Price stability will be good for the market, says analysts
CAPITALAND Ltd, the biggest buyer of existing apartment blocks for redevelopment in Singapore in the past year, said en bloc sales have “peaked” as owners asked for record prices for their homes.The market for existing buildings has hit a high “in terms of pricing”, said Mr Liew Mun Leong, chief executive officer of CapitaLand.
The developer, South-east Asia’s largest, had an 18.3-percent share in the city state’s $13.49-billion en bloc collective sales from July last year to June, according to data from real estate consultant Knight Frank.
A frenzy of redevelopment around the Orchard area and the prime Holland Road Residential district prompted the Government to raise a tax on property companies rebuilding some older apartments.
The purchases are done through collective or en bloc sales, where home owners jointly sell their developments.
“The problem now is that en bloc owners’ expectations are raising the hurdles,” said 61-year-old Mr Liew yesterday.“Going forward, en bloc owners must be realistic about what is marketable.”
Developers were buying older homes in prime areas to redevelop and resell at prices more than four times higher as demand for luxury apartments pushed prices to records.
Last year, a record 70 older developments were sold, totalling $8.1 billion, Knight Frank said. In the first half of this year, there were 48 transactions amounting to $9.48 billion.
“En bloc sales are about derived demand,” said Mr Nicholas Mak, Knight Frank’s research director. “As long as high-end property demand continues, the en bloc sales would continue.”
CapitaLand in June said it was buying Farrer Court in the Holland Road area for a record $1.3 billion. SC Global Developments Ltd, a builder of luxury homes in Singapore, said the same month it agreed to buy No 6 Ardmore Park for $262 million, or $2,338 per sq ft, the highest for an existing complex.
“There will come a time when the market cannot bear” the prices, Mr Liew said.
Some developments are having a harder time with en bloc sales. Pacific Mansions in River Valley had an asking price of $1.18 billion, or $2,400 per sq ft.
But the owners reportedly did not get bids that met their asking price, and are negotiating with possible buyers to achieve their reserve or minimum price, which is 10 to 20 per cent lower.
“We are seeing vendors adapting to be more accommodating,” said Mr Donald Han, managing director of Cushman & Wakefield Pte.
“Instead of expecting record price after record price, there is some price stabilisation, which will be good for the market.” — BLOOMBERG
.jpg)
No comments:
Post a Comment