INVESTORS made a dash for high-end residential development Gallop Gables after The Straits Trading Company offered a two- year guaranteed rental yield of 7 per cent on 10 units there last week.
Not only did the company let go of all 10 units at the freehold Farrer Road estate in three days, it managed to sell another 16 without providing a rental guarantee. Prices of the 26 units ranged from $3,075,200 to $3,840,000, fetching an average of $1,220 psf.
The 'overwhelming response' was surprising because sales in the high-end property sector have been weak since the financial crisis erupted, said Straits Trading's executive vice- president Eric Teng.
Even though the rental guarantee applied on just 10 apartments, 'we were still able to sell more units because our prices were reasonable and competitive and we have an excellent well-maintained product', he said.
Located near the Botanic Gardens, asking prices at the 12-year-old Gallop Gables have dropped in the last few months. Straits Trading put up two blocks of apartments for sale in July last year with a price tag of about $1,500 psf.
'Feedback from prospects and buyers suggest that with less than one per cent per annum (from) fixed deposits in banks today, a yield of 3 to 4 per cent per annum and above in property rental is still an attractive proposition,' Mr Teng added.
According to him, buyers were mainly locals in their mid-thirties to late- seventies. Most bought the units for investment though a few said they might move in when the rental guarantee ends.
The situation indicates that well-located high-end properties can still sell with good advertising, said Chesterton Suntec International's head of research and consultancy Colin Tan.
'It shows what clever marketing and publicity can do . . . Of course, the property itself is good.'
Encouraged by the response, Straits Trading is ready to sell more units at Gallop Gables but it is raising prices by up to 10 per cent. The new prices are 'still reasonable' compared with those a year or two ago, said Mr Teng.
Units available for sale are 'limited' but the company prefers not to disclose the number as it is still monitoring the property market.Source: Business Times, 14 April 2009