The unique challenges of boutique developments
By Elizabeth Choong
/ EdgeProp Singapore |
Lavender Residence is the star performer among the boutique developments with a take-up rate of 47.1% during the first month of launch. (Image: FLJ Property)
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SINGAPORE (EDGEPROP) - Boutique developments, projects with fewer than 100 units, are extremely common here in Singapore. In total, there are about 1,700 boutique developments, or approximately 50% of all condominiums and apartments. Since January 2023 alone, there have been nine new launches for such projects. Despite its popularity, developers face significant challenges in selling and marketing them. This article delves into the initial take-up rates of boutique versus larger developments, explores the challenges involved, and suggests reasons why these smaller projects might eventually attract specific buyer demographics.
Boutique developments have lower take-up rates
A list of condos that were launched from January 2023 to March 2024 was compiled. The take-up rate for each condo was calculated based on the number of units sold during the first 30 days after it was launched and the total number of units in each development. In total, the 30 condos on the list are a mixed bag of developments ranging from boutique developments with only 17 units to mega developments with 1,008 units. The list also includes both freehold and leasehold developments located all over the island.
The scatter plot below summarises our key findings. Each blue dot represents a development, with the y-axis showing the take-up rate during the first month of launch and the x-axis being the size of the development, in terms of the total number of units in the development. The correlation coefficient value, which measures the strength of a linear relationship between two variables, is greater than zero, which indicates that there is a correlation between the two variables. This is statistically significant and it proves that the size of a development does have an impact on its initial sales performance.
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Why boutique developments struggle during the launch phase
Based on the 30 condos on our list, the average take-up rate for the nine developments with 100 units or fewer is 16.5% during their respective first launch months. In contrast, the average take-up rate is 51.2% for the seven condos with more than 500 units. The overall average take-up rate for all 30 condos during their launch months is 44.6%.
Source: EdgeProp Research and URA Realis (as at 3 April 2024)
Among the nine boutique condos on our list, only Lavender Residence has a take-up rate that is above 30% during its launch month. Additionally, Gems Ville (0%), Claydence (3.6%), and Ardor Residence (2.9%) have take-up rates that are less than 10% despite being freehold and located in districts 14 or 15.
There could be a few reasons for this. Firstly, boutique developments are likely to have a smaller marketing budget compared to larger developments, so they might not be able to create as much buzz and attention for their projects. At the time of writing, boutique developments Ardor Residence and Gems Ville had only 27 and 37 sales listings on EdgeProp. In contrast, 386-unit The Botany at Dairy Farm and 638-unit Tembusu Grand had 280 and 191 sales listings, respectively. A check on competing property portals provides the same conclusion. Furthermore, the recent preview of 533-unit Lentor Mansion attracted over 5,000 visitors and the massive 1,008-unit Grand Dunman drew approximately 10,000 visitors during its preview weekend in July last year.
Secondly, larger developers tend to have stronger branding and presence as well as an impressive track record accumulated over the years. Some are even regarded as the master developer for a neighbourhood due to their involvement in numerous projects within that area. An excellent example would be GuocoLand and the Lentor area. Of the six launched government land sales (GLS) sites near the Lentor MRT Station, GuocoLand has a stake in four of them. Together, the four GLS sites are expected to yield approximately 75% of the residential units from the six sites. Four of the upcoming developments in Lentor, namely Lentor Mansion, Lentor Hills Residences, Lentoria and Hillock Green, are on our list of 30 condos.
Moreover, boutique developments may not always be located in the most prime areas with the best connectivity. This means that residents of boutique developments might not enjoy the convenience arising from close proximity to amenities such as shops and transport nodes. For example, there is no MRT station within a 500m radius of Parq Bella, Gems Ville, Claydence, and Ardor Residence.
Newly launched condos that are located near MRT stations tend to be popular with buyers. Sceneca Residence, which is located next to Tanah Merah MRT Station, achieved a take-up rate of 60% during its first day of launch in January last year. Approximately 71% of the units in the massive The Reserve Residences were sold during its launch weekend in May last year. The huge development is located a short walk from Beauty World MRT Station. During their respective launch weekends in July last year, Grand Dunman and Lentor Hills Residences achieved take-up rates of 54.6% and 50.0%, respectively. Grand Dunman is located within walking distance of Dakota MRT Station while Lentor Hills Residences is a stone’s throw away from Lentor MRT Station.
Furthermore, the convenience and connectivity offered by nearby amenities are the reasons for the continued popularity of integrated developments, which are usually larger projects with numerous residential units. EdgeProp did a survey in 2022 which found the buyers are willing to pay more for homes near amenities that provide them with convenience and connectivity.
Additionally, boutique developments tend to have a limited variety of units that can only cater to specific groups of buyers. In contrast, buyers of large developments can choose from numerous units that differ in size, number of bedrooms, and floor layout. For example, there are only six two-bedroom units in boutique condo Gems Ville. They are all 797 sq ft in size and share the same layout. However, massive Grand Dunman has 119 two-bedroom units that are 667 sq ft or 893 sq ft.
