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How New Property Launches are Changing in the Face of a Slowing Market
By Property Soul (guest contributor)
With property developers rushing to launch new projects, the once quiet market is buzzing again. I spent a few Saturdays visiting the sales galleries of some property new launches, including the Jewel@Buangkok, Sant Ritz, Bartley Ridge, the Panorama, etc. I also went to see some mixed developments like the VENUE Residences, Midtown Residences and Nine Residences.
Figure 1: One of the new launches visited
When sellers outnumber buyers
The URA recently released the sales figures of new condos. Developers managed to sell a total of 724 units in February. It is 28 per cent higher than January but is still some 55 percent lower than last year’s monthly average.
With all the cooling measures, it is very challenging to find buyers who can fit the following criteria:
1. People who are keen to buy in this market.
2. People who are buying for the first time, or don’t mind paying the additional stamp duties.
3. People who have the financial muscle (and patience) to go through the TDSR test.
Although developers claim that the project is 60 or 80 percent sold, no one can tell how many of those buyers can successfully pass the TDSR test and get financing from the banks.
I am impressed by the rate developers are building new projects. Even at the same location, there is more than one project launching at the same time. Some condos nearby have just obtained TOP. And there are a few more construction sites building in high gear just across the street.
Apart from projects within the first two weeks of a new launch, the sales galleries are very quiet, even on Saturday afternoons. There are obviously more agents than buyers. Sometimes I find myself as one of the one or two buyers there. In other words, there are plenty of launches, lots of unsold units and many property agents, but few buyers.
How things are changing in sales galleries
Like many others, I have no urgency to plunge into the market right now. I am just doing routine research to see what is on offer. But the scene is completely different from what I have witnessed one or two years ago in the following ways:
1. Length of setup
In the past, sales offices at actual sites are quickly torn down to start building after most units are sold. Now they can still be found at the same place waiting for potential buyers after six to nine months.
2. No more crowds
There is no more queue of eager buyers waiting to submit a blank cheque. Gone are the days when it is a common sight to see countless pair of shoes lying in front of the showflats. The half-empty carpark is now filled with the cars of the sales representatives instead.
3. Inside the sales galleries
Developers have become more sensitive amid slower sales and intensified competition. More sales offices are prohibiting visitors from taking photos. One new launch even decided not to distribute sales brochures until buyers book a unit. They have someone from the developer stationed there to ensure the compliance of their policy.
4. In the showflats
Marble floorings are replaced with more economical homogenous tiles. Functional wardrobes are being substituted with simple two-door wardrobes. Bathrooms that used to feature branded accessories become no-frills toilets with the absence of bathtubs. The explanations are ‘easy maintenance by the new generation of buyers.’
The project site is maximized to build more units. A 650 sq ft flat can fit in two bedrooms. A three-bedroom unit is now barely 900 sq ft. They say this is the trend of new condos.
Some new sales tactics
There is no more sales pitch of ‘if you don’t buy now prices will climb soon.’ The promises of quick profits and optimistic rental return are also gone. Instead, buyers are told that property is a long-term investment and it is always profitable if they can hold it for more than five years.
Now agents are adopting a problem-solution approach:
1. Given I already own a private property, I was asked to refinance it in order to have more cash on hand.
2. To avoid the 7 percent additional buyer stamp duty, one agent asked me to sell my shares to my husband to decouple our joint-tenant property.
3. Another agent suggested to sell my existing property before (or six months after) the TOP of the new project in order to claim the refund of the additional stamp duty.
Property agents as stalkers?
When I was about to leave a sales gallery for another one only a stone’s throw away, the property agent volunteered to accompany me for the short trip. When I told her that I could find my way, she insisted that it was their company policy to do so.
She followed me to go inside her competitor’s sales office. Just when I was about to do the registration, she pre-empted me by hurriedly entering her own particulars. Then I heard her saying aloud,
“She is my client. I am the exclusive agent representing her. This is a co-broke case.”
I was taken aback by this new arrangement but was unsure whether I should clarify it under these circumstances. It is a similar situation when a guy follows a girl everywhere to mislead everyone into believing that he is her boyfriend. But the girl finds it hard to clarify for fear of embarrassing him, herself, and the others too.
The property agent continued to follow me throughout the visit until we left her competitor’s sales office. She asked me which new launch I was planning to go next. I said I just wanted to go home!
By guest contributor Property Soul, a successful property investor and enthusiast who shares her experiences and knowledge on her blog. Posted courtesy of www.Propwise.sg, a Singapore property blog dedicated to helping you understand the real estate market and make better decisions. Click here to get your free Property Beginner’s and Buyer’s Guide.
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