The low interest-rate environment, pent-up demand and the fact that prices for property had remained “sticky” are believed to be factors that may have prompted demand from HDB upgraders.
Despite the challenging environment brought about by the COVID-19 pandemic, sales of private residential projects continued to increase, with HDB upgraders propping up sales volume.
In the year to date, private home sales increased 7% to 7,600 units from the previous year, with Singaporeans emerging as key buyers, reported The Business Times (BT) citing DBS Group Research.
Dubbing the Singapore property market as “a bed of roses”, DBS analysts Rachel Tan and Derek Tan expect sales volume for this year to stand at 10,000 units or more to surpass last year’s sales volume should the strong momentum continue in the remaining months of 2020.
Pointing to the 566-unit Penrose by Hong Leong Holdings and City Developments Limited as an example, the research house noted that the condominium project at Sims Drive sold more than 60% of its units during its first weekend launch that ended on Sunday (27 September).
The project sold 341 units, which was “a remarkable record for a year hit by COVID-19”, said the analysts. In fact, it marked one of the most successful first weekend launches this year.
Singaporeans accounted for nearly 85% of buyers, of which most of them were HDB upgraders from across areas islandwide.
“This is akin to the new launch projects, especially in FY2020, given the closure of the national borders due to COVID-19,” said the research team as quoted by BT.
DBS attributed the strong sales to the low interest-rate environment, pent-up demand and the fact that prices for property had remained “sticky”. It believes that these factors may have also prompted demand from HDB upgraders.
The project’s developers also cited right timing and sensitive pricing of the units.
Average selling price at Penrose – which stood at $1,500 per sq ft (psf) to $1,700 psf – was in line with other newer projects within the vicinity and less than 10% higher than selling prices at Sims Urban Oasis that was launched in 2015.
Based on the selling prices, Penrose’s margin could be 25% to 33%, estimates the analysts.
Looking ahead, DBS expects selected projects to continue to perform well, particularly those targeting upgraders.
Moreover, the robust property buying by Singaporeans either indicate that unemployment risk among locals is manageable or Singaporeans remain “very cash rich”, said the analysts.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email email@example.com