Developer delays launch of condo
CapitaLand wants to watch impact of loan curbs
Buying interest in residential property has been hammered so badly that one major developer has delayed a planned condominium launch.
Heavyweight CapitaLand yesterday said it has postponed the launch of its project in Marine Parade originally slated for late last year.
The launch will now be at an unspecified time this year after tighter loan rules known as the total debt servicing ratio (TDSR) hit the market last year.
Mr Wong Heang Fine, chief executive of CapitaLand Residential Singapore, said at the firm’s full-year results briefing at Capital Tower: “For Marine Parade, we have started construction. We decided to delay the launch to this year… Last year the TDSR came out in June, so we want to watch the response.” The TDSR caps a borrower’s total debt repayments at 60 per cent of gross monthly income, hitting a buyer’s ability to afford a property.
Mr Wong’s comments came after the firm announced last April it planned to launch the mid-tier Marine Parade project in the later part of last year. The unnamed development is near the Parkway Parade shopping mall and will have 124 units.
Other projects that are slated for launch this year include the firm’s landed housing development in Coronation Road and an Iskandar condo development in Danga Bay, Johor, said CapitaLand.
Market watchers noted that developers with strong balance sheets are able to hold on to their land parcels until the market strengthens.
But players that acquired land through the Government Land Sales programme might not have the luxury of time as they could be penalised if they do not sell out their units within five years from the award of the land tender.
Developers have been struggling with the sluggish market since loan curbs hit the affordability of private homes. This prompted real estate veteran Kwek Leng Beng earlier this month to call on the Government to review some of its property market cooling measures, as home sales and prices fall.
CapitaLand still has 327 out of 509 units unsold at its project Sky Habitat in Bishan, according to data from the Urban Redevelopment Authority released this week. Mr Wong said the firm plans to follow up with new launches for Sky Habitat this year.
The firm also has 278 units unsold at its 1,715-unit d’Leedon project in Leedon Road, 186 at the 1,040-unit The Interlace in Alexandra Road and 213 at the 694-unit Sky Vue in Bishan.
If developers want to sell units faster under the sluggish market conditions, they must demonstrate that they are willing to price their projects reasonably and accept lower profit margins, said Century 21 chief executive Ku Swee Yong.
“It depends if their intention is to clear stock or sell units slowly,” he said. “Sometimes there are different shareholders for the projects, so that might prevent them from dropping prices too.”
Although the cooling measures have been successful in placing a lid on red-hot demand, Mr Wen Khai Meng, chief executive of CapitaLand Singapore, also told the briefing that the firm hopes the timeframe given to developers to sell units can be relaxed. “It will be good so that the market can be given room to adjust demand and supply to reach an equilibrium without the risk of having wild swings in prices.”
Residential properties in Singapore constitute less than 10 per cent of CapitaLand’s portfolio.
Mr Lim Ming Yan, president and group chief executive of CapitaLand, said: “Although we have a small exposure relative to many of our peers, if the Government should remove some of the measures, a lot of people will stand to benefit from that.”
He also noted that the Government will always formulate its policies in response to the market.
“If market conditions should become more challenging, I suppose the Government will always take that into consideration on whether they want to lift the measures or not.