What’s ahead for developer sales in 2017?

2016 has been indeed a very tough year for the property market, but that said, it is not an entirely despondent picture. Although buyers remained cautious and selective in buying private properties, there were spurts of buying activity in developer sales for selected months. In October specifically, developers sold 1,252 private homes, way surpassing the 509 units in September.

In the first 10 months of 2016, developers sold 6,908 private homes, higher than the 6,386 units sold in the same period the year prior. Following this trend, It is very likely developer sales for the whole of 2016 will surpass the 7,440 units sold in 2015.

Which are the notable star performer projects and what are their selling points?

The stellar private home sales figures of 1,252 residential units sold in October are well within expectations. October comes before the quieter year-end period marked by vacations and the festive period, so developers were keen on launching two mega projects before market winds down. These two projects were Forest Woods and The Alps Residences, both receiving good buyers’ response. The exuberant private home sales in Oct was however very project-specific and it is unlikely that this indicates a possible turnaround in buyers’ interest for private properties in 2016 as a whole.

Fig.1: Private residential projects that sold most units in October 2016 

Project Name	Cumulative Units Launched to-date	Cumulative Units Sold to-date	Cumulative Units Launched but Unsold	Units Sold in Oct 2016	Median Price ($psf) of units sold in Oct 2016
FOREST WOODS	519	364	155	364	1,412
THE ALPS RESIDENCES	626	334	292	334	1,078
THE TRILINQ	600	452	148	30	1,411
THE GLADES	650	592	58	28	1,456
RIVERBANK @ FERNVALE	510	491	19	26	988
LAKE GRANDE	710	538	172	24	1,304
SYMPHONY SUITES	368	354	14	24	1,083
SOPHIA HILLS	493	147	346	23	1,946
THE SANTORINI	597	269	328	23	1,055
SIMS URBAN OASIS	650	593	57	21	1,426

Source: URA (monthly developer sales) for Oct 2016, R’ST Research

What can we learn from top selling projects in 2016?

In recent times, it is clear that there are two main factors that drive sales – competitive, attractive pricing, and unique selling points. 

A unique selling point could mean that the project is strategically located. If it is in Outside Central Region (OCR), ideally, it should be in a more accessible part compared to other suburban locations. For instance, Serangoon is definitely much more accessible to the city compared to Punggol and Sengkang. This explains why Forest Woods, situated near Serangoon MRT station, is a popular choice amongst buyers. As for The Alps Residences, it is located in the quaint yet increasingly developing Tampines Ave 10 locality.

Any project that do not offer at least either of these two selling points are likely to witness a lukewarm reception from buyers. That said, if a project manages to fulfil either one of this criteria will generally be well received , and if it manages to fulfil both of them, then it has the potential of being sold quickly.

Price trends for developer sales

Buyers now understand that there are value buys in each category of residential properties. They are especially sensitive to ‘fair pricing’ at the developer sales side, where prices tend to be non-negotiable. Buyers can only accept or walk away from the prices offered by developers, unlike resale properties where one can aggressively negotiate for lower prices. Within the private condo categories, the following pricing is the range of acceptable/expected pricing to buyers:

• OCR leasehold projects – average price of at, or lower than, $1,000 psf for projects not near MRT stations  and an estimated $1,250 psf for those near an MRT (Within 1km of an existing MRT station, future MRT stations are not counted)
  

• RCR leasehold projects – average price of $1,350 to $1,450 psf but ideally not more than $1,500 psf

• CCR leasehold  projects – a wider range between $2,100 to $2,600 psf. However, it also depends on how prime is their location and how big or small the units are
• Freehold project commands a premium of at least 15 percent from the prices mentioned for each of these leasehold types mentioned above

Broader picture of developer sales and buyers’ motivation in 2017

The good news is that the demand for residential properties in 2016 is very different from 2010-2013. Buyers who are in the market for a condo between 2015 and 2016 are more realistic and opportunistic. As a result, new launches in 2017 are expected to be priced similar or lower than the launch price of new completions in 2014 and 2015. Developer sales activity is also expected to continually improve, on back of competitive pricing.

This article was written by Ong Kah Seng, Director of R’ST Research on behalf of 99.co