Author: The Folks @SG PropTalk
London property remains hot with Asians
Average price by market segment: Q2′ 2013 – Q2′ 2014
Living 180 University @Toronto, Canada
SG PropTalk now tweets… again!
The wife and I had gotten ourselves a twitter account since 2012 but we were never very diligent about it.
However, our housing minister has inspired us to post a tweet tonight. So we are trying to “get the bird chirping” again and more regularly this time around.
New project info: Highline Residences
So the much anticipated project at the City fringe has finally been put out for sale. The wife and I have passed by the boarded site of Highline Residences several times over the past months and have been wondering when Keppel Landwill do the launch.
Weather forecast for shoeboxes: Stormy with a likelihood of flood!
We also firmly believed that majority of shoebox units that were purchased since 2009 were not for self-stay – we do not have the figures to substantiate our claim so we are prepared to “agree to disagree” on this point.
For existing owners who have bought shoeboxes for investment purposes, they will be competing for rentals with not just the brand new units that are expected to flood the market next year but also with the bigger apartments. Given the current depressed state of the rental market, which looks to get worse next year, landlords are likely to drop asking rentals to get tenants rather than leaving their apartments vacant. This will sure to put additional downward pressure on rental yields for shoeboxes – given a choice between a shoebox and a bigger apartment at about the same monthly rent, it is a no-brainer as to which a potential tenant will opt for.
Start of the GIS (Great Iskandar Sell-off)..?
New project info: Marina One Residences
Wing Tai Chairman: No "fire sale" (for now)
And for its 156-unit Nouvel 18located next-door, a joint venture with City Developments, QC rules dictate that it must obtain its TOP by Dec 17, which means all units must be sold by late 2016.
“There is no point in lowering the price … it’s almost like retail — you don’t see the high-end, luxury products on a fire sale. If LVMH does that, it is destroying its brand. In the high-end segment, you’re selling a brand image; not for utility. If it’s for utility, you can never sell at that kind of price,” said Mr Cheng.
“We still have one-and-a-half years for Le Nouvel Ardmore. We will hold our price and wait until that time to make a decision.”
Several developers have in the past months lowered prices of their projects to move units. For example, MCL Landhad cut prices of its Hallmark Residences in Bukit Timah by about 10% earlier this year.
The wife and I cannot find any transacted price information for Le Nouvel Ardmore, since it is not mandatory for caveat to be lodged with the URA. However, we did find an August 27 listing on PropertyGuru for a 3,800sqft unit asking for $18 million. This worked out to be more than $4,700psf!
And looking at another soon-to-TOP project nearby with comparatively smaller-sized units, the transacted prices for the 84-unit Ardmore 3 averaged around $3,300psf over the past 2 years (Aug 2012 – Aug 2014).
So Mr Cheng may indeed have a point there: The luxury home market is catering to an entirely different playing field and even if prices were to drop by 20% (hypothetically), the absolute price quantum is probably still way too rich for even the “above average Joes”. Given that the sector may not be as price elastic as the mass market segment, dropping prices to try and increase sales may not necessarily do more good (moving more units) than bad (brand erosion).
But the question remains – how much further are developers of luxury projects with large number of unsold units prepared to hold on to their prices especially with their QC datelines looming?
There is always a bright side to everything though: Those who have already bought into these projects need not worry about parking spaces when inviting their Lambo or Ferrari-driving friends over for dinner parties and such… for quite awhile at least.