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[UPDATE] Property sector in limbo as projects’ sales galleries stay closed

Cecilia Chow

SINGAPORE (EDGEPROP) - The Fortitude Budget announced on May 26 brought little cheer to those in the real estate sector as there was no mention of when the sales galleries of developers’ projects could reopen and when property viewings could resume. This further dampened sentiment in the sector where developers, consultants and realtors were already disappointed that Phase One of reopening after the “circuit breaker” did not include them.

Projects' sales galleries are not allowed to open until further notice, according to URA (Photo: Albert Chua/EdgeProp Singapore)

While hair salons, air-conditioning repair services and auto repair workshops are allowed to resume business from June 2, property projects’ sales galleries have to remain closed “until further notice”, according to URA in a circular on May 20.

For property agents, the circuit breaker seems to have been extended beyond June 1. They are still not permitted to have face-to-face meetings with clients, except where clients’ physical presence is legally required to complete transactions. The latter has to take place in the office of the real estate company. Property viewings are still permitted to be conducted only through digital means.

“People like us are in limbo,” says Ong Choon Fah, CEO of property advisory firm Edmund Tie. “Real estate services are supposed to be in Phase One, but our hands are tied: salespersons still can’t meet with their clients in person, we still can’t conduct site visits, and transactions have stalled. While we understand the need to keep everyone safe, we hope we can go back to work soon so we can help keep our economy going.”

Leasing activity — for office, retail and residential — should be allowed as tenants need to view the space before committing to a lease, says Alan Cheong of Savills (Photo: Albert Chua/EdgeProp Singapore)

Alan Cheong, head of research at Savills Singapore, agrees. Property valuers should also be allowed to conduct site visits, especially if a property is vacant, he says. Leasing activity — for office, retail and residential — should be allowed as tenants need to view the space before committing to a lease, he adds.

‘Embracing a new normal’

The Council of Estate Agencies (CEA) advised property agents to “embrace a new normal” in its guidelines on May 26. “The adoption of safe management measures and technology must intensify so that we can carry out property transactions safely,” says CEA. “You should continue to work from home to the maximum extent possible and adopt information technology tools in place of face-to-face interaction and to conduct property transaction activities online.”

No doubt, the business of selling real estate will change even after the circuit breaker is lifted. “In the past, prospective buyers will visit five to eight projects’ sales galleries when shopping for a property,” says CB Chng, executive director of Logan Property, the Hong Kong-listed property development group in China. “Virtual tours of showflats and other online platforms will help cut out the first round of viewings and help reduce the crowd at sales galleries.”

As property is a big-ticket item, potential homebuyers want to see the actual sales gallery and showflats before buying, says Logan Property's Chng (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Once home buyers have narrowed down their choices to just two or three projects that they are keen on, “they will still want to visit the actual sales gallery and showflats as property is a big-ticket item and they want to make sure they see what they are buying”, Chng adds.

The health of the property market affects many related sectors and livelihoods, observes Chng, from property developers and their staff to property agencies, consultancies, conveyancing lawyers, contractors and others.

Consumer behaviour has definitely changed with the prolonged circuit breaker, but not many people are prepared to purchase a property based on virtual tours alone. “Still, a lot of clients are very receptive to meeting salespersons via Zoom to understand more and to discuss restructuring their property portfolios,” notes Eugene Lim, director of marketing and sales at Oxley Holdings. “Feedback from property agents is that a lot of the buyers are waiting to make a decision only after they have viewed the actual showflat. The extension of sales galleries’ closure is a disappointment. We were hoping to see an uplift in new home sales after the circuit breaker.”

Read more: EdgeProp Singapore launches Guided Virtual Showflat Tours

With safe distancing measures and contact tracng system in place, visting developers' sales galleries could be even safer than buying milk at the supermarkets, says Michael Ng, executive director of CEL Development (Photo: Albert Chua/EdgeProp Singapore)

While property players understand the government’s concern about the risk of a second wave of infections should the economy reopen too quickly, Savills’ Cheong is of the view that reopening sales galleries should be allowed if sufficient conditions are put in place to minimise the risk.

“If visits to sales galleries are restricted to by-appointment-only and under strict safe distancing measures, such as limiting the number of people per group and having a contact tracing system — like what we did at Kopar — it will be safer than buying milk at the supermarket,” points out Michael Ng, executive director of CEL Development, the development arm of listed conglomerate Chip Eng Seng Corp.

Circuit breaker sales

CEL Development had previewed Kopar at Newton in the fourth week of March, after strict safe distancing measures were introduced, and it was launched on the weekend of April 4–5, just before the circuit breaker kicked in on April 7. To date, 94 units have been sold, or close to 25%, out of a total of 378 units in the high-end condo located on Kampong Java Road, just off Newton Circus in prime District 9.

Private preview by invitation only, with strict safe distancing measures observed at Kopar at Newton prior to the circuit breaker (Photo: CEL Development)

Of the 94 units, 20 were sold during the seven weeks — April 7 to May 22 — of the circuit breaker. CEL Development’s Ng estimates that 15 out of the 20 were purchases made without having visited the physical sales gallery.

