It was reported in The Straits Times yesterday that CapitaLand has hired a world renowned architect with a reputation of head-truning designs to shape their major condominium project in Bishan.
The site, near Bishan MRT station, was acquired by CapitaLand for $550 million in February this year. The winning bid, which translated to $869psf ppr, had set a new record for 99-year leasehold suburban condo site. This led some experts to predict selling prices of between $1,400psf and $1,700psf - a new record for suburban homes.
Experts also say that enlisting a world-class architect may be a way for developer to overcome price resistance by differentiating their product.
But judging by the sales progress of several "designer projects" in the market, it is quite evident that pricing remains the primary concern with buyers. This is despite the brand name and added touch of glamour that desginer architects bring to these projects.
Reflections By The Bay (No. of units: 1,129)
The Interlace (No. of units: 1,040)
d'Leedon (No. of units: 1,715)
In our opinion, the less than stellar sales seen at such "designer projects" can be attributed to another important factor - exclusivity. It may be appealing to live in a project designed by a world-renowned architect, even if you have to pay a premium for the apartment. However, it loses much of the shine when you have to share the "glamour" with a thousand other unit owners.
Something for developers to ponder about...?
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5 comments:
Hey Folks, is the break even for the condos normally at about 50%?
Do you think the D'Leedon will get over the 50% mark soon? My family bought a 2 bed room for own stay and just wondering if the maintenance cost will go up if not all homes get occupied.
Hi Anonymous (1/8/11, 9:24PM):
Yes, we do believe that most developers will at least break even when their projects are about 50% sold.
Based on what we have heard, sales at most new projects are moving at snail paces these days. This is especially with higher-end projects such as d'Leedon. So we think it may take awhile yet before it hits 50%.
Your question on maintenance cost is an interesting one: Our understanding is that the monthly maintenance cost for each apartment is calculated based on the "total share value" of that apartment and the value of each "share" is determined by the developer concerned at the onset. As such, the maintenance cost for each apartment type should remain fairly constant irrespective of the take up rate.
Hey Folks, thanks for your prompt reply on the maintenance cost. I was just randomly thinking if <50% gets sold by TOP, wouldn't that mean that the residents have to take on the larger share of maintenance cost which should remain fairly constant for such a large estate. But seems you clarified that the cost should remain fairly constant.
Based on a 23% take up rate after about 7 months, probably take another year or so to get 50% based on current situation.
Even so, do you think Capital Land will reduce the PSF of the project to offload it? Afraid that next year, they might reduce price to say $1200PSF to try to sell more units. Has this ever happened?
Hi Anonymous (1/8/2011, 11:51PM):
There are several projects that we know of that still have quite a few unsold units many years after their TOPs. Whatever units that are unsold will remain in the hands of the developer (who will probably try to lease them out and get rid of them at slightly lower prices), and they will have to pay the monthly maintenance cost for these unsold units.
Having said that, how fast units in a particular project move will be dependent on a whole host of factors - selling price, economic condition etc. And if history is anything go by, most (if not all) of these new projects will be at least 70 - 80% sold by the time they TOP.
As to your last question, we do not know if any developer has previously tried to "laylong" their remaining units in a particular project to sell more units. However, it is definitely not in their interest to do so as their reputation will get hit big time. So we really cannot foresee "big boys" like CapitaLand doing so. They may resort to "enticements" like giving furniture vouchers or some form of legal/stamp duty subsidy, but probably not straight-off discount on the psf price.
Hope the above helps. Cheerio!
Dear Folks,
Thanks for the very detailed revert.
Indeed there are some units in Bt Timah Rd that are probably left unsold and have to be taken care of by the developer.
I believe eventually D'Leedon will be 70% sold before TOP. After all, they still have a few more years before 2014.
My worry is just that it will be "leylong-ed" and it's indeed not in their interest. But they might be desperate...
Guess time will tell and it's too late to regret now. :)
Thanks!
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