Source: EdgeProp Research
Lastly, boutique developments usually do not have the space for numerous common facilities unlike larger developments. Owner-occupiers with children usually prefer a development with a variety of common facilities. Lavender Residence and J’den are the star performances for boutique and large developments, respectively. Lavender Residence only has a pool, BBQ pits, a gym, and a children’s playground. Likewise, there are limited common facilities in Parq Bella which comprise of a pool, an outdoor BBQ area and a function room. In contrast, J’den has several pools, a BBQ pavilion, a gym, a playground, a party house, a multi-purpose room, and a social lounge. The smaller developments provide only the basic common facilities, such as pool and BBQ pits, unlike larger developments that provide a wider variety. Additionally, some larger developments may provide larger or more of the same facilities. For example, the different pools in J’den.
The exception: Lavender Residence
Lavender Residence is a boutique development punching above its weight. The freehold development has only 17 units but achieved a take-up rate of 47.1% during its first month of launch. The take-up rate has climbed to 70.6% at the time of writing. It is notable that the majority of transactions are for three-bedroom units that are approximately 800 to 1,000 sq ft, and provide sufficient space for owner-occupiers and their families.
Another reason for the popularity of Lavender Residence could be its central location within District 12. The development is within a 500m radius of Bendemeer MRT Station and within a 1km radius of Bendemeer Primary School, Hong Wen School, Northlight School, Bendemeer Market and Food Centre, City Square Mall, Mustafa Centre, and the Central Expressway.
Source: EdgeProp LandLens (as at 27 March 2024)
The most recent sales transaction for Lavender Residence took place in January at $2,091 psf, which is a 7.3% increase from the average price of $1,949 psf based on the eight units that sold during the launch month of June last year. The affordable price for Lavender Residence and its freehold tenure could be the reasons for its popularity with buyers.
Source: EdgeProp Market Trends (as at 1 April 2024)
Proximity to amenities matters a lot: J’den
J’den was launched in November last year and achieved a take-up rate of 87.0% during the first 30 days of launch. As such, this 99-year leasehold development attained the highest take-up rate during its launch month compared to the other condos on our list. The take-up rate for J’den has increased to 89.4% at the time of writing.
Source: EdgeProp Research (as at 1 April 2024)
A contributing factor to the strong sales performance for J’den is its location within the Jurong Lake District, which is slated to be Singapore’s secondary CBD. Furthermore, the 368-unit development is within walking distance of Jurong East MRT Station. The North-South and East-West Lines currently serve the station, and it is expected to become an interchange station for the Jurong Region Line upon its completion in 2029. J’den is also within walking distance of Westgate, JEM, and Jurong East Bus Interchange. Fuhua Primary School is within a 1km radius.
Another reason for J’den’s popularity with buyers could be attributed to the suitability of its units for families. Approximately 70% of the units in J’den are two or three-bedroom units that are 701 to 1,300 sq ft in size.
The Lakegarden Residences is the other leasehold condo in District 22 that is on the list of 30 condos we analysed. The 306-unit development did not fare as well as J’den despite having a similar number of units and being in the same district. Both condos are also 99-year leasehold developments launched in the second half of last year. The Lakegarden Residences achieved a take-up rate of 22.2% during its first 30 days of launch, below the take-up rate of 87.0% for J’den. However, the take-up rate for The Lakegarden Residences has improved to 33.3% at the time of writing.
In contrast to J’den, there are no MRT stations or malls within walking distance of The Lakegarden Residences. However, Lakeside Primary School, Jurong Secondary School, and Yuan Ching Secondary School are within a 1km radius.
Furthermore, The Lakegarden Residences is located adjacent to the former Park View Mansion, which was sold via a collective sale. A new 99-year leasehold condo, named Sora, will be built on the site. Sora is expected to have approximately 440 units and will launch for sale this year. Some potential buyers, who are not in need of immediate housing, could have put their purchase plans on hold until the launch of Sora so that they can make comparisons between both projects.
Source: EdgeProp LandLens (as at 1 April 2024)
The excellent location of J’den not only boosted its take-up rate but also had a positive impact on its price. In February, the average price for J’den was $2,621 psf compared to the average prices for The Lakegarden Residences ($2,234 psf) and new leasehold condos in District 22 ($2,492 psf).
From its launch in November last year until February, the average selling price for J’den has increased by 6.0%, while the average selling price for The Lakegarden Residences increased 2.8% over the same timeframe.
Source: EdgeProp Market Trends (as at 1 April 2024)
Is there beauty in boutique condos?
In general, smaller developments face a number of challenges that do not affect their larger counterparts. Yet, there is a silver lining for small developments because some buyers specifically look for boutique projects, valuing the privacy and fewer neighbours sharing common facilities that such developments offer.
Boutique developments are also usually more affordable than their larger counterparts, which would appeal to buyers with more modest housing budgets. For example, 19-unit K Suites and 816-unit The Continuum were launched approximately the same time last year. The average launch price for K Suites was $1,980 psf compared to the average launch price of $2,723 psf for The Continuum. Both freehold condos are located in District 15.
The smaller scale of boutique developments could also decrease the risk of construction delays which has affected the construction industry since the pandemic. This will allow owner-occupiers to better plan the timeline for the sale of their current property, as well as the renovation and move into their new home.
Finally, some boutique developments offer unique designs that appeal to buyers who want a home that caters to their lifestyle and stands out from other developments.
Check out the latest listings for The Lakegarden Residences, Lavender Residence, J'den, Gems Ville, Grand Dunman, The Reserve Residences properties
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