Despite the high supply of state land, launch prices of new 99-year condos are continuing an upward trend, primarily attributed to the robust demand.
According to a recent DTZ study, the median prices of new 99-year leasehold condos released in 2010 and 2011 on sites sold at Government Land Sale (GLS) tenders are eight to 35 percent higher than the equivalent nearby condos sold earlier.
Wing Tai recently released Foresque Residences at Petir Road at an average price of S$1,100 psf, 32 percent higher than the median unit price of Tree House in the preceding quarter period.
Keppel Land launched The Lakefront Residences in Jurong last November at a median price of S$1,075 psf, approximately 35 percent higher than the median price for the adjacent Caspian project over in the previous quarter.
“Developments with fewer units and / or smaller units tend to have higher per square foot prices,” said Chua Chor Hoon, Head for SE Asia Research at DTZ.
For example, at Petir Road, Foresque Residences has one- to four-bedroom units, while the adjacent Tree House has two-bedroom units and upwards.
Meanwhile, Ong Choon Fah, COO and Head of Consulting and Research for SE Asia at DTZ, believes that developers have been integrating more one-bedroom units and even smaller one- and two-bedroom units, compared with previous projects. By making the lump-sum prices affordable, they have been able to attain higher psf prices.
Furthermore, units in new property releases are sold on a progressive payment scheme, which means purchasers do not draw down the whole housing loan immediately.
“Concerted efforts by developers to market new launches also creates an emotive appeal to buyers which would be missing when one shops for an older property in the secondary market,” Mrs. Ong noted.
Market analysts argue that since 2010, the government has been launching more 99-year condo sites near projects that have been selling like hot cakes, in an effort to cool the market. However, increasing demand for these new projects have been the depleting the land banks of many developers, resulting in them bidding furiously for state land tenders.
In addition, analysts warn about a possible surplus when all the units sold at property launches are completed.
“There are so many variables that affect the equation. At the end of the day, people have to be mindful and buy within their means,” Mrs. Ong added.
To contact the journalist, you may send your message to editor@propertyguru.com.sg