At Logan Property’s 1,410-unit Florence Residences, 38 units were sold during the first 45 days of the circuit breaker, while the 1,259-unit Stirling Residences chalked up sales of 14 units over the same period. “If developers are allowed to open their sales gallery, coupled with the virtual tours, sales should pick up pace,” Chng says.

Meanwhile, the biggest of the mega project launches, the 2,203-unit Treasure at Tampines, captured 43 sales from April 7 to May 22. About half of the purchases were by those who visited the sales gallery previously, notes a spokesperson for Sim Lian Land.

The Florence Residences by Logan Property, where 38 units were sold during the first 45 days of the circuit breaker (Photo: Samuel Isaac Chua/EdgeProp Singapore)

The 1,206-unit JadeScape garnered sales of about 30 units during the circuit breaker, notes Yen Chong, deputy general manager of Qingjian Realty. “It’s still a good number and we will continue to engage property agents during this period.” About 20% to 30% of the purchases were made by Singaporeans based overseas. “They want to purchase a property now because they feel that Singapore is still the place they want to invest in,” says Chong. “They are the ones who have been willing to purchase without having viewed the physical showflats.”

Qingjian Realty and its joint venture partner, Perennial Real Estate, are also preparing for the launch of Forett@Bukit Timah, the redevelopment of the former Goodluck Garden at Toh Tuck Road. The project is scheduled to be rolled out in 3Q2020 — when sales galleries are allowed to open.

Oxley Holdings has also recorded relatively healthy sales — over 40 units sold from April 7 to May 20 — across three projects, namely the 1,052-unit Affinity at Serangoon; the 1,472-unit Riverfront Residences; and the 548-unit Kent Ridge Hill Residences. Oxley’s Lim anticipates the number of units sold to cross 50 by June 2.

About 20% to 30% of the purchases at Jadescape were made by Singaporeans based overseas, says Yen Chong of Qingjian Realty (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Growing acceptance of virtual viewing

“During the first two weeks of the circuit breaker, most of the buyers were those who had visited the sales gallery previously,” notes Oxley’s Lim. “But from the fifth week of the circuit breaker, we saw more buyers who only viewed the showflats virtually.”

Oxley was an early adopter of virtual tours for its projects, launching the virtual platform a few weeks before the circuit breaker kicked in. During the circuit breaker, Lim conducted more than 20 webinar training and dialogue sessions for property agents. “We continuously engage agents to give them new insight into the various projects,” he says. “It’s during such times that developers have to engage property agents and treat them as partners in order to continue the sales momentum on the virtual platform.”

Buying homes based on virtual platforms appears to be gaining acceptance, says Ismail Gafoor, CEO of PropNex. During the first two weeks of the circuit breaker, PropNex sold 16 units each week. That increased to 21 units by the third week, 40 units by the fourth week, 53 units by the fifth week, and 61 units by the sixth week, he relates. “There’s definitely greater confidence and acceptance by HDB upgraders and investors to make buying decisions based on virtual tours.” As such, Gafoor reckons new home sales in the month of May is likely to be in the range of 250 to 300 units, similar to the level registered in April.

At Riverfront Residences, all the one-bedroom units are sold out and even the two-bedroom units are substantially sold with only six still available, says Oxley's Eugene Lim (Photo: Samuel Isaac Chua/EdgeProp Singapore)

The relatively healthy weekly sales presently arise from two major types of buyers, says Savills’ Cheong. “The first group, the majority, are mainly purchasers who had visited the sales galleries before the partial lockdown,” he says. “The second group are Singaporeans working overseas who wish to return once it is feasible, so they commit to a purchase while abroad. This group is the minority.”

‘Gradual fading’ as closure lengthens

Savills’ Cheong cautions: “For the majority, the longer the sales galleries remain shut, the memory of the visit will gradually fade and it will become even more difficult for agents to convince buyers to commit. The daily barrage of negative economic news would begin to hijack their minds, and even if they can afford to buy, they may not want to.”

As such, Cheong reckons monthly new home sales of 280–350 units in April and May could whittle down to the 150–200 range come June and July. “The resale front will fare much worse because potential buyers may not have had the chance to view the units prior to the lockdown,” he says.

Treasure at Tampines saw 43 units sold from April 7 to May 22, with half the buyers being those that visited the sales gallery previously (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Cheong estimates resale transactions to fall sharply from 388 units in April to below 200 in May. And with the extension of circuit breaker measures for property agents, resales in the months of June and July are likely to see a downslide to 50–70 units, he adds.

Resales will suffer as face-to-face meetings are still not allowed except at closing in the real estate agency office, says Bruce Lye, managing partner of SRI. “The challenge during the circuit breaker is that property viewings are not allowed,” he says. “And with this condition being extended beyond June 1, it will be especially difficult for secondary sales of apartments, condominiums and even houses where buyers are looking to purchase  for their own use.”

CEA has clarified that if a property is unoccupied, a property agent may enter the property on his or her own to photograph or film the property in order to conduct online viewings thereafter. But property agents are not allowed to enter occupied properties, "even if it is temporarily vacated, to photograph or film the property".

Check out the latest listings near Affinity at Serangoon, The Florence Residences, JadeScape, Kopar at Newton, Riverfront Residences, Stirling Residences, Treasure at Tampines

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