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SG Developers stand firm on TDSR assault

Property Here - Friday, September 13, 2013

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Despite the current economic conditions and cooling measures, particularly the Total Debt Servicing Ratio (TDSR) framework, property players remain optimistic on the outlook for Singapore’s housing market.

Several developers are not holding back on their project launches while prices remain competitive. 

Last weekend, The Skywoods condominium at Dairy Farm Road released 150 of its total 420 units for sale at an average price of S$1,250 psf, with the developer TA Corporation offering discounts of up to 25 percent. 

Around 100 units were reportedly sold over two days. Prices range from S$715,000 to S$1.68 million for one- to four-bedroom units, while penthouses are going for just under S$2 million. The project is expected to be completed in 2016. 

Comparatively, the nearby Hillion Residences by Sim Lian JV (BP) launched in March, with prices starting from S$668,000 for a one-bedroom unit. 

BANKS GET TOUGHER 


Neo Tiam Boon, Chief Executive Officer and Executive Director for TA Corp, said: “This is our first site in the Dairy Farm area and is close to the upcoming Hillview MRT station on the Downtown Line 2. There will be many visitors (to the showflat) looking to buy units, but the TDSR will have a big impact and financing from banks will be a challenge.” 

He added that in the past, most developments were sold within two months but this is now likely to extend anywhere from nine months to a year. He doesn’t expect new homes to sell out quickly and thinks sales will be limited to buyers with hard cash.   

Notably, the developer’s Gambir Ridge freehold condo launched about a year ago and was fully sold in just three days. 

Over in Tanah Merah, the much-anticipated The Glades had its soft launch over the same weekend. The 99-year leasehold project comprises 726 condo units. 

A spokeswoman for its developer, Keppel Land, told The PropertyGuru that 80 out of the initial 200 apartments released were sold at prices between S$1,400 psf – S$1,600 psf. 

According to a blog post by property blogger Mr Propwise, this is slow in comparison to the nearby Urban Vista, which sold around 350 units over its launch weekend back in March at a similar price level, and is currently more than 80 percent sold. 

LAND PRICES TOO HIGH

Getty Goh, Director at Ascendant Assets, said while he observes weaknesses setting into the market, especially with the TDSR, prices are expected to remain sticky.

“Prices of recent GLS (Government Land Sales) sites have been high and there is limited scope to price cheaply. Unless in a really bad financial situation, developers will not be inclined to sell at a loss,” he added.

Just this week, a mixed development site in Yishun was awarded to Frasers Centrepoint after it submitted a record bid of S$1.43 billion. 

But if sales at new launches do not pick up, developers might be forced to slash prices and there are some indications this is already taking place.

Located at Bright Hill Drive, Thomson Three – which is jointly being developed by UOL and Singapore Land – is expected to be priced “at a more realistic level”, between S$1,350 psf and S$1,400 psf, said Liam Wee Sin, (UOL President) Property. 

“Without TDSR, we could easily have priced this project at S$1,500 psf on average, or even higher,” he told reporters. 

The condominium opened for preview on 7 September, with sales bookings planned to start next Friday. The 21-storey project features 435 apartments and 10 strata semi-detached houses.

Next week, the Urban Redevelopment Authority (URA) will release data on the number of new private home sales for the month of August, but Goh does not expect a month-on-month decline in transaction volumes. He has also predicted some stability in the market.

In July, 481 private homes excluding executive condominiums (ECs) were sold, a whopping 73 percent decline from the 1,806 units sold during the previous month, the lowest recorded transaction volume since December 2009.

Image: Thomson Three, a joint venture project between UOL and Singapore Land, launches next week amid much market uncertainty. (Artist’s impression – Photo by UOL Group)

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, wrote this story. To contact him about this or other stories email romesh@propertyguru.com.sg