Q3 sales of new private homes hit by govt curbs

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Business Times - 24 Sep 2010

Q3 sales of new private homes hit by govt curbs

Number seen falling to as low as 3,300 from above 4,000 in Q1 and Q2

JUST 3,300 to 3,500 new private homes were sold in the third quarter - considerably fewer than the 4,033 and 4,380 units sold in Q1 and Q2 respectively - as sales hit a snag in September after the government introduced its latest set of property measures.

The estimate was released by CB Richard Ellis (CBRE) yesterday, which also said in its latest report that sales volume will fall even further to about 2,000 units in Q4.

'We expect the residential market to mellow in the fourth quarter of 2010,' the firm said. 'New home sales volume in the fourth quarter is expected to be lower, around 2,000 units.'

Market sentiment was dampened and sales activity slowed down this month as industry players took time to digest the implications of the measures.

In Q3, projects with strong location attributes and projects with small-format units continued to be the star performers.

Condominium projects which were fully sold included 368 Thomson (157 units), The Scala (468 units), Terrene (172 units) and small-format projects Haig 162 (99 units), Dorsett Residences (68 units), Centra Suites (62 units), Centra Studios (51 units) and Leicester Suites (47 units).

In the suburban 99-year leasehold category, The Greenwich at Seletar Road sold 230 of its 319 units and NV Residences at Pasir Ris Grove sold 300 of its 642 units - establishing new price benchmarks of $1,095 per square foot (psf) and $830 psf in their respective locations.

Developers, who started out Q3 with bullish bids for land sites, bought a total of six residential and one commercial-residential site from the government as well as more than 10 sites from the private sector over the quarter.

But they are likely to be less bullish in their bids as the market softens further, CBRE said.

But while sales of new private homes fell in Q3, prime non-landed residential rents inched up.

Preliminary estimates from Jones Lang LaSalle (JLL) showed that average rents for prime non-landed homes rose slightly by 1.1 per cent quarter on quarter to $4.65 psf per month in Q3 2010 on the back of higher rentals at newly completed projects.

JLL said that from the start of this year to August, around 1,520 units were completed in districts 9, 10 and 11 - including projects such as Skypark and Ardmore II where leases are higher than the market average.

But looking ahead, JLL said that the market average for prime residential rents was expected to remain steady or rise marginally at best in view of the substantial impending supply in the next few years.

An estimated additional 14,000 units are scheduled for completion from end-Q2 2010 to 2015. This translates to around 2,500 units per annum on average, or 1.5 times the historical 10-year average of around 1,600 units per year, JLL said.

JLL's data also showed that average rentals in non-prime locations felt the impact of new supply adversely. Average rents in the popular Central districts stayed flat while that in the traditional East Coast districts slipped 4.3 per cent quarter on quarter to $3.30 psf per month.
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