Developers getting creative?

Property analysts said developers will probably have to get more creative in order to move sales after the introduction of new cooling measures recently.

One developer told Channel News Asia that it is planning to complete its condominium project a year ahead of schedule to entice buyers.

To date, 380 of the 500 units launched at La Fiesta at Sengkang have been sold. There are 810 units at La Fiesta in total.

Most of the deals were done before the cooling measures kicked in on January 12.

Since then, sales have cooled and just eight units were sold over the weekend.

Its developer, EL Development, has offered discounts of up to 24% off the selling price.

On average, a unit at La Fiesta cost about $1,125psf after discount.

It hopes to deliver the new units a year ahead of schedule by June 2016.

The committed date for delivery of the units was originally set at June 2017.

It will start work earlier and adopt more efficient construction techniques.

Lim Yew Soon, managing director at EL Development, said: "Initially, we are thinking of starting in April, May. We will speed up our construction progress, we intend to commence construction in March, early March. By completing our project earlier, we believe we will be able to draw buyers who are looking for self-occupation."

Mr Lim said this could raise construction cost by two to five per cent, which it will absorb fully.

The developer will also roll out its new marketing campaign for the project this week.

Going forward, EL Development will also devote more resources to explore opportunities in overseas markets like the Iskandar region in Malaysia, Myanmar and China.

Meanwhile, analysts said many developers have offered extra discounts to cushion the impact of the increase in Additional Buyer's Stamp Duty (ABSD).

Colin Tan, director of research and consultancy at Chesterton Suntec International, said: "If you are in the midst of a launch, the developer can't have sales stagnating. The best thing they could do is to absorb the ABSD. That is why the discounts that they are giving is around five to seven per cent."

Singaporeans buying their first home will not be affected by the latest round of cooling measures and some analysts said developers can look at packaging their products to target this group of buyers.

Beyond current projects, analysts expect developers to work at right sizing units and maximising space usage or explore other property segments.

Chia Siew Chuin, director of research and advisory at Colliers International, said: "The way to go is still catering to families with room types catering to them but because of the affordability issue, developers may be prompted to look at smaller sizes of apartments. This is of course not to the extent of Mickey Mouse apartment."

Nicholas Mak, executive director at SLP International Property Consultants, said: "Another way is that the developers may start to look at developing outside the residential market. For example, they may be looking at the commercial property market or industrial property market locally.

"If the developers were to venture into the industrial development market, they have to be aware that they should build industrial units that are suitable for end-users and not retail investors."

Creativity aside, analysts said developers must be careful that their marketing activities do not contradict the intention of the cooling measures.

 

Source: Channel News Asia