Saturday, January 26, 2013

Developers Embark on Discount Race

Jan 25, 2013

Following the government’s new measures to cool the property market, developers have entered what resembles a discount race in hopes of enticing buyers to keep buying.

The race started with Q Bay Residences in Tampines, which was the first to offer a 5 to 7% discount last week, which effectively negates the 5 to 7% increase in the Additional Buyer’s Stamp Duty (ABSD). The increased ABSD was one of the new rules under the latest cooling measures. 

Q Bay residences have currently sold more than half of its 630 units within its first weekend on the market, indicating that a good project at a sufficiently competitive price would could still entice buyers.

Since then, other property developers have followed suit. Some felt that launching Q Bay Residences right after the cooling measures were implemented was a bold move, but it was one that gave other developers confidence to proceed and launch their properties.

Far East Organisation has also taken out an advertisement in The Sunday Times, announcing discounts of up to 4% on some of its properties like euHabitat at Jalan Eunos, The Seawind at Telok Kurau and SeaHill at West Coast Link. These discounts would be added to the current discounts the developer is already offering.

The percentage of discounts has also increased by 10 to 15% at properties like CapitaLand’s d’Leedon at Farrer Road. Prices for this luxury property now start from more than $1300 per square foot (psf), down from its initial launch price of $1680 psf.

These discounts are believed to be the integral factor for potential investors looking to buy their second or third property. However, industry insiders are sure that they will not last forever, especially since the land bids in the second half of 2012 were rather aggressive. In order to offset the land costs, developers will not be able to lower selling price by much. The projects built on these expensive sites will be launched from the second half of this year. That’s when anaylysts believe the discounts will stop.

The biggest discounts will be enjoyed in the first quarter of 2013, after which it would dwindle. From 5 to 7% now, it could taper to 2 to 5%.

It is currently unknown how far the measures will go in relieving buying interest in a fluctuating stock market and the low interest rates at the banks. However, discounts are unlikely to become the norm. During the first implementation of the ABSD in December 2011, discounts were then gradually reduced till they dwindled to nothing.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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