Week in Review – 19 March 2015

Increase in private home sales in February, Increased new property launches pose a challenge to existing projects with unsold units, Thousands show up for Yishun’s North Park Residences public preview, More shoebox flats built to meet high demands
Increase in private home sales in February
382 new private homes were sold in February, a small rise compared to 374 homes sold in the previous month. This despite fewer unit launches. Sims Urban Oasis by GuocoLand fared the best, with 112 out of its 200 units sold. 
Mr Nicholas Mak, Executive Director at SLP International Property Consultants, commented that sales levels for 2015 will depend on the cooling measures. Analysts expect that an increase in new project launches such as Kingsford Waterbay and North Park Residences could also stir interest and promote a sales hike. Ms Chia Siew Chuin, Director of Research & Advisory at Colliers, told Singapore Business Review, “Well-located and competitively-priced projects remain in demand and this should help to steer developers’ strategies. As developers gear up for more launches, primary market sales volume is expected to improve to between 400-600 units in March”.
The prospect of an increased interest rate might push buyers to make quicker decisions. “Some buyers sitting on the fence might be swayed to hasten their decision to buy and lock in interest rates,” explained Mr Desmond Sim, head of CBRE Research, Singapore & Southeast Asia. 
Sales of executive condominiums (ECs) fell to 65 units last month, compared to 184 ECs in January. This could have been attributed to the lack of new EC launches. Prices may be reduced within the year to drive interest, especially within newer estates such as Sengkang, Woodlands and Punggol, where oversupply is a concern. 
Increased new property launches pose a challenge to existing projects with unsold units
Upcoming new launches are putting more pressure on existing projects, with those in the central region and Sentosa hit by losses of up to one million dollars. According to the Urban Redevelopment Authority (URA), 20 large developments with over 200 unsold units as of January 2015 include The Santorini in Tampines, Highline Residences in Tiong Bahru and Vue 8 Residences in Pasir Ris. 
Buyers that bought projects in 2Q of 2013 when the market was bullish may “book losses” if they were to sell today, said Mr Donald Han, managing director of Chestertons to Channel NewsAsia. “Out of 40 developments that were launched in 2010, about 11 would have suffered some form of paper loss.” According to DTZ, prices of resale condominiums fell by nearly 10 per cent last year, as transaction volumes dropped by 30 per cent. The luxury segment saw the largest decline at 2.5 per cent quarter-on-quarter in Q4 2014.
Many developers have been reluctant to cut prices however, and are looking for other ways to woo buyers. Mr Ku Swee Yong, CEO of Century 21 Singapore, revealed to Channel NewsAsia, “Of the 20 large developments, only The Panorama in Ang Mo Kio has an obvious drop in prices.” Besides proposing agents a higher commission as an incentive to introduce projects to their clients, developers are also considering offering more attractive interior design, or being more flexible with unit layouts. 
Thousands show up for Yishun’s North Park Residences public preview
Frasers Centrepoint’s upcoming North Park Residences drew crowds of over 2,000 strong for its first day of viewing. The development attracted many due to its location and close proximity to Yishun MRT Station. North Park Residences is also connected to Northpoint City, a large integrated development that will offer a mall, bus interchange and a community club. The development is expected to be ready by 2018. 
More shoebox flats built to meet high demands
In a February report, Knight Frank observed an increase in shoebox flats outside the Central Area, from 12.3 percent to 12.4 per cent, despite the Urban Redevelopment Authority’s restrictions on the maximum number of private non-landed dwelling units under 70 sqm. According to Knight Frank, the most notable increase was seen in the East Region, where the number of units rose by 6.8 percent. 
Knight Frank concluded that with the continued cooling measures, “developers are likely to continue incorporating more smaller-sized units in developments”. This is to appeal to a wider group of home seekers, such as smaller families, investors and singles, who are looking for units with more affordable prices. The property consultancy warns however, that potential investors should “take note of the likely softening in rents” with the oncoming supply of newly completed private homes in the following years.