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PR Newswire
16-01-2016, 03:10 PM
INDIRECT discounts such as cash rebates and furniture vouchers, which were once popular with private homebuyers, are becoming less prevalent in today's price-sensitive residential market.
"There was a season when discounts, rebates and other perks were dangled as carrots to attract buyers. However, these may be relatively passé today," said Tan Tee Khoon, managing director of KF Property Network, a subsidiary of Knight Frank.
"For projects which are launched especially after the imposition of Total Debt Servicing Ratio (TDSR), developers are cognisant of the loan restrictions and slow market sentiment. As such, they would have priced their developments to sell," he noted. "Beyond price, location and product differentiation contribute a major part to the buying decision as well." The Mortgage Servicing Ratio (MSR) is also applicable to executive condo applicant. HDB EC in the market include The Terrace EC, Signature EC, Amore EC, Brownstone EC, Parc Life EC and upcoming Visionaire EC and Wandervale.
Only 3 per cent (110 units) of some 3,850 non-landed private homes sold by developers since May 25 had indirect discounts, with an average discount of 1.7 per cent of the transacted prices.
These units were from about 14 per cent (18 projects) of the 132 projects that moved stock since May 25, with percentage discounts within some projects varying widely, The Business Times' analysis of developers' new sales data shows.
Legislative amendments requiring housing developers to submit detailed transaction information to the Controller of Housing every week took effect. The data from developers is then published by the Urban Redevelopment Authority (URA).
Besides transacted prices of individual units, developers need to declare the value of any benefits extended to buyers - such as cash rebates, absorption of legal fees or stamp duties, rental guarantees and furniture vouchers - that would have otherwise masked the actual value of the properties sold.
Developers have since late 2013 been asked to provide net prices of units sold in their monthly sales data submission to URA, which used these as more accurate inputs for its price indices, but the unit-level information from developers was not publicly available before June this year.
Savills research head Alan Cheong noted that developers may find it pointless to hand out cash rebates now that these have become public information. "The analogy is that of the traffic police putting up signs along the highway telling drivers to expect a speed camera ahead. Naturally, most alert drivers will slow down," he quipped. "It also highlights that some market watchers may have been barking up the wrong tree, complaining that developers are using carrots to prop up sales prices."
Developers who need to clear their stock urgently to meet Qualifying Certificate (QC) requirements and the Additional Buyer's Stamp Duty (ABSD) are more likely to slash prices directly, industry players note.
And direct price cuts, if any, would have been reflected in the reported transacted prices.
The QC rules require most developers here to pay extension fees for condo units which are not sold within two years from the project completion. Since December 2011, developers have also been required to develop any residential site they acquire, and sell all the units within five years in order to qualify for the remission of ABSD on the land cost.
In the list of projects offering indirect discounts since late May are those that have to be completely sold by 2017 to qualify for the remission of ABSD. This includes Jewel @ Buangkok, The Venue Residences, The Glades and Pollen & Bleu.
But there are also those not affected by the QC or ABSD, such as City Developments Ltd's (CDL) Coco Palms and D'Nest, Keppel Land's Corals at Keppel Bay, and Far East Organi-zation's (FEO) The Seawind.
A Keppel Land spokeswoman told BT that promotional discounts in some projects were given from time to time in the form of cash rebates or direct price discounts. About 38 per cent of the over 70 units sold since May 25 at The Glades - developed by Keppel Land and China Vanke - came with indirect discounts, URA data downloaded on Nov 9 shows. These discounts range from 0.3 per cent to 6.8 per cent of transacted prices.
Singapore Land moved close to half of the 17 units sold at Alex Residences since May 25 with indirect discounts, and half of the 10 units sold at Pollen & Bleu with indirect discounts. MCL Land sold almost one in every five units at Lakeville since May 25 with indirect discounts ranging from 0.2 per cent to 1.6 per cent of the transacted price. A 78-sq m unit on the 12th floor at The Venue Residences by CDL reflected the deepest indirect discount of 18 per cent of transacted value.
Some developers are also dangling rental guarantees to entice buyers, though that remains less common for local residential projects. FEO recently advertised an annual rental guarantee of 6 per cent for two years for a one-bedroom loft apartment at Altez, as well as for one to three-bedroom units at TST.
FEO chief operating officer Shaw Lay See told BT that the group has been offering rental guarantees since 2006 for selected units in some projects such as TST and Altez, given that it has an in-house residential lease management team.
"Through our marketing efforts over the years, we found that investors do not have the time to lease out or manage the tenancy of their apartments that they have bought from us," she said.
According to PropNex CEO Mohammed Ismail, indirect discounts were more popular pre-TDSR. "Right now, with the more stringent loan declaration, it has become more advantageous to have direct discounts," he said. "With a direct price cut, some buyers will also incur a lower ABSD."
While direct price cuts are said to be more prevalent, their actual magnitudes remain fuzzy since the original full price lists are not publicly known to begin with.
CapitaLand recently advertised a "15 per cent discount plus additional discount for selected units" for a limited period at the 1,715-unit d'Leedon - a project that is about 90 per cent sold. Its spokeswoman said the discount mentioned is off the selling price but added that it would not be meaningful to compare prices of units bought at different points in time.
"Developers have to make necessary adjustments in view of the prevailing market conditions," she added. "Furthermore, prices are determined by the specific attributes of the unit, such as facing, storey height, layout, size, etc."
Mr Tan of KF Property Network said he does not foresee huge price cuts next year as developments launched after the implementation of TDSR and ABSD were already priced according to market conditions, though there will still be the occasional "star buy" units in relaunches and new stack releases.
"Developers know that it's a quantum-sensitive market now, so there is no point trying to hoodwink buyers by having a price list and then a discounted list," he explained. "Sophisticated buyers will look at value proposition vis-a-vis resale units in the vicinity."
