Help for Centris condo buyers

Source : Straits Times - 14 Jan 2009

Developer offers to help secure bank financing, in bid to avoid defaults

DEVELOPERS of a Jurong condominium project have offered to help buyers secure bank financing for their units in a bid to head off any defaults or fire sales.

Those who bought at the launch of The Centris in 2006 but have yet to secure financing can meet loan officers from the three local banks at a roadshow organised by the developer this weekend.

Prime Point Realty Development is taking a proactive approach because the 610-unit project was offered under the deferred payment scheme and well before the market weakened.

With deferred payment, buyers secure a unit with a small amount paid up front - 10 to 20 per cent of the purchase price. The rest is due once the building gets its temporary occupation permit (TOP).

That will be around June, but the rapid deterioration in the economy, falling home prices and tightening of credit markets may have left some buyers at risk of not meeting their full payment.

The added danger is that this could result in fire sales or eventual defaults.

It has prompted Prime Point Realty to write to buyers asking if they want loan advice. About 250 buyers who have yet to obtain loans or who are keen on switching to a better loan rate have responded.

The roadshow with United Overseas Bank, DBS and OCBC will be held this weekend at Jurong Point, which is linked to The Centris.

‘(It will) make it very convenient for our purchasers to discuss their end-financing arrangements if they have yet to do so. We believe that this is the prudent thing to do,’ said Mr Michael Leong, executive director of Guthrie Properties, one of the partners in the Prime Point Realty joint venture.

The others are Lee Kim Tah Holdings and TMW PCCW, a German investment fund managed by Pramerica Real Estate Investors (Asia).

Representatives from property firm ERA, which marketed The Centris launch, will also attend the roadshow. ERA can help sell the units of buyers who cannot get sufficient financing.

The roadshow initiative has baffled one property consultant, who said The Centris was launched at a low price. He said the developer’s risk of being hit by defaults or being stuck with returned units is small compared with projects launched at the height of the market.

It is also a mass-market condo that would have attracted mostly owner-occupiers, added the consultant.

Prime Point Realty’s risks are limited to the original buyers as the developer does not offer the deferred payment scheme for sub-sales.

The 99-year leasehold condo sits on top of the new extension of Jurong Point mall and is near the Boon Lay MRT station and bus interchange.

It was first sold at an average of just below $500 per sq ft (psf). Its launch came before home prices peaked in 2007 and current price levels are still hovering above launch prices.

Sales registered last month show prices of between $557 psf and $610 psf. One of them, a $561 psf deal, netted the seller a profit of about $130,000 as he had bought cheap during the preview.

‘If any of the buyers have problems financing their units and want to sell at (the launch price), there will be a ready pool of buyers out there,’ said a property agent, who declined to be named.

Property values in Jurong are expected to be supported by government plans to transform the area into a bustling lakeside hub for business and leisure, he said.