Saturday, 7 January 2012

Some return units to developers, fearing price dip

They prefer to forfeit 1.25% of unit price; developers still sanguine

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Guanyu 道 said...

Some return units to developers, fearing price dip

They prefer to forfeit 1.25% of unit price; developers still sanguine

06 January 2012

Developers of major projects released in November and early December have seen some units being returned. Market watchers say this could be a knee-jerk reaction to the introduction of the additional buyer’s stamp duty.

Those who do not exercise their option to buy forfeit a quarter of the 5 per cent option fee, equivalent to 1.25 per cent of the purchase price of the unit. But this would be a small price to pay for those who believe that private home prices may slide sharply.

Even in routine times, some units get returned to developers for a host of reasons.

At CapitaLand’s Bedok Residences, which was released on Nov 23, about 4 per cent or around 20 of the 495 options issued were not exercised by the deadlines.

In Pasir Ris, where City Developments Ltd (CDL), Hong Leong Holdings and Hong Realty released The Palette condo in the first half of November, buyers for about 4 per cent or around 17 of the 436 units granted options have decided not to exercise them, said a CDL spokeswoman.

At the Archipelago condo facing Bedok Reservoir Park, about 12 per cent or 15 of the 130 units for which options were issued since the project was previewed on Dec 2 are being returned to developers UOL Group and Singapore Land.

The average price for the 577-unit five-storey, 99-year leasehold condo is about $1,000 psf. ‘All 15 or so units returned are apartments; none of the strata semi-detached homes sold in the project have been returned,’ said a spokesman for UOL.

A seasoned property agent said: ‘While Bedok Residences and The Palette were released in November, Archipelago’s preview began just five days prior to the additional buyer’s stamp duty being announced on the evening of Dec 7, and hence (buyers) had a longer window to exercise options post-Dec 7.

‘There was a higher chance of a knee-jerk reaction among Archipelago buyers deciding to let options lapse on fears of an overall price correction in the Singapore private residential market.’

On a more positive note, UOL’s spokesman said: ‘The fact that around 90 per cent of those who had been granted options at Archipelago have decided to go ahead with their purchase shows they are confident about the pricing of the development, notwithstanding the latest curbs. We will release the returned units to the pool available for sale.’

CDL’s spokeswoman said the units returned at The Palette may not necessarily be due to the cooling measures. Personal reasons and financing matters could also be at play.

To date, 450 of the total 892 units in the project have been released. The project is now selling at about $890 psf on average.

CapitaLand Residential Singapore’s spokeswoman said yesterday: ‘Eighty five per cent of the 583 available units at Bedok Residences have been sold, mainly to Singaporeans and permanent residents. To date, over 95 per cent of buyers have signed their Sales and Purchase Agreements, which reinforces the strong appeal of the development.’ The condo is priced at $1,350 psf on average.

Earlier project launches with units returned to developers include The Tennery in Choa Chu Kang, with nearly 6 per cent or 13 of the 220 units that had been sold in December 2010 (when the project was released) returned by the following month.

Eight Courtyards in Yishun saw 2.9 per cent or 10 of the 340 units sold in April last year being returned in May.

BT surmised the above figures from a comparison of developers’ monthly sale declarations to the Urban Redevelopment Authority; but in fact the actual returned units could be higher, suggest analysts, since developers could have seen units being returned within the same month of options being granted and would just declare the net units sold by month-end to URA.