Activity may be muted at the top end of the condominium segment, but with more launches in the pipeline, will developers offer more inducements to attract buyers?
Even though the top end of the condominium segment in 2012 has seen lacklustre sales, prices in the luxury residential market are expected to remain relatively stable next year, with some consultants expecting a slight uptrend in capital values.
For the full-year of 2012, high-end condo prices have risen 5% from $2,286 psf in 4Q2011 but they are still 4% below the peak of $2,495 psf reached in 4Q2007, notes Alan Cheong, Savills Singapore's head of research. He forecasts prices of prime residential property to rise by 3% to 5% in 2013, while mass-market condos and apartments are expected to see greater price growth of 10% to 15%. In December, the average unit price of prime condos posted a second quarterly rise of 2% q-o-q from $2,350 psf in 3Q2012 to $2,395 psf in 4Q2012, according to Savills Research.
As anecdotal evidence, two months ago, Ho Bee Investment sold the last 11 units at The Orange Grove, its 72-unit, high-end condo located at the junction of Stevens and Orange Grove Roads. All 11 units were said to be purchased by one buyer for a total of $59 million, according to caveats lodged with URA Realis in early October.
The buyer is believed to be a Singaporean who bought the units as part of his estate planning. Nine of the 11 units are three-bedroom apartments with sizes of 2,153 sq ft and 2,336 sq ft. The other two units are a 3,972 sq ft, four-bedroom apartment and a 4,047 sq ft penthouse. The sale is said to have been brokered by CBRE Group.
The average price of the 11 units at The Orange Grove, a prime District 10 location, worked out to just $2,071 psf. That is just a shade higher than the average price of $1,954 psf for three units purchased by another multiple-unit buyer at 8M Residences. The 68-unit private condo is located in Margate Road, off Mountbatten Road in District 15 in the east coast.
With the price gap between the mid-tier segment and prime districts closing rapidly, astute investors are quickly shifting their targets to newly completed or recently launched high-end condos in the prime districts in the coming year.
This could explain the recent activity in the Core Central Region (CCR), which includes prime Districts 9, 10, 11, as well as the downtown areas including Marina Bay and Sentosa Cove. The region was the best performer across all market segments in November, with a 45% increase in sales from a low volume of 144 in October to 209 last month, according to Jones Lang LaSalle (JLL).
At the 381-unit Leedon Residence by GuocoLand for instance, 80 of 104 units released have been sold. Prices achieved in November ranged from $1,625 to $2,141 psf, or a median of $1,862 psf, according to URA data. A new stack of units at Leedon Residence has been released recently, and these are priced at $2,200 to $2,700 psf as they are better facing units. "Sales are seeing steady incremental growth," says Joseph Tan, executive director of CBRE, which is marketing the project. Leedon Residence is a redevelopment of the former Leedon Heights. The project is designed by the respected SCDA Architects, whose recent projects include The Marq on Paterson Hil, Nassim Park Residences and Seletar Residences.
Next door to Leedon Residence, and fronting Farrer Road is the massive 1,715-unit D'Leedon, developed by a consortium led by CapitaLand. The project is designed by Pritzker Prize-winning architect, Zaha Hadid, who is making her debut in high-rise residential projects. The project is also located in front of the Farrer Road MRT station.
The 99-year leasehold private condo is a redevelopment of the former HUDC estate of Farrer Court, and construction is well underway. To entice buyers, the developer has concocted a series of discount schemes. This includes "district discount" (for those whose addresses are in selected postal codes), "education discount" (for those who are working in schools, or whose children are enrolled in selected schools nearby), along with a "move closer to workplace discount" (for those who work in the Central Region). Buyers have been able to enjoy up to a 10% discount on their purchases, according to marketing agents.
Last month, CapitaLand also released 300 new units at D'Leedon for sale, of which 133 were snapped up, making it the top seller in the CCR in November. The units were sold at a median price of $1,431 psf. Hence, as at end-November, 681 of 1,228 units released to date have been sold. "It's not just the attractive pricing relative to the city fringe and suburban locations that have drawn buyers," according to a marketing agent. "Buyers can see the actual project coming up on site, and appreciate the size of the land, and the distance between towers."
