Developers slash prime home prices by up to 30% to dodge extension charges

Discount schemes are working well, analysts say.

In a desperate bid to dodge hefty extension charges, developers are resorting to huge discounts and creative marketing schemes in order to sell units at a number of high-end residential projects, according to a report by UOB Kay Hian.

At Ardmore Three, for instance, Wheelock has rolled out an ABSD Assistance package which offers a further discount of 13% to 15%. The package comes on top of an existing 15% discount, which effectively translates to a 30% price cut.

The ABSD Assistance package effectively jump-started sales at Ardmore Three, which had only sold seven units in March 2016. At a recent site visit, UOB Kay Hian learned that the development has sold up to 40 units, with the cheapest units priced at $2,560 psf including the discounts.

Pricier units at higher floors of Ardmore Three are priced at above $3,000 psf. The average selling price of $2,800 psf is a far cry from the project's original price range of $3,000-$4,000 psf.

“We have been seeing nascent signs of life in the high-end market as developers relent on pricing at selected projects, dangling discounts to entice,” UOB Kay Hian said.

Over at the 174-unit project Gramercy Park, City Developments has been offering discounts of up to 18%, which comes on top of a 2% price reduction. The discounts resulted in the sale of about 6-7 units, but CDL has rebuffed attempts at further price cuts.

"The slower uptake compared with that for Ardmore Three implies that prices cuts could well be too shallow to appeal to prospective homebuyers, and an effective discount of about 30%, representing prices as low as $2,000 psf for selected units could possibly trigger the same surge of interest witnessed at Ardmore 3,” the report noted.