After the Christmas break of 2019, developers have just posted their highest January residential sales in 7 years.
However with the onset of the Covid-19 pandemic and its likely impact on the economy, developers are bracing themselves for a possible fall in the volume of new home sales, and its repercussion on their price power.
Property analysts are also expecting some short-term impact on sales figures. But most appear cautiously optimistic and feel there will be continued healthy demand for new homes.
In fact some of them, such as Mr Ong Teck Hui, JLL’s senior director for research and consultancy, anticipate a possible resurgence in purchases from pent-up demand, once the threat of Covid-19 recedes.
He noted that: “While there could be some moderation to the volume of transactions in the short term, an immediate negative impact on prices is not expected, as sellers are generally not under pressure and able to hold.”
The Urban Redevelopment Authority released data on Monday that showed that, excluding executive condominiums (EC) units, developers sold 618 private residential units in January 2020. This was 14.9% higher than the 538 units they had sold the previous month, December 2019.
The figure of 618 units is also 41.4% higher than the 437 units that found buyers in January 2018.
Last month January saw the launch of three new projects, all in the prime central districts: The Avenir at River Valley, Van Holland at Holland Village, and Leedon Green at Farrer Road.
As for this month February, sales have started at a few new projects like the Verticus in the Balestier neighbourhood, Parc Canberra executive condominium at Sembawang, and the latest completed phase of Luxus Hills landed houses.
Mr Alan Cheong, Savills Singapore’s executive director, remarked that: “At this juncture, with healthy sales registered at Parc Canberra and the good turnout at The M preview, the impact of the coronavirus has perhaps only marginally affected buying sentiment. For now, the impact… has probably affected developers’ sentiment more than buyers’.”
Impact on Upcoming New Launches
He also felt that developers may want to delay launching projects till there is more clarity on the Cover-19 outbreak. Some of these could include the upcoming launches of Ki Residences at Brookvale, the Landmark at Outram, Linq at Beauty World, Forett @ Bukit Timah, Penrose at Sims Drive, and One-north Eden at one-north.
He added that: “This will affect total sales during this period because the less developers launch, the lower the new sales volume.”
Ms Tricia Song, Colliers International’s head of research for Singapore, added another perspective to the current scenario, saying that: “The Covid-19 outbreak could dent demand for residential properties in several ways. These include weaker overall market sentiment, and social distancing as people shun crowded places, including showflats. Moreover, foreign buyers are likely to postpone purchases of Singapore residential properties, especially in the high-end segment; this is particularly so for Chinese buyers given travel curbs. “These concerns are valid; depending on how severe and protracted the situation becomes, some of the planned new launches could be pushed to 2021.”
Nevertheless, citing the experience from the SARS 2003 outbreak, Ms Song thinks that unless the Covid-19 outbreak leads to a protracted downturn, “pent-up demand will return later and developers will refrain from major price cuts”.
This is likely to be the case for projects such as One-north Eden, the Peak at Thomson, the Atelier at Newton, and One Bernam at Bernam Street, and perhaps even Ki Residences.
Similarly, the head of research for Singapore and South-east Asia at Cushman & Wakefield, Ms Christine Li, commented that: “With some business sectors expected to experience a slowdown, buyer sentiment is expected to be more cautious until the situation improves, which could potentially be in the first half of 2020.”
She added: “Nonetheless, the underlying demand in the private residential market should remain unchanged and with pent-up demand accumulating, the market could potentially see a surge of transactions in the second half of 2020, after the outbreak.”
Over the weekend, Soilbuild sold five units of their freehold 162-unit Verticus condo at an average PSF price of just below S$2,100 at a “VVIP private event”.
The company said that this was in line with their expected selling price for the development, close to their breakeven cost of almost SGD$2,000 PSF.
Source: The Business Times . 18 February 2020