Kuwaiti pullout from $818m deal, low top bid for Jurong West site unnerve market
MAJOR residential property launches are unlikely for at least three months after the already nervous market was spooked by two sobering events this week, market analysts said.
The first was the pullout of a Kuwaiti investor, Kuwait Finance House, from an option to buy $818 million worth of 97 units at Goodwood Residence.
The second was when the top bid by a property developer for a Jurong West landed housing site came in at less than half what had been expected.
Market sentiment was already jumpy given general market uncertainty, in the wake of the United States sub-prime crisis.
Developers were already saying they are prepared to delay their launches. Property consultants now do not expect any major condominium launches in the next three months. Some developers could even postpone their launches indefinitely, they said.
Still, prices are generally holding steady for now and smaller players will still launch small projects in the months ahead.
Industry sources speculated that Kuwait Finance House had pulled out as it had bought the units at a very high price that could not be supported by the current market.
As for the Jurong West site, sources said the low bid of $78 per sq ft of land area reflected rising building costs and current sentiment. If the Government awards the tender, sale prices of below $1 million per unit will fit in well with upgraders' expectations and needs, they say.
An industry source said: 'The Kuwaiti pullout is bad news but it's not as if things have suddenly changed drastically.' The fundamentals in Singapore are intact but sentiment has deteriorated, he said.
'There are people who have money to buy but they just want to wait and see.' With buyers and sellers largely waiting on the sidelines, there is little action.
Developers prefer to err on the side of caution and even if they offer homes for sale, they are doing it quietly, sources said.
Indeed, so far this year, the 405-unit Waterfront Waves in Bedok Reservoir has been the only new major condo launch. A few blocks have been launched and 110 units have been sold.
Small, quiet releases include the 47-unit Cosmo in Guillemard Crescent and some projects in Telok Kurau. Despite the sluggish market, some of these small projects such as Cosmo and Suites@Owen in Owen Road have sold well.
A consultant said: 'There are foreign funds and investors still in the market that are on the lookout for bulk condo purchases.'
Among high-end properties, a fund recently agreed to buy - at a discount - the remaining units at Grange Infinite, sources said. The 68-unit freehold condo in Grange Road has more than 40 units left.
There is no lack of high-end condo projects - with quite a few ready or nearly set for launch.
These include Far East Organization's Silversea in Amber Road, UOL Group's Breeze by the East in Upper East Coast Road, and City Development's condo project in Thomson Road.
But financially strong developers are likely to delay launches to the second half, said a consultant.
While the bigger players may not act soon, Evan Lim & Co's EL Development is preparing to launch its 51-unit Parc Centennial in Kampong Java Road soon.
'Not everyone can hold back their launches for a long time,' said another consultant. 'But nobody is ready to lower their prices yet.'
He added: 'There's the possibility of prices falling but I haven't seen people panicking.'
In the short term, prices are likely to remain flat.
'It is good for the property market to have a sustainable and affordable price level for the mass market,' said a property developer. He added that demand as well as unprecedentedly high construction costs were problems
STILL STRONG
'The Kuwaiti pullout is bad news but it's not as if things have suddenly changed drastically.'
AN INDUSTRY SOURCE, who adds that the fundamentals are intact
STILL WAITING
'Not everyone can hold back their launches for a long time. But nobody is ready to lower their prices yet.'
A CONSULTANT
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