Tuesday, September 04, 2012

Developers hold back on luxury projects

Several property developers are holding back their new launches and the completion of high-end residential projects in the hope that luxury property prices will soon appreciate.

While suburban homes have set price records, the luxury sector has seen both prices and sales volumes decline over the past year. In Q2, prices of new non-landed luxury homes fell six percent to S$2,230 psf, noted Savills Singapore.

In the meantime, some developers have opted to sell their high-end developments through private previews, including Bishopsgate Residences, Le Nouvel Ardmore and Tomlinson Heights, where units cost more than S$3,000 psf with overall prices of at least S$5 million, according to a consultant.

Alan Cheong, Head of Research at Savills Singapore, said that some developers have appealed for a waiver of extension fees for homes not disposed of within two years of completion.

“Developers with holding power will likely pay to lengthen their sales window while maintaining their current sales prices,” said Cheong.

“Some may even choose to pay the additional buyer's stamp duty and transfer their unsold inventory to an investment company and lease out these units as investment assets while waiting for a price appreciation in the medium term,” he noted.

Experts also feel that some developers choose to delay project completions so as not to get caught by the two-year rule.

Nicholas Mak, Head of Research at SLP International, said that developers may only be able to delay construction for a certain period as the schedule for external contractors and buyer expectations must be met.

“The reasons behind delaying completion, however, could be to avoid being under pressure to sell, paying holding costs for a completed property and to prevent ageing from setting in,” he added.

View the original article here

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