En bloc projects being leased out instead of getting rebuilt
MANY new homes recently built for the well-heeled in Singapore are sitting empty.
Only 45 per cent of the luxury projects launched since June 2006 have been sold as of November last year, according to property consultancy CBRE.
This period saw the roll-out of 20 projects in this segment, which has a total of 2,209 units, some of which have yet to be launched.
Faring worse are high-end projects launched since the second half of 2007, during the period of peak property prices: Only 33 per cent of the 1,233 units have been sold.
“Several projects remain on the market, especially those that were launched in the second half of 2007 and thereafter. By then, news of the sub-prime crisis had caused the market to put on the brakes,” CBRE said in a report released yesterday.
Some developers have seen poor sales, while others held back on the number of units rolled out.
Some projects launched over the past two years - such as Belle Vue Residences, The Orange Grove, The Ritz Carlton Residences and The Hamilton Scotts - have over 90 per cent of their total units unsold.
This year, luxury apartment prices may drop by 10 to 15 per cent, predicted CBRE, while prices of Good Class Bungalows could decline by 10 per cent.
Already, the segment’s :average launch price has dropped from $2,000 to $4,000 per square foot (psf) in 2007 to a range of $2,000 to $2,600 psf last year, CBRE estimated. It added that developments like Ardmore Park, Four Seasons Park and Grange Residences saw prices drop to $2,400 psf last year from as high as $3,300 psf in 2007.
In light of the weak market, several developers have delayed the redevelopment of their en bloc projects, by renting out units. These include collectively-sold developments like Grangeford Apartment in Leonie Hill Road, Lucky Tower at Grange Road, and Leedon Heights, said CBRE.
”Most developers will start to launch when the market begins to recover, ” CBRE said of en bloc redevelopments. “Developers who are laden with unsold units in projects that were already launched would prefer to focus on clearing them rather than launching new projects and add to supply.”
There were only seven residential collective sales last year, compared to 150 in 2007, DTZ Research said. “With high construction costs, financing difficulties and weak market sentiments, developers are shunning residential collective sales.”
Source : Today - 8 Jan 2009