Amber45 | A value proposition in a sea of current and future launches

By Amber45 / BROUGHT TO YOU BY UOL GROUP | November 2, 2018 3:30 PM SGT
Attractively priced versus leasehold properties in the vicinity, Amber 45 has upside potential
IT HAS BEEN more than three months since the implementation of the latest series of property cooling measures. We can begin to assess how the residential landscape has changed and whether pockets of value are emerging in the market.
HISTORICAL CORRELATIONS
From Figure 1, we see that the increase of new launches in the primary market has slowed since the latest cooling measures. Nevertheless, they have been resilient.
There is a strong historical correlation between primary home prices of non-landed properties in District 15 in the East and those in the prime Orchard Road Districts of 9, 10 and 11. The likely explanation of this correlation is that both regions are homes to upper-income households.
PRICE PREMIUM BETWEEN D9-11 AND D15
The price premium for non-landed private residential properties in Districts 9, 10 and 11 over those in District 15 averaged 39% from 2012 to 2017. However, for the fi rst three quarters of 2018, the premium for non-landed homes in Districts 9, 10 and 11 has risen signifi cantly, and is more than 50% as at the fi rst week of October.
What is likely to happen is that prices in District 15 will rise to close that gap (see Figure 1), because future launches in the district have higher breakeven prices than those launched in 1H2018, including Amber45.
INCREASING BREAKEVEN PRICES
Although the collective sales fever has broken, it should be noted that the market is still primed for a series of launches at sequentially higher price from...