Wooing buyers the low-interest rate way

TWO developers have tied up with financial institutions to offer low interest rates to buyers of certain residential projects.

Hong Leong Finance is offering rates of as low as 0.98 per cent a year on loans to buyers of its sister firm City Developments’ (CDL) The Residences at W Singapore at Sentosa Cove.

For the Waterbank at Dakota condominium, United Overseas Bank (UOB) is offering an enticing deal: the commonly used benchmark rate SOR (Singapore swap offer rate) plus 0 per cent during the construction period. The project is being developed by UOL group, which has close ties to UOB.

Hong Leong Finance’s package for the 228-unit The Residences at W Singapore is based on a special variable home rate, currently 7.25 per cent a year. The first year’s rate now stands at 0.98 per cent or the special rate minus 6.27 per cent. The rate for the second year stands at 1.58 per cent, the third 2.58 per cent and thereafter 3.28 per cent.

A Hong Leong Finance spokesman said the firm had also offered a special financing package for another CDL project, Cube 8, but the rates were not as low as those for The Residences at W Singapore.

CDL is part of the Hong Leong group.

At The Residences at W Singapore, those who take up the financing package get an extra perk: a one-year membership offering dining privileges at F&B outlets under the Millennium & Copthorne International group, said Hong Leong Group.

The Residences at W Singapore was released for sale late last month at $2,500 to $3,000 per sq ft.

CDL said then that it had sold about a quarter of the 56 units released for sale.

At the 99-year leasehold Waterbank at Dakota, the special financing package is an SOR-pegged home loan. SOR is now at 0.46 per cent.

UOB and UOL could not provide details of the financing package but industry sources put it at the three-month SOR rate plus 0 per cent for the duration of the construction period.

Once the project obtains a temporary occupation permit, the rate becomes SOR plus 1.35 per cent.

The 616-unit project has seen sales already crossing 370 units. Prices, too, have risen and now range from more than $1,000 psf to more than $1,300 psf.

UOB also offered special packages for previous UOL projects but the rates were not as low as for Waterbank at Dakota, sources said.

‘Banks have always been very keen to tie up with developers for new launches. They will offer a very competitive rate in such exclusive arrangements,’ said Knight Frank’s managing director of residential services Peter Ow.

‘But in these two cases, for rates to go that low, I must say I have been in the business for more than 25 years and I have not heard of such rates. The conditions may be rather stringent.’

Source: Straits Times, 15 Apr 2010