A small number of projects with unique offerings in the $3,000 psf range have also seen a flurry of activity in 4Q. An example is Eden Residences Capitol, a 39-unit residential block, which is part of the Capitol Theatre-Capitol Building-Stamford House conservation project located in Stamford Road. The site will also be linked underground to the City Hall MRT station.
The joint developers of the project are Perennial Real Estate headed by Pua Seck Guan, with a 24% stake; Pontiac Land Group's Chesham Properties with 50%; and Ron Sim, CEO of Osim International, with a personal stake of 26%.
The first phase made up of 10 units was released at a by-invitation-only private preview in October, and to date, all have been snapped up. Typical units in the 99-year leasehold Eden Residences Capitol are three- and four-bedroom-plus-study units, which are sized from 2,100 to 3,380 sq ft. There are also two garden villas of 2,723 sq ft and 3,520 sq ft, and penthouses from 4,080 to 6,470 sq ft.
Pricing of the properties sold in Eden Residences Capitol ranged from $7 million for the smaller units to upward of $10 million for the large units, says CBRE's Tan. Average prices achieved were said to be slightly above $3,000 psf. All units are said to have unblocked views of St Andrew's Cathedral and Marina Bay Sands. The consortium will not be releasing any more units for sale until it is ready to unveil its luxury six-star hotel concept, according to a spokeswoman.
About 70% of the buyers of units at Eden Residences Capitol were Singaporeans, with the rest being mainland Chinese, observes Tan, the marketing agent for the project. "The property appeals to those who like living in an integrated development, and a trophy location," he adds.
Two other mega mixed-use developments featuring residences are expected to be rolled out in 1Q2013. They are both in Beach Road.
One of them is the much anticipated South Beach development by City Developments Ltd (CDL) and IOI Corp with 190 residences, 650 hotel rooms, half a million sq ft of Grade-A office space and about 85,000 sq ft of retail space. The project has two frontages — along Beach Road where it sits opposite Raffles Hotel, and Suntec City on the other. Designed by world renowned architect, Foster & Partners, it will be connected underground to the Esplanade MRT station.
Private previews are expected to begin sometime in 1Q2013, and speculation is that prices could hover in the range of $3,500 to $4,000 psf.
Located further down Beach Road, and flanked by The Gateway and Parkview Square office towers is the upcoming Duo Residences. The 660 units will be housed in a 50-storey tower, and will be part of the $3 billion mixed-use development called DUO by M+S, the joint-venture company where Khazanah Nasional holds a 60% stake, and Temasek Holdings, 40%.
The other 39-storey tower will contain a mix of Grade A office space, a five-star hotel and retail space. The development will be linked underground to the Bugis MRT Interchange station. Designed by celebrated architect Ole Scheeren, Duo Residences is expected to preview sometime in the next quarter as well.
Some buyers have been willing to pay a premium for views, especially in the Marina Bay area where units with direct bayfront views are limited. At Marina Bay Suites, the second residential tower within the Marina Bay Financial Centre mixed-use scheme, a 5,662 sq ft penthouse unit was sold for $19.3 million or $3,409 psf in October, which is a record price for the luxury high-rise residential tower. As at end-November, two units were sold for $2,872 psf and $3,100 psf, bringing the total units sold to 188 out of a total of 221 in the development.
On the whole, the luxury segment has seen sluggish sales in 2012. The subdued sales for new projects in the prestigious Ardmore Park neighbourhood are synonymous with what is happening elsewhere in the luxury market.
Listed developer Wheelock Properties held private previews at its 84-unit Ardmore 3, located next to Ardmore II. One unit at Ardmore 3 has been sold to date. According to a caveat lodged with URA Realis, the sole transaction for an 11th floor unit was done at $5.68 million ($3,160 psf).
