With a series of new condominium projects launched at new highs and achieving at least 70% sales on their first weekend, can the buying momentum be sustained?

Unlike previous years, visitors to the sales galleries of new condominium launches this year have had to jostle with a few thousand others and get in line just to have a peek at the showflats. The hubbub and crowds have given rise to a sense of euphoria at the sales galleries.

“Singaporeans must see a queue, then they will join in,” says Anson Yap, vice-president (project marketing) of ERA Realty. “We must see other people buying before we buy.”

At a briefing for agents on May 7, Yap said: “Foreigners are savvier and normally ahead of the trend. The fact that they are returning to the Singapore residential market and buying luxury property means that they believe the recovery of the housing market is real and they see future price upside.”

In March and April, there was a string of previews of projects in the city-fringe area and suburbs. These projects saw more than 70% of the units released sold on the launch weekend (see Table 2).

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Up, up and away

On the weekend of May 5 and 6, at the launch of Twin VEW, 442 units out of a total of 520 units in the development were sold, bringing total sales to 85%. The average price of $1,399 psf achieved at the project set a new benchmark for West Coast Vale, as it was 21.7% higher than the average price of $1,150 psf at Parc Riviera next door when the project was launched in November 2016.

The developer of Twin VEW, CSC Land Group, paid $592 psf per plot ratio (ppr) for the site last year. At the beginning of this year, City Developments (CDL) paid $800 psf ppr for the adjacent 99-year leasehold site at a government land tender. Based on CDL’s purchase price, the new project is likely to be priced from $1,600 psf, says Alice Tan, head of research and consultancy at Knight Frank Singapore. This will be at least 14.4% higher than the average price of $1,399 psf achieved at Twin VEW.

Last month saw the launch of Rivercove Residences, a 628-unit executive condo. It is the only EC project launched so far this year. Close to 80% of the units were sold via ballot on the first day of launch. At an average price of $965 psf, it set a new benchmark price for ECs. “People were almost crying when they managed to get in to the ballot tent to buy a unit,” recounts ERA’s Yap, who conducted the ballot, which was said to have lasted eighthours on April 14.

The first launch of 2018 was that of New Futura, a freehold luxury condo by CDL on Leonie Hill Road in prime District 9. About half of the 124 units in the twin-tower development have been sold so far, at an average price of $3,258 psf.

‘Benchmark prices’

The weekend of May 12 and 13 will mark the 10th project launch this year: Amber 45. The 139-unit freehold development by UOL Group is located on Amber Road in prime District 15.

At the preview weekend of Amber 45 on April 28 and 29, more than 3,000 people turned up at the sales gallery located opposite the Dakota MRT station. Unlike most of the projects launched so far, Amber 45 does not have any one-bedroom units. Unit sizes start from 614 sq ft for a two-bedroom unit, which is priced from $1.45 million, while a three-bedroom unit starts from about $2.5 million and a four-bedroom unit, from $3 million. Indicative prices are around $2,360 psf.

According to George Tan, executive director of Savills Residential, one of the marketing agents for Amber 45, the project attracted not just en bloc beneficiaries and affluent parents buying for their children, but also many residents from the landed housing estates of Siglap and Kembangan in the east. “It’s a very good profile of buyers,” he says. The project is expected to set the benchmark for upcoming launches in District 15.

“The new condo launches this year have set benchmark prices,” says ERA’s Yap. He points to the first significant mass-market launch this year: the 861-unit The Tapestry at Tampines by giant developer CDL. On the first weekend of sales on March 24 and 25, 315 of 450 units released were sold at an average price of $1,310 psf. This was a good 21.8% higher than the average price of $1,075 psf achieved at The Alps Residences when it was launched in October 2016.

Likewise, Oxley Holdings’ The Verandah Residences, which was launched at an average price of $1,800 psf, set a new benchmark for the Pasir Panjang area. On the first weekend of sales on April 7 and 8, the project saw 129 out of a total of 170 units snapped up. Only 10 units are available for sale currently.

Phase Two of Park Place Residences, which was launched on the same weekend as The Verandah Residences, saw 149 out of 219 units sold at an average price of $2,014 psf. The average price achieved in Phase Two is 11.8% higher than the $1,800 psf achieved when the first 210 units were launched in March last year. Those units were sold out in a day.

