Lessons from 2 new condo launches
By Ida West
/ EdgeProp Singapore |
SINGAPORE (EDGEPROP) - When it comes to new launches, the talk in town these days is the hugely successful launch of Penrose, a development by City Developments and Hong Leong Holdings in District 14 which sold 60.3% of 566 units over a weekend. This success was cited by professionals within the industry as the “rejuvenation” of the property market and is widely shared with great exuberance on social media.
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The lesser celebrated launch which didn’t receive the same coverage and enthusiasm is the launch of Hyll on Holland (Hyll), a development by Far East Consortium in a joint venture with Koh Brothers Group, in District 10. The project sold 4 units or roughly 1% of the 319 units available in the initial “soft launch” phase, which happened the week after the launch of Penrose.
So, are we really in the midst of a bull run in the property market despite the ongoing pandemic and Hyll is just a bump on the road, or are buyers still treading cautiously when it comes to property purchases? We believe it's the latter and we turn to data once again for enlightenment.
Buyers are still very price sensitive
Resale projects and new launches within 500M of Hyll on Holland. Source: URA, Edgeprop
The average selling price of Penrose is $1,585 psf. Next door, units at Sims Urban Oasis, also a leasehold project completed in 2017, is selling at an average price of $1,550 psf in the secondary market. New projects are typically priced at 10%–20% premium compared to resale properties due to lower maintenance cost, better financing options, choice units and the “novelty” factor. For a new launch to be priced at a similar level to a resale property 200m away is almost unheard of.
On the other hand, the average selling price of Hyll is $2,656 psf, based on caveats lodged. Within a 500m radius, there are 15 other older freehold projects transacting for an average selling price of ~$1,700 psf in the resale market. For example, Viz @ Holland, a development completed in 2008 and is 228m away from Hyll, units similar in sizes to available units at Hyll were being transacted in the $1,600–$1,700 psf range. Even newer projects such as Leedon Residence which was completed in 2015 and has much larger units, is transacting at the $2,243 psf price range.
Pent-up demand? It depends on the location
There hasn’t been any new launch within 500m of Penrose since Sims Urban Oasis, which was launched more than five years ago. The closest uncompleted project, The Antares, is more than 700m away within the same district 14 and has an average selling price of $1,754 psf. There’s only one other uncompleted project within the 1km radius of Penrose, which is a development called Rezi 24 that has an average selling price of $1,607 psf.
In comparison, within 500m of Hyll, there are three other projects launched within the last two years, namely Leedon Green, 15 Holland Hill and Wilshire Residences. Further out, there are two other projects — Van Holland, which is 864m away and One Holland Village Residences, which falls within the 1km radius. In total, excluding Hyll, there are more than 1,400 launched and uncompleted units within this area alone.
Timing and ‘luck’ still matters, a lot
The launch of Hyll coincided with URA’s new initiative, which prevented developers from re-issuing the same Options To Purchase multiple times to the same buyer in order to encourage financial prudency. This is seen by industry experts as a “mini cooling measure”, which could have dampened some of the enthusiasm in the market. Previously, we estimated that the market is artificially ‘inflated’ by roughly 15%–20% due to the ability to re-issue options multiple times and the methodology used by URA to define “new sale transactions”.
Creating awareness crucial in a buyer’s market
Leading up to the launch of Hyll, there’s a general consensus among the industry professionals that there seems to be a lack of awareness among consumers about this 319-unit development. A search on EdgeProp’s listing site shows that there are currently 117 listings being marketed by property agents. That’s substantially fewer than the available units for sale.
In contrast, Penrose currently has 270 listings being marketed. Considering that this 566-unit development only has 173 units available for sale, the ratio of listings to available units is considerably higher compared to Hyll. A quick browse on other property portals reveal the same conclusion. Although this is not a scientific measure of marketability of each individual project, it does provide a good gauge for awareness.
Hyll also didn’t have the benefit of a preview window, which most developers use to collect cheques and garner interest from the ground.
The two highly contrasting fortunes of the latest two new launches accurately reflect the mood on the ground. Amid talks of a buoyant property market despite the continuing job losses, the truth is that buyers are still extremely cautious and rightly so when it comes to purchasing a million-dollar condo.
Discover more about the Leedon Green, best selling freehold project in prime District 10 here
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