buying fever."

Industry watchers say the government may end up introducing another harsher set of cooling measures, such as a tax on profits from property sales in the next few months.

Colin Tan, Head (Research and Consultancy), Chesterton Suntec International, said: "What's going to happen if the buying doesn't stop and while we may not feel the impact now, but the consequences may come maybe a year or two later and it can be pretty adverse.

We'll have a lot of units up for rental, then the rentals could collapse especially when there's a lot vested buying.

The worse is of course when rentals come down, and holding cost go up as well, so that will reduce the yield and when yield is miserable, some investors may opt to sell or are forced to sell and that may start a domino effect."

Analysts say the latest figures also show that properties with strong branding and good locations remain the most attractive.

Although the November statistics came as a surprise, many believe the number for December will come back down as developers launch fewer properties over Christmas and New Year.

For the month of December, property watchers expect between 800 and 1,300 units to be sold. - CNA/wk/ch