Five executive condominiums (EC) are coming onto the market, after a nine-month drought in EC launches, but consultants and developers alike are unsure of how they will perform.
Some expect the new launches to benefit from pent-up demand, while others believe sales will not be that brisk as increasingly selective buyers take their time with their new array of choices.
It boils down to the price eventually, most say. ECs will meet with buyers’ resistance if prices exceed S$1 million in quantum or about S$800 psf. Most ECs are selling at about S$780-820 psf presently.
The 70 per cent slump in EC sales after a 30 per cent mortgage servicing ratio (MSR) kicked in last year shows that new launches could face challenges if they are still priced at or close to levels before the MSR was imposed. From Jan-Aug last year, ECs sold at a median of S$750 psf.
Vincent Ong, co-managing partner of Evia Real Estate, the developer of Lake Life, one the five ECs, agreed that the MSR will make some buyers more hesitant, depending on their debt profile. The saving grace is that ECs remain 20-30 per cent cheaper than equivalent private properties, and this will sustain interest levels in this market class, he said.
The three ECs which have confirmed their launches from now until November are: Qingjian Realty’s Bellewoods (in Woodlands) and Bellewaters (in Sengkang), and the Evia Real Estate-led consortium’s Lake Life (in Jurong West).
The other two yet to have set their launch dates are Keong Hong’s The Amore and Kheng Leong’s The Terrace, both in Punggol.
Three of the five projects are located in the Punggol-Sengkang region and may have to vie with one another for buyers with competitive pricing. This is on top of the existing unsold 75 units at Ecopolitan and 107 more at Waterwoods in the vicinity.
In Woodlands, Bellewoods is also up against the 120 units unsold at Forestville.
Lake Life may attract the most interest, although its record high land price of S$418 psf per plot ratio (versus the usual S$300-plus) will be factored into their pricing. This is because it has been 17 years since the last EC, Summerdale, was launched in Jurong West in 1997.
Add to that the fact that the Jurong Lake District is going through a major makeover, including spruce-ups of its parks and gardens, a new Science Centre, and the prospect of the high-speed rail station to Malaysia to be built there.
The project has gathered more than 500 pre-registrations over the past two weeks. But prices are indeed on the higher end. Current market indicative price for Lake Life is $880 to $890 psf.
Some projects are controlling apartment sizes to keep prices within buyers’ comfortable range. Donald Ng, head of sales and marketing at Qingjian Realty, for instance, is proud that Bellewaters’ Type C1 three-bedders are among the smallest in all the existing ECs.
Qingjian has managed to make efficient use of space with “no wastage, no super long corners or odd corners. With a reduction in size, it can help to keep the total quantum affordable within MSR limits,” he said.
Bigger units such as four-bedders or large three-bedders could be difficult to sell as buyers may struggle to secure the needed loan.
Most of the time at new launches, it is the smaller units that get snapped up because their loans are easier to finance. Bigger units might be booked but after that returned because buyers might have difficulty placing the deposit or getting the loan quantum from banks.
Bellewoods will come with two-bedroom units, a rarity in the leftover inventory from earlier ECs. The ones left in the market are low-floor or bigger units or those with not so favourable specs.
A developer of one of the five upcoming ECs, when asked what kind of interest his project might attract, said: “Your guess is as good as mine. It is an uncertainty all developers grapple with, so it boils down to the advertising and marketing. Of course we will do as much marketing as we can to make it attractive.”
Source: Business Times – 20 September 2014