Smaller developers show the way while larger ones look to them for cues
(SINGAPORE) Sales in the property market may have been dismal in the last few months but some bold developers have continued with launches, registering sales and perhaps influencing property prices at the same time.
And most of these are small- or medium-sized developers that are, for want of a better word, rather obscure.
In the last quarter of 2008, for instance, official market data revealed that sales volumes were highest for Macly Capital's 104-unit Newton Edge and EL Development's 200-unit Rosewood Suites with total sales of around 130 units making up almost 30 per cent of all primary sales for the whole quarter.
Perhaps more important is that both developments were 'competitively priced'.
On its marketing strategy, EL Development (ELD) managing director Lim Yew Soon said that he was aware that there were other developers waiting to launch mass market projects and ELD simply wanted to get 'the first mover's advantage'.
Mr Lim conceded that pricing for Rosewood Suites required a bit of guesswork and it was eventually launched at about $580 psf. But saying that ELD was not looking to start a price war, he added: 'Being a smaller developer, we are more nimble and able to survive at lower margins.'
The influence of these smaller developers may be difficult to gauge but it should be noted that the first launch by a big developer this year - the 712-unit Caspian by Frasers Centrepoint - was done at an average price of $580 psf. It has since racked up sales of 334 units.
Could smaller developers be leading the market at the moment then?
According to Cushman & Wakefield managing director Donald Han, projects that have registered substantial sales volumes can certainly have an impact on property prices which incidentally fell by 6.1 per cent in Q4 2008.
And, with the big developers staying largely out of the market, Mr Han added: 'You can't really blame the market when there is nothing to buy.'
Knight Frank director of research and consultancy Nicholas Mak noted that movements in the market - even small movements - are monitored by all developers, even the big ones.
Teo Hong Lim, chief executive of Roxy-Pacific (the parent company of Roxy Homes), also dismissed the perception that smaller developers are under pressure to sell because they have less holding power.
Roxy Homes has launched six small projects with a total of 165 units since the start of 2008 and Mr Teo said that the cost of its sites are typically around $300 per square foot per plot ratio. This, together with value engineering (no basements) and targeted marketing (small units), has helped
Roxy-Pacific rake in $147.9 million in total sales value by the end of the third quarter of 2008.
More recently, Roxy Homes launched the 42-unit The Lucent in Telok Kurau and Mr Teo said it is about 50 per cent sold.
'I am taking an alternative approach,' explained Mr Teo of his sales strategy. Still aggressive, Roxy Homes has continued to advertise, spending about $1 million on ads. The developments, many of which are in Telok Kurau, are also designed for a specific market. 'We don't over-provide. We provide buyers with what they want, but not in excess,' he added.
Indeed, Roxy Homes' sales strategy has put it in an enviable position. Mr Teo said that with its 88-unit Nova 88 in Balestier, it has exhausted its land bank and can now look for new sites if the price is right.
Even more gung-ho is World Class Land (WCL) which recently launched its 38-unit Palmeria in Telok Kurau on the third day of the Chinese New Year last month, usually a quiet month for sales.
'Approvals (for sale) had been granted and the showflat was ready,' said WCL director Daniel Ng.
Palmeria may be a small niche product, but WCL still managed to sell 75 per cent of the units at approximately between $750 psf and $850 psf, a price that apparently sits well with buyers.
Still, according to PropNex CEO Mohamed Ismail, small- and medium-sized developers have little impact on prices as 'not only are their developments small in terms of the number of units, but also, as niche developments, they cater to a different client base altogether'.
Regardless, some appear to have taken on the role of 'testing the market' in terms of ascertaining price thresholds in these uncertain times.
East Coast Properties managing director Alvin Ng said it has just launched a small landed housing development called Montclair @ Whitley just 'to get a feel of the market'.
Over 300 people went to view the showhouse over the first weekend of sales. However, no sales have been recorded yet. The prices, of course, were 'competitive'.
Source: Business Times - 11 Feb 2009
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