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Property launches in Singapore pick up amid muted demand

Analyst Lee Nai Jia thinks buyers will still go for "value buy" units of S$1.5 million and below, as constraints such as the Total Debt Servicing Ratio are still in play. 

SINGAPORE: Developers are starting to launch new projects in Singapore, following a quiet start to 2016. And while there is an underlying demand for homes, one analyst said developers must keep prices relatively low to attract buyers.

CapitaLand’s Cairnhill Nine is one of the latest projects to be unveiled on Tuesday (Feb 23). The integrated development, a 268-unit residential tower, is part of the same complex as the Ascott Orchard Singapore, a 220-unit serviced residence slated to open early 2017.

It will be the first residential project to be launched in the Orchard Road area in nearly three years, according to CapitaLand.

Other recent launches include Wandervale, an executive condominium in Choa Chu Kang, which saw strong crowds at its showroom over the weekend.

The starting prices for Cairnhill Nine range from S$1.35 million for a one-bedroom apartment to S$6.67 million for the most expensive penthouse. The average indicative price is S$2,500 dollars per square foot.

Despite a relatively quiet start for new developments this year, CapitaLand is confident the premium location and relatively low prices will draw interest.

"Cairnhill Nine is a very well-located project in the heart of Orchard Road,” said Mr Wen Khai Meng, CapitaLand Singapore CEO. “It's also very attractively priced with about 90 per cent of the units S$3 million and below, and about 50 per cent S$2 million and below.

“Given that there's not been any new condominiums in Orchard Road in the last three years, we are confident of a very good response to this project."

HOMING IN ON VALUE BUYS

Property research firm DTZ said property measures such as the Additional Buyer's Stamp Duty (ABSD) have put a cap on prices, while potential property buyers have also become more selective.

"Generally there is still quite a substantial demand from potential buyers, it's just that there are sort of constrained by the TDSR (Total Debt Servicing Ratio) and ABSD,” said Dr Lee Nai Jia, head of research for Singapore at DTZ. “And in these later years, the ABSD - when it’s going to be lifted - is the main thing on most buyers' minds, because it is still quite substantial.

“So what we are seeing, at least from 2015, is buyers going for units of lower quantum, usually of S$1.5 million and below. And they usually go for value buys or value offerings when the project is close to amenities, MRT stations.”