"There was a season when discounts, rebates and other perks were dangled as carrots to attract buyers. However, these may be relatively passé today," said Tan Tee Khoon, managing director of KF Property Network, a subsidiary of Knight Frank.
"For projects which are launched especially after the imposition of Total Debt Servicing Ratio (TDSR), developers are cognisant of the loan restrictions and slow market sentiment. As such, they would have priced their developments to sell," he noted. "Beyond price, location and product differentiation contribute a major part to the buying decision as well." The Mortgage Servicing Ratio (MSR) is also applicable to executive condo applicant. HDB EC in the market include The Terrace EC, Signature EC, Amore EC, Brownstone EC, Parc Life EC and upcoming Visionaire EC and Wandervale.
Only 3 per cent (110 units) of some 3,850 non-landed private homes sold by developers since May 25 had indirect discounts, with an average discount of 1.7 per cent of the transacted prices.
These units were from about 14 per cent (18 projects) of the 132 projects that moved stock since May 25, with percentage discounts within some projects varying widely, The Business Times' analysis of developers' new sales data shows.
Legislative amendments requiring housing developers to submit detailed transaction information to the Controller of Housing every week took effect. The data from developers is then published by the Urban Redevelopment Authority (URA).
Besides transacted prices of individual units, developers need to declare the value of any benefits extended to buyers - such as cash rebates, absorption of legal fees or stamp duties, rental guarantees and furniture vouchers - that would have otherwise masked the actual value of the properties sold.
Developers have since late 2013 been asked to provide net prices of units sold in their monthly sales data submission to URA, which used these as more accurate inputs for its price indices, but the unit-level information from developers was not publicly available before June this year.
Savills research head Alan Cheong noted that developers may find it pointless to hand out cash rebates now that these have become public information. "The analogy is that of the traffic police putting up signs along the highway telling drivers to expect a speed camera ahead. Naturally, most alert drivers will slow down," he quipped. "It also highlights that some market watchers may have been barking up the wrong tree, complaining that developers are using carrots to prop up sales prices."
Developers who need to clear their stock urgently to meet Qualifying Certificate (QC) requirements and the Additional Buyer's Stamp Duty (ABSD) are more likely to slash prices directly, industry players note.
And direct price cuts, if any, would have been reflected in the reported transacted prices.
The QC rules require most developers here to pay extension fees for condo units which are not sold within two years from the project completion. Since December 2011, developers have also been required to develop any residential site they acquire, and sell all the units within five years in order to qualify for the remission of ABSD on the land cost.
In the list of projects offering indirect discounts since late May are those that have to be completely sold by 2017 to qualify for the remission of ABSD. This includes Jewel @ Buangkok, The Venue Residences, The Glades and Pollen & Bleu.
But there are also those not affected by the QC or ABSD, such as City Developments Ltd's (CDL) Coco Palms and D'Nest, Keppel Land's Corals at Keppel Bay, and Far East Organi-zation's (FEO) The Seawind.
A Keppel Land spokeswoman told BT that promotional discounts in some projects were given from time to time in the form of cash rebates or direct price discounts. About 38 per cent of the over 70 units sold since May 25 at The Glades - developed by Keppel Land and China Vanke - came with indirect discounts, URA data downloaded on Nov 9 shows. These discounts range from 0.3 per cent to 6.8 per cent of transacted prices.
Singapore Land moved close to half of the 17 units sold at Alex Residences since May 25 with indirect discounts, and half of the 10 units sold at Pollen & Bleu with indirect discounts. MCL Land sold almost one in every five units at Lakeville since May 25 with indirect discounts ranging from 0.2 per cent to 1.6 per cent of the transacted price. A 78-sq m unit on the 12th floor at The Venue Residences by CDL reflected the deepest indirect discount of 18 per cent of transacted value.
Some developers are also dangling rental guarantees to entice buyers, though that remains less common for local residential projects. FEO recently advertised an annual rental guarantee of 6 per cent for two years for a one-bedroom loft apartment at Altez, as well as for one to three-bedroom units at TST.
FEO chief operating officer Shaw Lay See told BT that the group has been offering rental guarantees since 2006 for selected units in some projects such as TST and Altez, given that it has an in-house residential lease management team.
"Through our marketing efforts over the years, we found that investors do not have the time to lease out or manage the tenancy of their apartments that they have bought from us," she said.
According to PropNex CEO Mohammed Ismail, indirect discounts were more popular pre-TDSR. "Right now, with the more stringent loan declaration, it has become more advantageous to have direct discounts," he said. "With a direct price cut, some buyers will also incur a lower ABSD."
While direct price cuts are said to be more prevalent, their actual magnitudes remain fuzzy since the original full price lists are not publicly known to begin with.
CapitaLand recently advertised a "15 per cent discount plus additional discount for selected units" for a limited period at the 1,715-unit d'Leedon - a project that is about 90 per cent sold. Its spokeswoman said the discount mentioned is off the selling price but added that it would not be meaningful to compare prices of units bought at different points in time.
"Developers have to make necessary adjustments in view of the prevailing market conditions," she added. "Furthermore, prices are determined by the specific attributes of the unit, such as facing, storey height, layout, size, etc."
Mr Tan of KF Property Network said he does not foresee huge price cuts next year as developments launched after the implementation of TDSR and ABSD were already priced according to market conditions, though there will still be the occasional "star buy" units in relaunches and new stack releases.
"Developers know that it's a quantum-sensitive market now, so there is no point trying to hoodwink buyers by having a price list and then a discounted list," he explained. "Sophisticated buyers will look at value proposition vis-a-vis resale units in the vicinity."