Developers in Singapore holding off launching new property projects, according to analysts

There is unlikely to be many new projects coming on the market as developers take stock, according to analysts. But they are not overly worried by the figures as the first few months of 2010 have been beyond expectations.
 
It is likely to be the start of a period of slower sales as developers weigh their options and buyers wait to see, according to Ong Choon Fah of DTZ. ‘There’s no great push factor to launch projects in June when you weigh the pros and cons. Potential buyers may also hold back purchases as they may not sense a great urgency to buy,’ Fah explained.
 
Knight Frank chairman Tan Tiong Cheng expects developers to try their best to maintain prices. ‘So what if they delay launches for a couple of months. After all, most of them have strong balance sheets and the Singapore economy seems to be continuing to perform well,’ said Cheng.
 
CB Richard Ellis executive director Joseph Tan said that the figures show that the first five months of 2010 saw a monthly average of 1,533 units sold, above the 1,244 average monthly transaction rate for the whole of 2009 which was regarded as a boom year.
 
During the global downturn between September 2008 and January 2009 developers sold only between 108 and 376 units per month. But some consultants are predicting that sales could drop below 1,000 units in June and the expect sales by the end of the year to be on par with 2009.
   
Developers launched 1,134 private homes in May, down from 2,085 units in April. But experts say a number of factors have come into play including the school holidays and the football World Cup.
 
Also, potential buyers may not see great urgency to commit as the bumper Government Land Sales Programme for the second half of this year means they will have a greater choice of projects to consider in the near future.
 
‘Over the next couple of months, sales could be around 900 to 1,300 units per month until more positive signs appear to entice buyers back into the market. It also depends on the projects that will be launched and their pricing levels. Already, there’s resistance to high prices, particularly in the suburban areas,’ said DTZ South-east Asia research head Chua Chor Hoon.
 
Colliers International analysis also showed buyers’ resistance towards higher-priced units continuing in May. The proportion of units priced above $1,000 psf has fallen from 69.2% of developers’ sales in March to 66.1% in April and 55.5% in May.
 
The firm’s director Tay Huey Ying also noted that the most expensive transaction in May was significantly lower than the most expensive primary market transaction in April.
 
DTZ’s Ong added that even as developers hold off launches in June, they will watch the market very carefully especially bids at upcoming state land tenders. ‘If winning bids ease, developers will have pricing flexibility for their end unit prices. If land prices remain buoyant or even surge further, developers may think they have some respite from pressure to moderate their prices,’ she added.