Feeding pent-up demand

Given the buying frenzy, many are wondering whether it is sustainable. While the residential market is sentiment-driven, ERA’s Yap attributes the strong sales partly to pent-up demand built up over the last 3½ years. He based this on average new-home sales over the past decade, which was 12,000 units a year. In 2014 to 2016, however, the average number of new homes sold was 7,000 to 8,000 units.

Last year, a total of 11,562 private new homes (excluding ECs) were sold, according to Prop Nex Realty. And, after 15 consecutive quarters of price declines, the URA private property price index turned the corner in 3Q2017.

In 1Q2018, there was a stronger-than-expected price growth of 3.9% for non-landed homes. “We think the increase is front-loaded, owing to the pent-up demand and buyers’ fear of losing out on good-value buys as prices trend up,” says Tricia Song, Colliers International head of research for Singapore.

However, affordability is still key in today’s market, notes Knight Frank’s Tan. In the mass-market segment, that means prices of one-bedroom units should be pegged below $1 million, while those of three-bedroom units should be less than $1.5 million. “I don’t see an increase in appetite for higher absolute prices in this segment,” she adds.

City-fringe prices — to catch up in coming quarters

Private-home prices in the Rest of Central Region (RCR), or the city-fringe area, rose the least in 1Q2018 (up 1.2% q-o-q) compared with the prime districts in the Core Central Region (CCR) and the suburban areas of Outside Central Region (OCR), where prices appreciated 5.5% and 5.6% respectively. Colliers’ Song reckons the more measured pace of increase in RCR in 1Q2018 could be due to the lack of new launches at significantly higher prices.

That could change in the coming quarters with more launches in RCR, such as Amber 45 in District 15, Margaret Ville by MCL Land in District 3 as well as Park Colonial and The Woodleigh Residences in District 13. As these projects are also expected to set benchmark prices in their respective locales, “prices of homes in RCR will catch up with those in OCR and CCR in the following quarters”, adds Song.

Given greater competition among city-fringe projects in the coming quarters, developers will be working hard to differentiate their projects, with some banking on “emotional appeal”, says Knight Frank’s Tan. She foresees “a mixed bag” in terms of the performance of new launches over the next three quarters.

Tugging at heartstrings

ERA Realty’s briefing of its agents on the upcoming project, Affinity at Serangoon, offers a glimpse of how developers such as Oxley Holdings are differentiating themselves from the rest of the pack.

Beyond the usual marketing paraphernalia, the consortium led by Oxley Holdings has even produced a food guide in collaboration with K F Seetoh, founder of Makansutra, which features his 50 favourite eateries located within a 3km radius of Affinity at Serangoon. They include Ah Seng Braised Duck Rice, Pow Sing Restaurant as well as the famous Ah Hock Fried Hokkien Noodles and Swee Heng Wonton Mee at Chomp Chomp Food Centre.

There is even a four-minute filmlet designed to tug at the heartstrings, not just the purse strings. “The film represents all of you — children and parents — and sends the message across on why this property is called Affinity at Serangoon,” says Eugene Lim, Oxley Holdings’ director of marketing and sales, in his address to the agents at the briefing. “When we showed it to the other marketing agents, we saw tears in their eyes and a lot of people taking out tissue paper at the end of the filmlet. We hope this will be very meaningful to you and your buyers too.”

The 1,052-unit Affinity at Serangoon is a redevelopment of the former Serangoon Ville privatised HUDC estate by Oxley Holdings and its partners — SLB Development, KSH Holdings and Apricot Capital, a private investment arm of the Teo family of Super Group.

Upward revision

With this year’s new launches achieving benchmark prices for their neighbourhoods, Colliers’ Song has adjusted her forecast for a price increase in private-home prices to 8% (from 5% before April). This implies another 4% rise in the next three quarters, which is a more gradual increase for the rest of 2018. She attributes this to “an unexpected gush of new launches in the next few quarters, an expected rise in mortgage rates and heightened volatility in the world economy”.

Meanwhile, Knight Frank’s Tan has revised her forecast of a 7% y-o-y increase in private residential prices to 10% by 4Q2018 on the back of stronger new home sales this year. It looks like developers will continue to draw in the crowds for many more weekend launches to come.

This article appeared in the EdgeProp Pullout Issue #830 (May 14, 2018)

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