Wednesday, August 29, 2012

Home sales drop in Sentosa Cove

The home sales volume in exclusive Sentosa Cove (pictured
) appears to be falling, as only 44 homes were sold during the first eight months of 2012, similar to the 46 homes sold over the same period last year, based on caveats lodged with the Urban Redevelopment Authority (URA).
However, the current volume is around 73 percent lower compared to the 160 homes sold between January to August 2010.

Aside from that, foreign demand also dropped as only 20 homes were sold to overseas buyers in the first eight months of 2011 and 2012, as opposed to 45 in 2010.

According to Alan Cheong, Research Head at Savills Singapore, the decline in sales at Sentosa Cove resulted from the “global financial crisis which then spilled over to the European sovereign debt crisis”.

Another possible reason for the decline is the leasehold nature of land for Sentosa Cove properties, which could be “holding back many local buyers”.

Cheong said: “Given the price of a landed property in Sentosa Cove, a Singaporean with the financial resources could easily have deployed that to buy a freehold Good Class Bungalow (GCB) on the mainland.”

He also emphasised that the ABSD (additional buyer’s stamp duty) is “not the sole overriding factor in holding foreign demand back in Sentosa or on the mainland”.

For the period of January to 8 August 2012, landed property sales at Sentosa Cove saw the biggest decline of 33 percent year-on-year, which could be attributed to three main reasons. First is the low base, “when only 12 units were recorded in the first eight months of 2011 and therefore in 2012, with eight transactions, the percentage change is amplified”, said Cheong.

Secondly, developers bought land on the high and are unwilling to sell at lower prices; and lastly, the weak demand especially from foreign buyers on the back of the global economic slowdown.

Amid slow sales, he noted that prices of non-landed homes are actually stable, falling a marginal 3.2 percent year-on-year for the period from January to 8 August.

In the near term, Cheong feels that sales would be tempered due to the Eurozone crisis and the slowdown in China. However, sales would eventually pick up in earnest “when we do see light at the end of the economic tunnel”.

View the original article here

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