Overarching Sales At The Arte

94% take-up in less than a month. Phase 1 of City Developments’ (CDL) The Arte saw an overwhelming take-up since its launch early this month, as buyers snapped up 170 out of the 180 launched units. Recent transactions imply that in order to attract buyers, the product has to be either mass market (<> or shoebox-sized (400 – 800 sf). As such, we are somewhat surprised by the project’s favourable showing, given its relatively larger size (1,000 – 1,800 sf) and mid market status (S$880 – 1,100 psf).

We also note that the fine performance was achieved in an area which has been mushrooming with new projects of late, i.e. Nova 48/88, iR Residences, Domus and The Mezzo. More notably, visitors thronged the showflat from 10am to 7pm, with last weekend alone accounting for more than 1,000 people. We observe that visitors and eventual purchasers were mostly Singaporeans, including HDB/mass market condo upgraders, families (with children) and young couples. Our chats with property agents revealed that unlike other smaller projects by niche developers where prices could still be negotiable, CDL stood firm on its selling price.

The Arte’s healthy turnout was mirrored in most of the projects which we visited last weekend, including The Peak @ Toa Payoh (Total Units: 1,203, Total Visit Count: 22,500), Lincoln Residences, The Mezzo, The BelleRive and Verdure (60% sold). We believe the current renewed interest in property is piqued by a slew of macro-factors: improved data from the US, recent marked rally within the equity markets and worse-than-expected 1Q09F drop in domestic property prices leading to predictions that the physical market has bottomed. Micro-factors include pent-up demand and Interest Absorption Scheme.

But asset deflation cycle should persist. While we are cognisant of the recent interest in a handful of prime properties (Illuminaire on Devonshire, The Mercury, Verdure and Gallop Gables), we reckon these small projects do not envelop the still-subdued buying sentiments in high-end projects. While selected investors (i.e. we heard from property agents that four penthouse units from The Mercury were bought by a single buyer at under S$800 psf, significantly under the current S$1,200 – 1,400 psf mark transacted at River Valley area) are gradually entering the market, we believe this trend could only be expedited when the overall economy exhibits more overt signs of recovery and increased foreigners re-enter the playing field.

While we deduce that more investors are now waiting for increased prime projects to be launched at competitive prices, we would like to point out that developers generally do have stronger holding power this time round. As such, we reckon they would continue to landbank their prime district projects, while launching their mass-mid market projects to generate cash-flow. Overall, our view on the physical property market (bottom in 1H10) remains status quo.


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