A growing trend has been observed by experts in Singapore for the past couple of years. It shows that developers in the city-state have somewhat slowed down in their land buying spree and are now more concerned in selling existing development projects.
Real estate property market analysts have discovered that unlike in the past, buyers seem to stay away from en bloc residential projects costing around $1 billion. According to Bloomberg, this can be attributed to the present volatility of the market in the Lion City.
ZACD Group executive director Nicholas Mak is aware of the market sentiment and also agrees with the findings. He said that at present, it may be difficult for developers to sell billion-dollar en bloc projects. This is perhaps why even developers themselves have started to put future big projects in the backburner and instead focused on disposing their existing projects.
Mak pointed out to Horizon Towers as an example. The property is a 99-year leasehold residential development near the popular shopping belt in Orchard Road. After a couple of failed attempts to secure buyers for the $1.6 billion property, it was re-launched last week for collective sale.
The 211-unit condominium, which was built in 1984 on Leonie Hill, was first offered for sale a decade ago for $500 million. However, the deal was scrapped after a Singapore court ruled that there was improper handling of the en bloc process.
On July 5 last year, developers of the project attempted another collective sale. However, the development project once again failed to secure a buyer even though the closing date of the tender was extended from August 7 to September 12. Property experts opine that it could be due to the new property cooling measures implemented by the government.
The day after the tender was launched, government authorities of Singapore increased the fees for Additional Buyer’s Stamp Duty or ABSD. The Singaporean government also tightened loan-to-value limits for those purchasing private homes. While the development project itself looks promising, the tender launch is seen by most as ill-timed.
The market sentiment was further dampened by the new higher average unit size of non-landed residential development outside the central region of Singapore. The new rule calls for each unit to only have 85 sq m or 100 sq m in area size.
The new policy, which took effect on January 17 2019, will limit the number of shoebox residential apartments, as well as decrease the maximum number of developers who are allowed to develop in a single project by as much as 18%. Another financial and property expert, Derek Tan of the DBS group, said that with the government putting in place more restrictive measures to cap both supply and demand, developers should now set their eyes on clearing their inventories instead of having more projects. If they fail to do this, they might end up with several multi-million properties without a single buyer.