With the predicted slowdown in housing demand next year, three high-profile City Developments (CDL) projects face roll-out problems. OCBC believes the developer will pause before it launches Nouvel, an EC in Choa Chu Kang and the Lucky Tower redevelopment next year.
The slew of price falls and restrictions on foreign buyers predicted for 2012 make these properties harder to sell.
OCBC forecasts a drop in residential prices by 15 to 25 percent for FY2012 to FY2013.
“Lower GDP growth, coupled with curtailed foreign demand due to recent measures, would reduce residential demand significantly. CDL has significant domestic exposure and we expect a challenging year ahead,” it noted.
Meanwhile, the recently launched 892-unit Palette has recorded a good showing since last month, “selling 41 percent of units at an average ASP between S$850 psf to S$900 psf.”
“We believe CDL has executed well on this launch and has priced it to sell briskly in an environment of increasing uncertainty. Note that the project was priced only marginally above that of NV Residences, which could have contributed to the strong take-up rate at launch. Given residential headwinds in FY12, however, sales are likely to slow down,” OCBC said.
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