More Than 1,300 Units Sold. 1,323 private residential units were sold in February, which is the highest monthly number since August 2007, an 18-month high. It was also a jump of more than 10 times compared to the 107 units sold in January. However, sales from three projects -- F&N's The Caspian (median price S$603 psf; 517 units sold out of 600 launched), Alexis (median price S$1,083 psf; all 293 units sold) and Guocoland's soon-to-TOP The Quartz (median price S$591 psf; selling another 168 units for a total of 611 units sold altogether), contributed c.74% of the total sales in February. Of the three, the latter was previously launched a couple of years ago, and the remaining units were sold at a c.10% discount to initial units sold. As was the case in January, not a single unit in the high-end segment (>S$2,000 psf) was transacted in the primary market, as prospective buyers continued to shun high-end properties.
Notably, the number of units sold in February exceeded the number of units launched by developers. Even if the 168 units at The Quartz (previously launched) are netted off, the take-up rate is still better than the launch rate. We believe that this is reflective of some sense of excitement returning to the market, due largely in part to the newsflow related to The Caspian and Alexis.
Small Is Beautiful. As we had mentioned in earlier notes, this current pent-up demand in the market is premised on essentially two bases: discounting by developers on a psf basis (in the case of The Caspian and The Quartz) or small absolute price tags for small units. For instance, our on-ground checks this weekend continued to indicate that demand for smaller units is strong, but prices (and interest) remain firmly entrenched in the mass-market to lower-mid segment.
Domus: This 104-unit development at Irrawaddy Road (near Novena MRT) comprises about a-quarter of 1-bedroom units with the remainder being 2- and 3-bedroom units. We understand that the 1-bedroom units (just under 500 sf) were the most popular - with all now fully sold at an ASP of around S$1,000 psf (or just around S$500K). According to our sources, most of the buyers of the 1-bedroom units were investors (ie looking at rental return as opposed to speculators looking for a quick flip) rather than owner-occupiers. The larger units were selling at around S$900 psf. The remaining 1-bedroom units will be launched this week during the official launch, though the price is likely to increase to around S$600K, as these are higher-floor units. At S$1,000 psf, this would be a c.30% decline from peak values in the area.Kembangan Suites: Over at Kembangan MRT station, all 60 units of freehold Kembangan Suites were sold out within half a day (on the first day of preview). All the units here are small - from 344 sf to 581 sf - with the smallest units going for around S$300K (or around S$900 psf). At S$900 psf, this is about 15% higher than what nearby Astoria Park (99-year lease, TOP in 1995) was fetching at the recent peak.
We believe that this current 'downsizing' phenomenon - the interest in small units - is keeping ASPs steady to a certain extent, given that smaller units tend to fetch generally higher ASPs compared to larger units.
Maintain Cautious View. We advise investors to be cautious on the sector. Even as the primary market picks up from January numbers, recent sales volume have not been accompanied by strong catalysts or evidence of a turning point, so we do not believe such strong sales can be sustained. We expect developers to trade sideways and potentially challenge October lows; and would only recommend accumulating property equities when the macro environment shows signs of recovery. Small-caps with significant exposure to the high-end market should be avoided, with Fully Valued calls on SC Global, Ho Bee and Wing Tai. We continue to favour companies with strong balance sheets, with our Buy calls on City Dev (TP: $5.62) and Wheelock Properties (TP: $1.06).
Click here for more Property News
No comments:
Post a Comment