Saturday, July 5, 2008

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Livia Condominium Launch starts Price War

Here's the headline:

CDL opens Livia condo at Pasir Ris for preview - Business Times, 4 Jul 2008
Initial units are priced at $650 psf on average;
Kovan Residences launched
CITY Developments Ltd (CDL) has begun to preview its much-awaited Livia condo at Pasir Ris at an average price of about $650 psf for the initial batch of units, BT understands. "
And next to Kovan MRT Station, the 512-unit Kovan Residences is being soft launched today and the average price is said to be $870 psf. Both projects are 99-year leasehold.

Here's the forum exchanges extracted from Singapore Property Forum on whether the Livia Condominium launch may be the beginning of a price war among developers :

"To all buyers out there, the ball is in your court .....market is already adjusting to $650 psf average. Buyers have the upper hand, when there is little sales....developer have no choice but to start dropping their prices. It will soon drop to below $600 psf. To all the buyers out there it's your choice.....you can make or break a deal"

"It's the beginning of the end of the property boom, soon the developer will start a price war to attract more buyers.....and the only way to go is to cut the prices down."

"Nah ! Its the beginning of an eventual collapse in Singapore property market. Now they launching at $650psf...Soon another condo will launch at below S$600psf. I can guarantee anyone here, the various developers will not be able to sell all the units which they launch this year. Some will be KIV forward...and usually leftover items will be sold at 'CHEAP SALE'. This is my past experience been in the property market for over 15 years. No buyer wants to buy leftover items. Its common sense. Just watch and see ! The property doom is shaping now perfectly. I suspect this year property crash will be worst than in 1998. As Warren Buffett and Jim Rogers, George Soros all said, 'Everyone seem to underestimate the impact of the sub-prime crisis on the global economy.'. Soon we will see the real impact reaching our shores. "

"Furthermore it's only 99 LH, it should not command more than $600 psf. Below $600 psf......then it's worth considering. "

"Yes, I share the same view....it will be a great buy ..if it is below $600 psf"

"In fact, develop is pissing now, that is way they have to lower price to move unit. If they think property will increase in price due to inflation, why would they lower price now. Inflation will set the economy in tailspin. the entire economy will collapse. who would want to buy property. especially now is stagflation now inflation."

"With more than 60,000 private condo in the pipeline....no worries...Developer will soon start a price war, and the only way to go is to drop their price. "

"When the price is right .....definitely it will attract buyers. I was at the showroom this evening it was jam pack with buyers. Which simply conclude that all other developer have to follow in Livia footstep....you put a reasonable price you will get buyers. As have been mentioned before...it will be a price war....the lower you go the more buyers you will attract....simple logic. Soon other new condo launches have to lower down their asking price. It's a pity for those stuck with their condo at the peak ....looks like they can never compete with the new developer price. Re-saler are doomed"

"The Price war has begun Waterfront Waves new release from $694 psf Straits Times July 5th Check URA transaction Average more than $800 psf, Apr 08 $909 psf Waterfront Waves owners will be piss off....."

"Called Park Central, the project will have more than 550 units and comes under the HDB's Design, Build and Sell Scheme (DBSS). A market watcher said the firm will have to launch it below the prices of the previous DBSS project in Boon Keng. 'They will have to learn from the Boon Keng project, which still has leftover units. When it was launched, many people came but not all later bought,' he said. The 714-unit City View@Boon Keng, which was launched in January, had 474 five-room flats priced from $536,000 to $727,000, a range that some considered too high"

"Looks like the developer is starting to lower their asking price....more developer will follow......Buyers Galore...."

"As a buyer waiting on the sideline, I'm not one bit excited over the 10% fall in prices of recent 99 LH condo launches. At $700 psf to $900 psf for 99 LH condos with high risk of capital depreciation, prices are still too high for the value of the properties. Developers are just trying to bring back the buyers, so are the property agents, who will now tell you that prices won't go lower. I don't accept this and I urge buyers not to give in to this kind of selling pressure either. It's clear that if buyers continue to hold, prices will just have to continue to fall. "

"Like the following report:

S'pore's property boom cooling: analysts Sun, Jul 06, 2008 AFP
Property analysts say prices are likely to fall further in the third quarter but experts rule out massive declines because of the multiplier effect from two multi-billion-dollar gaming resorts now under construction.

they're going to sell you the IRs dream again but the reality is if economy goes bad, IRs will be a very big nightmare. If if prices have moderated, I'd want to wait for the economic dark clouds to clear first. It's still looking very uncertain now. "

About rising construction costs resulting in higher property prices, arguments are:

"Prices of property are not determined by construction costs. Fundamentally it is determined by demand and supply."

"dont ever think that the supporting property price is construction cost + land cost. If the economy turns sour, even lower than cost (construction + land) also must launch in order not to buckle under the holding cost. Interest + depreciation. the interest will have to move up to stop the inflation, when people lose confidence in holding on to the paper currency, that is the end of the world. fincancial panic everywhere, back to barter trade, by then only food is the only asset, home, property will be dumped."


