Both projects generated substantial turnout, mostly Singaporeans. There was significant buying interest, evidenced by the purchase of slightly over 100 units of MPR and 109 units of WR since their re-launches on Friday. Prior to their re-launches, WR only sold 24 units, while MPR only attracted 28 buyers. We believe majority of the buyers are specu-investors either looking to flip or rent, as 2-bedders drew the highest level of buying activity, while 3-bedders and above were slow to take off.
Further, buyers were not mindful of the units’ views, with the lowest floor unit transacted at the quickest pace due to their lower price (on an S$psf basis) as compared to upper levels. We gathered that 85 units of WR were already snapped up by Friday evening (all 2- bedders), causing potential buyers to throng to MPR during the weekend. For WR, most agents also had standby cheques from their clients if units were returned.
Downward price adjustment biggest draw. We believe the downward price adjustment ranks as the biggest attraction for buyers to commit, as the re-adjusted prices represent more upside potential than downside risks, especially within the River Valley area. For WR, the selling price of S$1,050 – 1,300 psf equates to ~ 20% off the previously-transacted price of S$1,430 -1,700 psf. There was also a similar price cut of ~ 20% for MPR, current S$1,350 – S$1,500 psf vs. S$1,650 – 2,000 psf previously.
More importantly, the new prices are not far off from trough levels of nearby comparable projects such as Rivergate and The Pier within the secondary market, e.g.S$1,200 – 1,250 psf. From anecdotal evidences and talks with agents, interest in Rivergate has spiked up over the past month, with sellers unwilling to sway from asking prices of S$1,400 – 1,500 psf. This can also be corroborated by Lippo Group’s recent ability to sell a few units here for ~ S$1,500 psf upon receipt of the keys for their 80 units. Other factors include the recent stock market rally, expectations of an improving economy and the location’s potential (historically good rental demand from expats, river view and part of the new river taxi route from the upcoming Marina Bay Integrated Resort).Our visit to a mid-market re-launched project – 51-unit Parc Centennial, also yielded similarly strong buying sentiments, as all of the 2-bedders were snapped up within two hours after they were re-launched at ~ 20% discount: S$1,180 vs. S$1,450 psf previously. In contrast, Far East Organisation has begun raising the asking prices for some of their existing projects, i.e. increase of S$100 – 200 psf for Vida (Cairnhill), as well as Jardin and Floridian (both Bukit Timah).
Our frequent showflat visits and Apr 09’s URA monthly data (142.1% MoM surge to 322 transacted units) are revealing a genuine spillover of interest from the mass-mid market to prime projects. Buyers’ risk appetites and profiles have also changed reasonably, as exhibited by an improved demand for units of higher quantum (S$1.0 – 1.5m) by specu-investors from the S$1.0m and below by HDB upgraders. Developers’ moves to shave off higher discounts off initial prices (helped by lowering construction costs and increased willingness to sacrifice higher margins) to capture sales have also helped prices to level off, from our view. Nonetheless, we note that the foreigners continue to form a minuscule proportion of the buying contingent.
In light of the above, we are now re-visiting our initial prognosis (physical prices to bottom in 1H10 and property stocks to bottom in 3Q/4Q08).
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