Monday, May 17, 2010

2010 still likely a banner year for private property

Number of new homes sold in 1st quarter suggests return to near boom levels

THE private homes market has slowed in the past fortnight but experts feel 2010 will still emerge as a banner year for the sector.

They say sales of new private homes will come close to matching levels seen in the boom days of 2007, but transaction values are likely to be higher given the rise in prices.

According to a report by consultant CB Richard Ellis (CBRE), the total value of new home sales this year is expected to reach a level between the $16.22 billion transacted in 2007 and the $23.52 billion recorded last year.

CBRE's executive director for residential properties, Mr Joseph Tan, said in the report that the residential market at the start of this year reflected 'a follow-through of the momentum begun last year'.

The numbers so far certainly point to a similar boom-time result.

Developers sold 4,380 new homes - landed and non-landed - in the first quarter. That suggests momentum for similar full-year transactions of around 14,000 achieved last year and in 2007, the report said.

A record was set in 2007 when 14,811 new private homes were sold, although 2009 came close with 14,688 changing hands.

Mr Tan noted: 'Prices are generally higher in 2010, with demand remaining robust. Thus, the total value at the end of the year should be higher than that in 2009.'

In the first three months of this year, caveats lodged in the primary market accounted for about $4.2 billion, or 26 per cent, of last year's total transaction value, said CBRE.

'On a like-for-like basis, if we sold the same number of units or even slightly fewer this year, the value would still be higher than that seen last year,' Mr Tan said.

The slowdown in recent weeks could just be the market taking a breather, say experts.

'In every cycle, there are some hitches and hurdles. We have been on a smooth ride and now we have hit a bump. But we are not even a month into the situation,' said Mr Tan.

More people have turned cautious because of fears over a possible fallout from the Greek debt crisis, though there were already signs of slowing last month, said DTZ head of South-east Asia research Chua Chor Hoon.

That was when the resale market began to quieten, though new launches were still taking place and doing fairly well in general.

Waterbank at Dakota, for instance, saw strong demand last month when it was released for sale and, now, only a handful of units are left at the 99-year leasehold, 616-unit condo.

But there have been no new launches to excite people so far this month, said Ms Chua, although some are being held over the coming weeks.

Property developers have also been busy since March marketing projects overseas, mostly those launched in the past year that still have a significant amount of unsold units.

'When the market was active last year, there was hardly any time to do overseas exhibitions,' said Mr Tan.

Still, property experts say it is too soon to tell if the market is really hitting the brakes.

'It's early days. The quietness may just be a knee-jerk reaction. We are still getting quite good inquiries on suburban projects, so it all boils down to pricing,' Mr Tan told The Straits Times.

'There is enough support from the upgraders' market itself. If sales don't hit the level we predicted, they may still reach 12,000 units. I don't see them falling below 10,000 units.'

Ms Chua concurred: 'The economy is growing. Unless there are major shocks, the property market should do fairly well this year. Sales (of new homes) could easily reach 10,000 units - which already exceeds the yearly average of around 9,000 units over the past 10 years.'

An industry source who declined to be named said the market seemed to have slowed because developers were not ready to launch their projects.

'Either their brochures or their showflats weren't ready. Or they hadn't got all the planning approvals,' he said. But condo previews were to start again the past weekend, with Flamingo Valley, he noted.

Volumes are unlikely to exceed levels seen last year as prices have since risen and some buyer resistance would have set in, he added.

But transaction values should rise as most of the upcoming launches will be in the mid- to high-tier segment.

Apart from Flamingo Valley in Siglap, new condo releases expected this month include The Cascadia in Bukit Timah and The Minton in Hougang. Waterfront Gold at Bedok Reservoir and Grangeford in Orchard may be released late this month or next month.

The 1,145-unit Minton, with an indicative pricing of around $900 per sq ft, is the only mass-market project on the launch pad.

Source: Straits Times, 17 May 2010

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