May also want to read:
History of Singapore Property 1960 to 2008
Buy or Not Buy: How to decide amid mixed market signals
When to Buy, When Not to by
Property Price Index Graph Plotter & Online Property Valuation
Your Property Investment Determines Your Financial Success in Your Life
HDB Resales: West Sees Highest Price Increase

3 comments:

Anonymous said...

what do you think is a good price psf for a private property on the east Cost katong/amber gardens area?

Smart Property Buyer said...

Dear Anonymous,
As an indicator, here are some old transaction records for Amber Garden and Katong:
(The last 2 numbers represent the price in $psf and date of transaction respectively).

AMBER GARDENS Condominium KING'S MANSION 168 1000000 552.99 01-Dec-01
AMBER GARDENS Condominium AMBERGLADES 114 670000 546.01 01-Dec-01
AMBER GARDENS Condominium KING'S MANSION 168 845000 467.28 01-Dec-01
AMBER GARDENS Apartment MARYLAND POINT 152 750000 458.4 01-Dec-01
AMBER GARDENS Apartment MARYLAND POINT 152 810000 495.08 01-Nov-01
AMBER GARDENS Apartment MARYLAND POINT 152 830000 507.3 01-Nov-01
AMBER GARDENS Apartment MARYLAND POINT 152 845000 516.47 01-Oct-01
AMBER GARDENS Apartment MARYLAND PARK 149 950000 592.33 01-Sep-01
AMBER GARDENS Apartment MARYLAND POINT 152 1010000 617.32 01-Sep-01
AMBER GARDENS Apartment MARYLAND PARK 152 800000 488.96 01-Aug-01
AMBER GARDENS Condominium AMBER PARK 162 1178000 675.55 01-Aug-01
AMBER GARDENS Condominium AMBER PARK 162 910000 521.86 01-Aug-01
AMBER GARDENS Condominium AMBER PARK 162 1030000 590.68 01-Aug-01
AMBER GARDENS Apartment MARYLAND POINT 152 1000080 611.25 01-Jul-01
AMBER GARDENS Apartment MARYLAND PARK 149 830000 517.51 01-Jul-01
AMBER GARDENS Condominium AMBER PARK 162 960000 550.54 01-Jul-01
AMBER GARDENS Condominium AMBER PARK 162 1110000 636.56 01-Jun-01
AMBER GARDENS Apartment MARYLAND PARK 152 835000 510.36 01-Jun-01

KING'S MANSION Condominium 437 Tanjong Katong Road 15 149 780000 486.34 10-Oct-03
KING'S MANSION Condominium 437 Tanjong Katong Road 15 149 720000 448.93 29-Sep-03
KING'S MANSION Condominium 437 Tanjong Katong Road 15 149 811899 506.23 17-Sep-03
KING'S MANSION Condominium TANJONG KATONG ROAD 149 870000 542.45 02-Sep-02
KING'S MANSION Condominium TANJONG KATONG ROAD 149 860000 536.22 02-Apr-02
KING'S MANSION Condominium TANJONG KATONG ROAD 149 800000 498.81 02-Mar-02
ARTHUR ROAD Condominium KATONG PARK TOWERS 387 1100000 264.07 01-Nov-01
ARTHUR ROAD Condominium KATONG PARK TOWERS 199 623000 290.85 01-Aug-01
ARTHUR ROAD Condominium KATONG PARK TOWERS 199 630000 294.12 01-Jul-01
ARTHUR ROAD Condominium KATONG PARK TOWERS 197 730000 344.26 01-Jul-01
TEMBELING ROAD Condominium KATONG GARDENS 119 710000 554.3 01-Jun-01
KING~S MANSION Condominium TANJONG KATONG ROAD 149 923000 575.5 01-Feb-01
SANCTUARY GREEN CONDOMINIUM TANJONG KATONG RD 15 77 771200 930.48 01-Jun-00
SANCTUARY GREEN CONDOMINIUM TANJONG KATONG RD 15 111 900600 753.77 01-Feb-00
SANCTUARY GREEN CONDOMINIUM TANJONG KATONG RD 15 88 694800 733.51 01-Feb-00
SANCTUARY GREEN CONDOMINIUM TANJONG KATONG RD 15 73 646800 823.15 01-Feb-00
KING'S MANSION CONDOMINIUM TANJONG KATONG RD 15 149 915000 570.51 01-Jan-00

You can find latest transaction on URA site.

Smart Property Buyer said...

Personally, I'm not at all excited by the 10% or so fall in prices during the recent condo launches. For one that has reasonably attractive location, we're still looking at $700-$900 psf for a 99 LH. On top of the general risks of property investment, the high risk of capital deprecation for 99 LH property is very great and must be justified with much lower prices like $600 - $500psf.

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