Friday, November 14, 2008

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River Valley condo Luma relaunches with prices halved

Units going for $1,450 psf, down from $2,800 psf at launch last year

The big property sale has begun. Prices have been slashed by half at Luma, a 75-unit freehold luxury condominium at River Valley Grove. Relaunching this weekend, units at Luma are being offered at $1,450 per square foot, down almost 50% from $2,800 psf when it was first launched last year. The relaunch of Luma at halved priced is believed to be the first among luxury condominiums.

SISV-Realink data shows two units on the 25th floor changed hands at $2,837 psf and $2,586 psf in April this year. These prices were already much lower than those for two units on the 20th and 26th floors, which went for $3,349 psf and $3,291 psf in August 2007. At that time when the property market was feverish, some people even speculated that prices could reach $4,000 psf.

Luma (which will be completed in 2011) has three units on each floor, ranging from 743 sq feet to 1,173 sq feet. The developer behind the project is the mid-sized Novelty Group. Luma sits on an en-bloc site at St Thomas Walk which Novelty bought in 2006 for $76.5 million, or about $810 psf of potential gross floor area. The Novelty Group also bought White House Park Apartments in Stevens Road for $22 million from Asia General Holdings. It also has developments in Pasir Panjang, Geylang, Yio Chu Kang and Pasir Ris.

Nicholas Mak, director of research and consultancy at Knight Frank, said more of the smaller developers could be relaunching at lower prices. 'The bigger ones are discreetly offering soft discounts, such as lifestyle vouchers,' he said. 'I think the chief aim is to move units, to increase sales. They've probably done their sums - they expect to do a level of sales to achieve breakeven point, which will lower their borrowings and feel more comfortable,' Mr Mak added.

Banks are probably repricing loans, and some developers especially the smaller ones that have revolving facilities or variable-rate loans may feel the pinch.

Comments on the above article extracted from the Singapore Property Forum:
"WOW! Cheap Sale!"

"If you look in terms of % drop is WOW but if you look in terms of returns, it's not so WOW .. URA data shows rental rate is about $4 psf for river valley area like Aspen Ht, Valley Park, .. even at halved price, rental yield works out to be only 2% lah.. for such a high risk?!"

"it just goes to show how over-valued spore property is"

"Luma today relaunch at half the price....Hahaha! What do you think the price of condo around that area now? it will be around $1400 in no time.....You think buyers stupid is it? Novelty is droping price becasue they have at least 6 other developments haven't sell or not selling well. Do you think he can hold all these units....through the crisis? That's why. You will see another developer doing the same in the next couple of days and next follow suit...... then, afterthat, owners will have no choice but to follow.....that is how the market will crash! Hahahaha! "

"Lol.. You sound really happy.. And how will that benefits you? Or did you had beer.."

"I am happy because I live in a hdb. I'm always an advocate of prudency. I think buying a condo is like buying a Ferrari. Will you burn your money like buying and depreciating a Ferrari? Singaporean have such a liking for condo that he don't mind burning away hard earn money into something that really make no sense compared to a hdb. If he is a businessman making lots of money.....I agree. But most of the S'porean who buy condo are wage earner. They don't know how to invest other than buying property. They will end up working for 3 persons in their whole life: Bank, govt and boss. Their life revolve around working, pay loan and working harder. In crisis time, they might not even keep their jobs. Even dbs is axing people. Rich man make the money FIRST, then spend. Poor man spend the money first, then try to make payment. Singaporean will wake up one day, just like how the American woke up 2 months ago."

"moron, this is marketng gimmick & a irresponsible small company selling.
They bought the land at $800 psf, development cost of $500 psf, they are still making money at $1500 psf.
This is just a blood-suc-ker company, should let them bankrupt.
What so good about River Valley area? walking distance no ammenity, no MRT, in/out of ERP, bad traffic, no good school, no big megamall, no sport hub....."

"but once upon a time during the boom, morons were even thinking about paying $4000 psf for it ... now both bulls and bears can see how over-valued property has become with all the speculation ... even at $1500psf your return is only at about 2% lah."

May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase


Anonymous said...

Just to share some similar news from Dubai...

Prices fall up to 50% in prestigious Dubai development


Burj Dubai sees prices being halved

Property prices in one of Dubai's prestigious developments have fallen by as much as 50% according to real estate brokers.
Prices in Downtown Burj Dubai, Emaar Properties' flagship development, have fallen at least 22%, while prices in the Burj Dubai tower itself have tumbled as much as 50%.
Brokers said Downtown Burj Dubai had seen some of the biggest price drops in Dubai because prices had previously risen so quickly.
'Downtown Burj Dubai had quite a sharp spike in pricing. Anything that has a sharp spike is open to a correction if the market slows,' said Vincent Easton, head of sales at Sherwood property consultants in Dubai.

Anonymous said...

this is only the beginning of the Great Singapore Sales .. it's a long way down to go from here

Anonymous said...

Apart from the serious overhanging supply situation, the grossly overpriced properties here and looming corporate failures/layoffs in Singapore, we have major problems of deferred payment schemes (no sympathy for the rich speculators who are waiting for better market sentiment to cash in, government support, to rent and obtain financing when TOP). Recent condominium projects are poorly designed and crowded with bay windows/planter boxes features exploited by local developers in Singapore. No sound mind would take a big commitment to buy now at this time until private condos are better designed and spaced, market less prone to speculation and more affordable. Otherwise, let us as Singaporeans be contended and stay in HDB (some HDB living condition are spacious and at par and more convenient than condos) There is no need to aspire to own private properties or speculate. Be simple and contended.

Leroy said...

Dear Smart Buyer,

I love reading your blog. I think you have made many people wiser, more patient and less gullible. And this save their ass from working for the rest of their life paying for loans on overpriced property purchase (probably saved mine too!).

Anyway, just to share another price of news(below) from Japan on developers going bust leading to falling property prices.

I think we should look into financial health of some of our developers here. Have they screwed up in US, UK or elsewhere already? And which project/s are linked to them in Singapore?

Any expert in this field on this blog?


Property prices in Japan fall as more real estate businesses go bust


Property prices in Japan are continuing to fall in price with the retail sector particularly badly hit amid signs that developers are now struggling.

The latest monthly figures show total annual returns in the commercial sector down 0.9% while retail property fell 4% in a year. The residential market fared slightly better, falling 1.3%.

The worsening figures come as developers and contractors reveal that they are now struggling with the financial downturn.

The latest figures from the Real Estate Economic Institute show that there are now just 203 real estate developers compared with 547 in 1995. And between January and September this year 425 real estate companies have gone out of business.

'The current bankruptcies have only just begun. There will be more and more,' said Akio Fukada, head of planning and research at the institute.

One Japanese contractor, Kajima, is pulling out of the UK after racking up huge losses on public funded contracts. It has posted losses of £124m in three years.

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