Typical homes at Ardmore 3 are 1,800 sq ft, three-bedroom units. This is a departure from what Wheelock has established as the gold standard for the Ardmore Park neighbourhood, with its 11-year-old Ardmore Park condo featuring four-bedroom apartments of 2,885 sq ft and Ardmore II, completed two years ago, with typical four-bedroom units of 2,024 sq ft. "At Ardmore 3, Wheelock is trying to offer something that's not readily available in the Ardmore Park neighbourhood — three-bedroom units, as most of the units in the area are at least four bedrooms and above 2,500 sq ft," says Tan.
Meanwhile, construction of Nouvel 18, located in Anderson Road next to Ardmore Park, is at an advanced stage. To date, the 156-unit, high-end condo developed jointly by CDL and Wing Tai, has not been launched. Adjacent to it is Wing Tai's Le Nouvel Ardmore, a 43-unit, ultra-luxury project. One unit has been sold so far, to Cheng Wai Kin, a brother of Wing Tai chairman Cheng Wai Keung and deputy chairman, Edmund Cheng. The price of the unit was $16.7 million or about $4,362 psf. Both Nouvel 18 and Le Nouvel Ardmore are designed by renowned architect Jean Nouvel, another Pritzker Prize Winner.
At the other end of Ardmore Park is the upcoming Sculptura Ardmore by Simon Cheong of SC Global Developments, who recently made a $745 million bid to privatise his company. The 35 units at the ultra luxury project have sizes ranging from 2,800 to 11,000 sq ft and are priced upward of $5,000 psf. No unit has been sold as yet, according to URA's latest new home sales data.
Emerald Hill, Bishopsgate
Some investors are window shopping for luxury apartments in the prime districts that are unique in terms of layout, or have unblocked views of greenery or Marina Bay. In the prime Emerald Hill Road neighbourhood, famous for its conservation terraces, are two luxury condos that were completed just last year. They are 111 Emerald Hill and The Residences at Emerald Hill.
The 40-unit 111 Emerald Hill was developed by Emerald Land, and is managed by LaSalle Investment Management. As at end-November, 18 units have been sold in the project. The boutique high-end condo features exclusively three- and four-bedroom apartments with sizes ranging from 1,970 to 2,497 sq ft. Units have been sold at prices ranging from $2,409 to $2,769 psf.
Next door to 111 Emerald Hill is Lafe Corp's 33-unit The Residences at Emerald Hill. Lafe Corp, a listed investment holding company primarily involved in property investment and development, announced in early November that it has appointed JLL as its marketing agent, and has recently completed two show flats. The developer is doing some enhancement works to the exterior of the building. The plan is to officially launch the project in January, says Manjit Gill, JLL's national director of residential, who is marketing the project.
Pricing of units in the 12-storey condo block, with views of Marina Bay Sands and the Istana grounds, range from $2,800 to $3,200 psf. There are also four strata-titled townhouses within The Residences at Emerald Hill, which are open for sale to foreigners. Each house has a strata area of close to 5,800 sq ft, with six bedrooms with ensuite bathrooms, private pool and private parking. The price tag of these freehold strata houses is $18 million apiece.
In the exclusive Bishopsgate Good Class Bungalow neighbourhood, off Grange Road, construction giant Kajima Overseas Asia, recently completed its luxury 31-unit boutique condo Bishopsgate Residences. As at end-November, three out of five units released have been sold. The latest transaction was at $3,325 psf in October.
"Many of the developments in prime Districts 9, 10 and 11 that have recently obtained their temporary occupation permit or are about to, were conceived during the go-go years of the pre-Lehman Brothers [collapse]," observes Savills' Cheong. "They therefore feature large units as they were targeted at the ultra-rich Middle Eastern or China buyers."
However, purchases by foreigners have been weighed down by the Additional Buyer's Stamp Duty of 10% introduced last December. "Now, there's only domestic liquidity," adds Cheong. "By and large, domestic buyers have limited bite size." As such, the projects in the prime districts that have sold well this year have been the likes of RV Suites and Stellar RV in the River Valley area, and 1919 in Mount Sophia as these have smaller units and more affordable absolute prices, he adds.
This story first appeared in The Edge Singapore weekly edition of Dec 31, 2012-Jan 4, 2013.
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