Only one out of four launched projects this weekend, 120 Grange, sold over 50% of its units.
During the weekend, four residential projects were launched concurrently as developers attempt to clear part of their inventories ahead of the one-month-long school vacation and a sizeable launch pipeline by competitors (14,000 units) over the next 6-12 months, JP Morgan said.
According to JP Morgan economist Brandon Lee, the sales take-up was mixed, with the better-located and better-priced projects (namely Margaret Ville and 120 Grange) achieving more decent take-up rates.
Only 120 Grange was able to breach a 50% take-up rate with 30-40 units sold (54-71% take-up). It is a freehold 56-unit high-end condominium along Grange Road owned/developed by Roxy-Pacific Holdings. Its average pricing is $3,000 psf ($2,980-$3,070 psf), which is relatively lower than nearby projects’ $3,200-$3,500 psf.
Margaret Ville, a government land tender site, sold 100-130 units (32-42% take-up) with an average price of $1,900 psf ($1,830-$1,980 psf), which is relatively higher than nearby projects’ $1,600-$1,800 psf. It is a 99-year leasehold 309-unit mid-end condominium along Margaret Drive developed by Hongkong Land's MCL Land.
Meanwhile, 110-140 units were sold (11-14% take-up) at Affinity At Serangoon (formerly Serangoon Ville), a 99-year leasehold 1,052-unit mass market condominium along Serangoon North Avenue 1. Average pricing is $1,550 psf ($1,480-$1,580 psf), which is relatively higher than nearby projects’ $1,200-$1,400 psf.
There were 60-90 units sold (10-15% take-up) at The Garden Residences, a 99-year leasehold 613-unit mass market condominium along Serangoon North Avenue 1 owned by a 60:40 JV between Keppel Land and Wing Tai Holdings. Average pricing is $1,750 psf ($1,680-$1,820 psf), which is relatively higher than nearby projects’ $1,200-1,400 psf.
Lee noted that three out of the four projects achieved record-high pricing for their respective locations as developers continue to target a 15-20% PBT margin despite getting land at a competitive price. "Similar to past launches, the smaller units with lower absolute price quantum continued to sell better, which suggests to us buyer profile is dominated by investors," he added.
The economist explained that the relatively subdued take-up for Affinity At Serangoon and The Garden Residences, which are just five minutes away from each other, implies that increased options for buyers will slow sales amid rising competition from several projects to be launched within the locality.
A similar trend could also come up in nearby Potong Pasir/Woodleigh area in July to August 2018, as several projects rather close to one other will be launched, namely The Woodleigh Residences, Park Colonial, Jadescape and The Tre Ver.
"We think developers may need to re-tweak their selling strategies ahead as buyers are now presented with a surfeit of options, which could result in less-than-optimal take-ups for some projects," Lee said. "We continue to prefer less resi-focused developers in view of possible cooling measures in 2H2018 and slower-than-expected take-up in 2H2018 launches."
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