No rush to the high-end??

Source : Weekend Today - 2 Aug 2008

Mass market take-up rate still good despite slowdown in luxury sector

There are still signs of life in the mass housing market, despite signs that the luxury sector is flattening out, according to the head of Singapore’s biggest developer.

“The outlook for Singapore residential prices will probably be very flat,” saidMr Liew Mun Leong, chief executive of CapitaLand. “The mass market take-up rate is still very good and for the mid-range tier, the prices are holding out well. But people will not be buying aggressively for the high-end sector now.”

He likened last year’s rush to buy luxury homes to watch-collecting.

“If you observe the high-end buyers, they are not buying for investment purposes but as a second or third property in Asia.” he said. “For the high-end property, the prices will still hover around$3,000 per square foot.”

In coming months, CapitaLand is targeting to launch 186 units at The Wharf Residences and 127 units at Latitude. Both are mid-tier developments in the River Valley area.

The recent slowdown in both local and regional property markets reduced CapitaLand’s profits in the first half of this year.

It yesterday posted earnings of $762 million, some 44 per cent lower than $1.5 billion recorded this time last year when profits were boosted by an exceptional gain from the sale of Temasek Tower.

“We have done well for this period, the profits booked so far have surpassed the $750 million for the full year of 2006.” said Mr Liew.

Even so, the slowdown in the Singapore property sector locally is evident, with overseas earnings contributing 54 per cent of the earnings before tax, up from 31 per cent last year.

On the international front, CapitaLand has a Malaysian retail real estate investment trust of about RM2 billion ($840 million) on track to launch by year-end. The fund will be listed in Kuala Lumpur and would bring its stable of property trusts to six.

While in Abu Dhabi, CapitaLand is building about 9,000 homes in joint venture with Mubadala Development Company. Sales are due to begin in late this year.