Prices of some new properties coming down

Move may signal end of months-long stand-off between buyers and sellers
GOOD news for homebuyers: The prices of some new developments are finally starting to come down.

At least two new projects have been tagged with prices below what they were expected to fetch just months ago.

Shelford Suites (left)Sold in March for: $1,869 psf - $1,905 psfCurrent price: $1,600 psf
Dakota ResidencesPlanned price: $1,000 psf - $1,100 psfCurrent price: $950 psf — PHOTO: CITY DEVELOPMENTS

This may be because developers are faced with no sign of improvement in the cooling property market, consultants say. They may be choosing to move units by making their projects more affordable rather than continuing to wait out the gloomy sentiment.

One example is Dakota Residences in Dakota Crescent, a 99-year leasehold project by Ho Bee Investment and NTUC Choice Homes.

Sales of its 348 units will start next Saturday at an average of about $950 per sq ft (psf) - below the $1,000 psf to $1,100 psf that Ho Bee had previously targeted.

This means a 1,300 sq ft three-bedroom unit would cost about $1.24 million, down from as much as $1.43 million previously.

‘After the land cost and building cost, the break-even price is actually almost $900 psf,’ said a property agent, who asked not to be named.

The Straits Times understands that about 120 units will be released in the first phase, and prices may go up by at least 5 per cent for the remaining units, depending on demand.
For now, the two- and three-bedroom units that face away from Geylang River are said to cost $950 psf to $970 psf, while the bigger four-bedroom units facing the river will go for $1,000 psf.
City Developments’ (CDL) Shelford Suites in Shelford Road has also started previews for its 77 units at about $1,600 psf on average.

Market watchers said this was lower than expected, as two units were sold in March for $1,869 psf and $1,905 psf.

Shelford Suites’ launch had been delayed for months as CDL waited for sentiment to improve.
Property consultants say the act of lowering prices may be the beginning of the end of a months-long stand-off between homebuyers and home sellers that has led to a slump in transactions.
Would-be buyers have proved strongly resistant to current property prices, which have jumped 36 per cent in the last five quarters, while sellers have refused to reduce their prices until now.
But while lowering prices may jump-start the market, a one-off reduction may not be enough to sustain sales, said Mr Colin Tan, the head of research and consultancy at Chesterton International.

‘Developers will have to continue to reduce prices if they want to maintain sales, as many projects are still out of the reach of owner-occupiers,’ he said.

Meanwhile, developers are gearing up to launch more mid-tier projects for an increasingly price-sensitive market.

East Bay, a 40-unit condominium at Tay Lian Teck Road off Upper East Coast Road, will be on sale in the coming weeks. Prices average $1,100 psf, starting at about $600,000.
Also in the east, Ivory at Ceylon Road has sold about five of its 28 units. Prices start at $558,000 for a 640 sq ft two-bedroom apartment, averaging $800 psf.

At 353 Pasir Panjang Road, a 19-unit boutique project will be completed soon, though sales have just started. A handful of units have been sold so far, with one-bedroom apartments going for $550,000, and three-bedroom units priced at $1.4 million to $1.5 million.

ONE-TIME PRICE CUT NOT ENOUGH

‘Developers will have to continue to reduce prices if they want to maintain sales, as many projects are still out of the reach of owner-occupiers.’ - MR COLIN TAN, head of research and consultancy at Chesterton International, who thinks one-off price reductions may not be enough to sustain sales

Source : Straits Times - 12 Jun 2008