Only time will tell

Source : Today – 9 May 2009

TIMING can decide whether the deferred payment scheme (DPS) helps or hurts private home developers, as shown by updates provided this week on two projects.

On Friday, Keppel Land revealed that it had yet to receive full payment for about a-third of Suites @ Central, a 157-unit freehold condominium on Devonshire Road that obtained its Temporary Occupation Permit (TOP) earlier this year.

In particular, payment from a bulk buyer has been delayed. In June 2007 – the year property prices here peaked – the unnamed customer made use of the DPS to buy 51 units at an average $1,806 per square foot (psf) and paid 20 per cent of the purchase price with the balance of $1,445 psf due after TOP, said KepLand.

But when time came to pay the remainder, the buyer “appealed to the company to extend the due date to arrange funds for payment”.

The firm has decided to give a six-month extension from May 8, on condition that the buyer pays $500,000 monthly during the extension period. It said it had received the first payment.

Separately, another two homebuyers are arranging to pay this month for five units, said KepLand.

To date, KepLand has received the requisite payments for 101 units. It owns 60 per cent of the joint venture project, while a Chip Eng Seng unit holds the other 40 per cent.

CapitaLand has had better luck with its DPS project River­Gate, which obtained TOP in March this year – with a key reason being its 2005 launch, before the sharp property price run-up.

The builder has collected payment for 98 per cent of the 542 units sold.

The 545-unit RiverGate, located in the Robertson Quay area, is a 50-50 joint venture project with Hwa Hong Corp.