Converting footfalls into sales

/ The Edge Property |

October 28, 2016 10:00 AM SGT

Cloudy economic outlook notwithstanding, the developers of Queens Peak and Parc Riviera are looking to jump-start sales to end the year on a more positive note

About 4,000 people visited the Queens Peak sales gallery on the weekend of Oct 22 and 23

At Hao Yuan Investment/MCC Land’s preview of the 736-unit Queens Peak on Oct 22 and 23, about 4,000 people thronged the sales gallery. EL Development’s preview of the 752- unit Parc Riviera on West Coast Vale over the same weekend drew more than 1,000 visitors.

For the developers and their appointed marketing agents, it is now a matter of converting those footfalls into expressions of interest and, ultimately, actual units sold on the first day of launch. The balloting of units is scheduled for Nov 5, three days before the US presidential election.

The start of October saw the launches of Forest Woods in Upper Serangoon and Alps Residences on Tampines Avenue 10, which are expected to translate into healthy sales for the month. Expectations are high that the level of interest seen at the two recent previews — Queens Peak and Parc Riviera — will translate into equally ebullient sales response for November, say analysts at DBS Vickers in their flash report on Oct 26.

The advantage of Queens Peak is its cityfringe location and proximity to the Queenstown MRT station. In fact, it is going to be linked to the MRT station via an extension of the existing covered overhead bridge, says Tan Zhiyong, managing director of MCC Land. Future residents of Queens Peak will be able to access the condo via the bridge to the second level of a six-storey carpark podium, and the lift lobbies leading to their apartments.

Above the car-park podium is a sky terrace that houses residents’ communal facilities. Sitting on top of the sky terrace and carpark podium will be the twin residential towers, with apartments spanning the eighth to 44th floors. The one- and two-bedroom units as well as the three-bedroom units are situated on the eighth to 26th floors. A sky terrace with more residents’ facilities will be located on the 27th floor of both towers. The more upmarket three- to five-bedroom units and five-bedroom penthouses will be housed on the 28th to 44th floors.

“The smaller units on the lower levels will appeal to investors as well as singles and young couples,” says MCC’s Tan. “The premium units on the higher floors will appeal to families and owner-occupiers who want more space and panoramic views.”

MCC Land’s Tan: We learnt from the earlier launches of these neighbouring projects, so we know how to calibrate our unit mix and prices

Calibrated prices and unit sizes

At Queens Peak, 62% of the units are one-bedroom, one-bedroom plus-study and two-bedroom units. The one-bedroom and one-bedroom- plus-study units are between 431 and 495 sq ft, the two-bedders are between 624 and 807 sq ft and the three-bedders are between 807 and 1,055 sq ft. The four-bedroom units are 1,507 sq ft, five-bedroom units are 2,002 sq ft and penthouses are between 4,628 and 4,768 sq ft.

In terms of absolute price, the one-bedders start from $680,000, the one-bedroom-plus study units from $768,000 and the two-bedders from $966,000. Three-bedders start from $1.31 million, with half of those units priced below $1.5 million. The indicative price range is between $1,430 and 1,830 psf, with the average price at $1,630 psf.

Nevertheless, Queens Peak faces stiff competition from other 99-year leasehold condominiums located in the corridor between the Redhill and Queenstown MRT stations, notes Ong Teck Hui, national director of research at JLL Singapore. These condos include Commonwealth Towers, Alex Residences, Principal Garden and The Crest, where unsold inventory amounts to more than 1,200 units, he says.

MCC Land’s Tan is unfazed by the competition in the neighbourhood. “We learnt from the earlier launches of these neighbouring projects, so we know how to calibrate our unit mix and prices,” he says.

Showflat of the living/dining area of a 1,055 sq ft, three-bedroom unit at Queens Peak

Next door to Queens Peak is Commonwealth Towers, an 845-unit condo developed by City Developments Ltd (CDL). Launched in May 2014, the units were priced between $1,635 and $1,690 psf. Two years ago, absolute prices started from $721,000 for a one-bedder and $965,000 for a two-bedder.

As at end-September, Commonwealth Towers achieved sales of 51%. Based on the latest caveats lodged in September and October, unit prices were from $1,621 to $1,800 psf. In terms of absolute prices, they ranged from $788,200 for a 441 sq ft one-bedder on the ninth floor to $1.3 million for a 753 sq ft two-bedder on the 31st floor.

