Saturday, March 19, 2011

Race to roll out property projects

FACED with a tricky guessing game over the property market outlook, developers will push out as many as 15 property launches over the next few weeks.

The launches slated for release range from smaller developments like the 36-unit Everitt Edge project in suburban Everitt Road to larger properties in the city centre, including the 360-unit Sky Suites @ Anson in Tanjong Pagar.

Some property market analysts say this substantial array of offerings could reflect uncertainty about what lies ahead for the market - including the unknown local impact of the earthquake and tsunami in Japan.

They also say the looming possibility of more government property market cooling measures has left developers eager to move more units while the going is relatively good.

Ms Chua Chor Hoon, head of DTZ South-east Asia, said the number of units released last month rose by up to 45 per cent compared with January and December. She said if the mid-January cooling measures have the effect over the months ahead that the Government is hoping for, then developers would be keen to sell units early in the year as they would expect sales to dwindle.

However, if prices and demand both stay strong, this would lift the chances of more government measures to slow the market in the next few months.

Ms Chua said both scenarios would leave developers keen to launch projects.

'Government intervention doesn't always have to take the form of increased stamp duty or adjusted loan-to-value limits on mortgages,' said Mr Nicholas Mak, executive director of research and consultancy at SLP International.

He cited recently proposed changes to the Housing Developers (Control and Licensing) Act and Housing Developers Rules as one good example. These include requirements for showflats to be more accurate in representing completed homes.

Cushman & Wakefield's senior manager for Asia-Pacific research Ong Kah Seng offered another explanation for the healthy line-up of launches.

Developers, he said, have to balance proposed launch dates with the levels of current and ongoing business activity.

Those with more launch-ready projects on hand would be keen to release them to ensure there is an even distribution of sales throughout the year, he said.

SLP's Mr Mak said that, based on his feedback from agents,the number of new homes sold this month is likely to be lower than last month's 1,101. He said that while the month has two weeks more to run, sales figures are expected to be lower than last March's.

Another factor at play is that developers know their rivals have plenty of stock on the way. In the next 12 to 18 months, more launches will add to an already ample supply of homes on sale, said Mr Mak.

'With so many new projects in the pipeline, the likelihood of developers having plots near to one another or along the same MRT line is greater,' he said.

'Everybody will want to gain that first mover advantage in the area and set the price tone for other projects that come along later.'

This plethora of choices could mean that buyers will take a wait-and-see attitude, said Mr Colin Tan, research and consultancy director at Chesterton Suntec International. This will result in a lower than average take-up rate, he said.

The disaster in Japan could also have a far-reaching impact on buyers here. Mr Tan said buyers who had been ready to dive in may have taken a financial hit from the recent stock market volatility.

'Of course you'll have second thoughts about whether to buy (as a result of Japan's disaster),' said Mr Benson Thng, an investor who owns several properties. 'But once the crisis is over, the market should get back to normal.'

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