Higher-end HDB market may be cooling

Source : Straits Times - 14 Nov 2008

No rush for condo-style Bishan flats as market sentiment turns sober
THE higher end of the public housing market is showing its first signs of cooling, with the Housing Board’s latest condo-style flats receiving a lacklustre response.
With only one day left to the closing of applications, Natura Loft at Bishan has drawn about 600 applications for 480 flats, its developer told The Straits Times yesterday.
This is in stark contrast to the overwhelming demand for the previous three projects sold under the HDB’s design, build and sell scheme (DBSS).
The first project, Premiere @ Tampines, was a big hit, with 6,000 applications for 616 homes; City View @ Boon Keng had 3,500 buyers vying for 714 flats; while the third project, Park Central at Ang Mo Kio, drew 2,300 bids for 578 units.
Industry watchers say Natura Loft is a victim of the latest turn in market sentiment, which has seen companies retrenching staff and economies worldwide entering recession.
‘Announcements such as DBS Bank laying off 900 jobs have caught everyone off-guard, and local sentiment has turned very bad,’ said Mr Colin Tan, head of research and consultancy at Chesterton Suntec International.
Other analysts such as ERA Asia-Pacific’s assistant vice-president Eugene Lim said Natura Loft’s pricing was ‘on the high side’.
‘The pricey units are launched at a time when the market is jittery, making a double whammy for the project,’ he said.
Four-room 95-sq m units at Natura Loft are priced from $465,000 to $586,000 while the five-room 120-sq m flats cost $600,000 to $739,000.
That works out to about $450 to $570 per sq ft (psf).
PropNex chief executive Mohamed Ismail said the relatively poor response reflects buyers’ reluctance to take big loans for homes in a period of uncertainty. Also, he pointed out that developers such as EL Development have started becoming more ‘price-sensitive’ and are selling condo units with full facilities - such as Rosewood Suites in Woodlands - at attractive prices of $590 to $600 psf.
‘Alternatives to a pricey DBSS flat are more available now,’ he said.
Mr Zuo Hai Bin, managing director of Natura Loft’s developer, QingJian Realty, said it was inevitable that sales of the project would be affected by economic conditions.
‘But we are still confident that there are genuine buyers,’ he told The Straits Times, adding that the showflat had attracted thousands of visitors.
Separately, the HDB launched 750 new premium flats for sale in Punggol yesterday. This brings the total number of new flats launched this year to 5,800.
The new project, Punggol Arcadia, offers 120 three-roomers, 465 four-room flats and 165 five-room units.
It is located at the junction of Punggol Place and Punggol Field - right next to the future Punggol town centre. Prices start from $181,000 for a three-roomer and go up to $416,000 for a five-roomer.
Analysts say the prices are a tad high as they are comparable to prices of resale flats in the area.
Four-room resale flats were sold for about $300,000 to $330,000 recently and five-roomers for $360,000 to $420,000, said ERA’s Mr Lim.
New flats under HDB’s build-to-order scheme are usually cheaper and take three years to build when demand reaches a certain level.
The slightly higher prices could be a reflection of the prime location next to Punggol MRT station, Mr Lim added.
Meanwhile, analysts say it remains to be seen if red-hot demand for new HDB flats will be sustained for this latest sale.
The HDB’s new projects this year have consistently attracted high demand.
At the end of the first day of the application period, Punggol Arcadia had received 262 applications. The closing date for the project is Nov 26.