The 429-unit Alex Residences, located within walking distance of the Redhill MRT station, is more than 65% sold. As at end-September, six units were sold, and these were all above the 20th floor of the single 40-storey tower. Unit prices ranged from $1,852 to $2,109 psf. In terms of absolute prices, they ranged from $1.23 million for a 657 sq ft two-bedder on the 23rd floor to $2.04 million for a 1,044 sq ft three-bedder on the 33rd floor.

Next door to Alex Residences and adjacent to the Redhill MRT station is Tang Group of Companies’ upcoming mixed-use development with some 400 condominium units. The project along Alexandra View is likely to be launched next year, reckons property consultants (see table).

Meanwhile, at Prince Charles Crescent, off Alexandra Road, are the 663-unit Principal Garden and the 469-unit The Crest. Launched a year ago, Principal Garden was 47% sold as at end-September. Since July, the developer has been offering buyers a $5,000 discount. In September and October, units sold ranged from $800,000 for a 484 sq ft one-bedder on the seventh floor to $1.82 million for a 1,076 sq ft three-bedder. Psf prices ranged from $1,558 to $1,701, based on caveats lodged over the last two months.

Source: CBRE Research

Forest Woods effect

Despite Queens Peak being located in Queenstown in the city fringe, and Forest Woods being located in the Upper Serangoon neighbourhood in the Outside Central Region (OCR), people will still compare the two projects “by virtue of the timing of their launches”, says Desmond Sim, head of CBRE Research for Singapore and Southeast Asia.

At Forest Woods, 337 out of 519 units, or 65%, were sold on the first day of launch on Oct 8. Alps Residences, which held its launch one week earlier, on Oct 2, saw 280 units out of a total of 626 (45%) sold on the first day.

The Upper Serangoon stretch where Forest Woods is located has more affordable prices ($1,400 psf on average) compared with the Queenstown-Redhill corridor, where average prices are in the $1,600-to-$1,750 psf range, notes JLL’s Ong. Ultimately, sales will depend on pricing and market sentiment, he adds.

CBRE’s Sim reckons that buyers at Queens Peak are likely to zoom in on the one- and two-bedroom units. As these make up 62% of the units in the project, he expects the response to be similar to that at Forest Woods.

Affordable pricing

“Parc Riviera is also looking at a similar strategy,” says CBRE’s Sim. “Nowadays, the success rate of new launches is dependent on absolute prices.” The project contains 120 one-bedders of 463 sq ft, 136 two-bedders of 603 sq ft and 196 premium two-bedders of 646 to 710 sq ft. They make up 60% of the units in the project. One-bedders are likely to be priced from about $570,000.

Lim Yew Soon, managing director of niche developer EL Development, is of the same view. “The main draw these days is the one and two-bedroom units because the pricing is palatable to most buyers,” he says. “We will definitely need to conduct sales by balloting for the one- and two-bedroom units.”

A scale model of the 752-unit Parc Riviera, whose launch last weekend saw more than 1,000 visitors

The last launch in the West Coast vicinity of Parc Riviera was the 210-unit Waterfront at Faber by World Class Land. Launched in May 2014, the project is fully sold at an average price of close to $1,200 psf, says JLL’s Ong. “Given the lack of new supply and limited competition in the area, Parc Riviera should be able to attract buyers if it is realistically priced.”

EL Development paid $314.1 million ($551 psf per plot ratio) for the Parc Riviera site in August last year. A requirement for the development of the site is the use of prefabricated, prefinished volumetric construction method.

The main attraction of Parc Riviera will be its height, notes EL Development’s Lim. At 36 storeys, it will dwarf the existing private condos in the neighbouring West Coast Park, such as Botannia and The Infiniti, which are both 12 storeys high. “From the 10th floor of our project, you will have unobstructed views of the Bukit Timah Nature Reserve,” says Lim.

The site adjacent to Parc Riviera is also a government land parcel. It has not been launched for sale yet.

