SINGAPORE – At least eight new condominium projects, mostly in the prime core central region (CCR), have offered discounts in April and May to draw buyers, The Business Times has learnt.
A two-bedroom unit in the 64-unit One Draycott was advertised at $2.2 million, half a million less than its original price of $2.7 million. According to caveats filed, the District 10 project built by Selangor Dredging has sold 19 units since its launch in 2018, at prices ranging from just under $2.3 million for a 732 sq ft unit to $3.5 million for one that is 1,345 sq ft.
Bukit Sembawang’s District 9 project, The Atelier, sold 46 units, or 38 per cent of its 120 units, in April alone after it offered a 7 per cent discount in the same month on certain units. The Newton area condo was first marketed in February 2021 but shelved its public launch amid health and safety concerns during the Covid-19 pandemic.
The Atelier has sold 94 units so far, according to caveats data as at Thursday. The lowest price transacted rang in at about $1.42 million for a 10th-floor unit of 549 sq ft sold in April 2023, compared with $1.49 million for an eighth-floor unit in the same stack sold in December 2022.
According to the Urban Redevelopment Authority’s latest tally of developers’ sales, the median price of units sold at The Atelier in April was $2,658 per sq ft (psf). This was 8.8 per cent lower than the median price of $2,916 psf when the project was first launched in March 2021, when it sold four units, noted CBRE’s head of research for South-east Asia Tricia Song.
Lower median psf prices may point to deals being sealed at lower pricing, although it may also indicate more units of a certain size being sold.
Agents are also advertising promotions for The Avenir in River Valley, touting savings of up to $366,000 for one-bedroom units, according to checks by BT. A unit listed at $2.08 million was offered at $1.72 million. The freehold condo being developed by Hong Leong, Hong Realty and GuocoLand was launched in January 2020, with 17 units caveated in the month at a median of $3,248 psf. To date, 361 of the project’s 376 units have been sold.
BT has also seen discounts advertised for One Bernam in the Central Business District, and for The Lilium and The Gazania in the outside central region (OCR).
Mr Lam Chern Woon, head of research and consulting at Edmund Tie, noted that median prices of primary CCR homes have risen by a more gradual pace of 3.9 per cent since end-2021, compared with 29 per cent and 17 per cent for the rest of central region and OCR respectively.
This suggests that developers of CCR projects have been more flexible on pricing, he said. The unsold rate for new projects in the CCR is also higher – at 15.4 per cent in the first quarter of 2023, compared with 3.6 per cent for projects in the city fringe and 3.5 per cent for suburban projects in the OCR.
Mr Lam pointed out that among the top 10 best-selling projects islandwide in April, four projects – The Atelier, Pullman Residences Newton, Leedon Green and Hyll on Holland, all in the CCR – saw prices slip by 2.5 per cent on average compared with March.
Industry observers said discounts could have been given ahead of the additional buyer’s stamp duty (ABSD) deadline later in 2023 facing some projects, such as Klimt Cairnhill and Neu at Novena.
Nearly 30 residential projects are approaching the critical sales deadline this year, when developers will have to clear all unsold units coming up on the site – or stump up a hefty stamp duty payment running into the tens of millions of dollars, BT reported in February.
Mr Christian Oh, director of investments at JNA Real Estate, estimated that the developer of freehold Klimt Cairnhill, Mr Low Keng Huat, will have to pay about $300,000 in ABSD for each unsold unit, if it does not clear all 138 units by end-2023.
According to caveats filed as at Thursday, Klimt Cairnhill has sold 55 units since it launched in August 2021. In 2021, just three units were sold, ranging from $5.7 million for a 1,496 sq ft apartment to $26 million for a 4,897 sq ft penthouse. Sales jumped in 2023 when 47 units were sold, ranging from $2.65 million for an 829 sq ft unit to $27.5 million for a 5,920 sq ft unit.
The median price of Klimt Cairnhill units transacted in April 2023 was $3,585 psf, about 6 per cent lower than the $3,818 psf median price for the project when it was launched in August 2021, said ERA Realty key executive officer Eugene Lim.
In early May, Neu at Novena advertised a 10 per cent discount on selected units, said CBRE’s Ms Song. The 87-unit freehold development by Roxy-Pacific, Macly Group and Lim Wen Heng Holdings faces an estimated ABSD deadline in November with a handful of units left unsold.
While some developers are trimming prices to beat their imminent ABSD deadline, others may have done so in anticipation of slowing demand for prime residential projects. Analysts estimate that up to 18 per cent of new private homes launched in the CCR are bought by foreign buyers, who now face 60 per cent ABSD on any residential property purchase, double the 30 per cent they were previously liable for. The new ABSD regime came into effect on April 27.
Mr Nicholas Mak, chief research officer of property portal Mogul.sg, added that developers may also be offering discounts to push sales for cash flow to finance the project, or to continue fulfilling the conditions of their loans.
Market watchers do not expect major discounting to continue, especially since many “promotions” are targeted at clearing the last few units in a development.
Huttons Asia senior director of research Lee Sze Teck said: “With developers facing high interest rates and construction costs, it is likely that prices will see a slight increase in the months ahead.”
Edmund Tie’s Mr Lam added: “Established developers would generally refrain from massive discounts to avoid squandering the goodwill with earlier buyers.”
THE BUSINESS TIMES