Showflat of a Parc Riviera penthouse with 4.4m ceiling height

The existing developments on West Coast Park feature larger units, with two-bedroom units above 800 sq ft. One such condo is the 493-unit Botannia, developed by CDL and completed in 2009. The most recent transactions at the 956-year leasehold project were at $1,099 to $1,202 psf, according to caveats lodged in August and September. In terms of absolute price, units sold ranged from $1.36 million for a 1,238 sq ft, three-bedroom unit to $1.82 million for a 1,572 sq ft, four-bedroom unit.

The 315-unit Infiniti, completed in 2008, is a freehold condo by Frasers Centrepoint. The most recent transaction there was for a 915 sq ft, two-bedroom unit that was sold for $950,000 ($1,038 psf) in May.

West Coast, Jurong appeal

According to EL Development’s Lim, units will be priced from below $1,000 psf to $1,400 psf, with an average price of $1,250 psf. “Many buyers comment that units in new projects today are small but we’re trying to keep them affordable,” he says. “However, we will try to make sure that the common bedrooms can fit a single bed and a small side table or a queensized bed.”

Another attraction of the site is that the Pandan River is located next to it, and it is just a five-minute drive to Jurong East Central or Jurong Gateway, the upcoming Second CBD, says Lim. Although there is no MRT station nearby at the moment, there are bus stops at Ayer Rajah Expressway, with both the Clementi and Jurong East MRT stations just a short bus ride away. In the future, there will be a new West Coast Extension to the Jurong Regional Line. This could see more MRT stations in the West Coast area, with a possible link to Haw Par Villa MRT station on the Circle Line.

This year saw the launch of MCL Land’s Lake Grande in Jurong West. The 710-unit project was launched for sale the weekend after the governments of Singapore and Malaysia signed a memorandum of understanding on the Kuala Lumpur- Singapore High Speed Rail in July. A total of 436 of the 500 units released were sold in the first weekend at an average price of $1,368 psf. At Lake Grande, it was also the smaller units — the one- and two-bedders — that found favour with buyers. As at end-September, the project was 73% sold, at a median price of $1,312 psf.

Lim: The main draw these days is the one- and two-bedroom units because the pricing is palatable to buyers

Recovery underway?

With 2016 bookended by the launch of Queens Peak and Parc Riviera, Christine Li, head of research at Cushman & Wakefield, is projecting new home sales to ring in at 7,500 to 8,000 units, which is higher than the sales figures for 2015 (7,440 units) and 2014 (7,316 units).

“The recent spate of bond defaults has led investors to divert funds back into the real-estate market,” says Li. “Recent figures have indicated a stabilising residential market, and people waiting on the sidelines are coming back to take advantage of low borrowing rates due to the delayed Fed rate hike.”

As at end-3Q2016, URA data points to unsold inventory of 21,000 units, which is a historical low. But that does not mean property prices are going to rebound, says CBRE’s Sim.

Based on the 3Q2016 advance estimates, the private property price index is down 10.8% from the peak of 2Q2013. The Core Central Region (CCR) has seen prices fall 10% year to date, the Rest of Central Region (RCR) has seen a 10.8% drop and the Outside Central Region (OCR), a correction of 9.5%. “However, due to the weak leasing market and supply overhang in the RCR and OCR, prices will continue to moderate in the next few quarters, given the slowing of the economy,” says Cushman & Wakefield’s Li.

According to Nomura in its Oct 20 report on the Singapore property market, overall unsold inventory represents 35 months of demand. In the suburbs, it is 25 months. While that is low compared with the peak in 2014 (46 months and 35 months respectively), Nomura analysts Sai Min Chow and Royston Tan say the level is still high compared with the average of 30 months and 22 months respectively for the 2009-to-2015 period.

The vacancy rate in Singapore’s private housing market crossed 10% in 2Q2016, and hit 10.4% when 30,000 new homes were completed in 2015 and 1H2016. Nomura analysts estimate another 30,000 units will be completed from 2H2016 to 2017, with 50% in the prime and city-fringe locations.

While the residential market appears to be bottoming, CBRE’s Sim expects a “prolonged U-shaped recovery” rather than a V-shaped recovery. “We are nearing the trough,” he says. “We are at the point during the flight when the air stewardess tells you to put your seats upright and prepare for landing.”

This article appeared in The Edge Property Pullout, Issue 752 (Oct 31, 2016) of The Edge Singapore.

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