TLDR
The Singapore property market for new condo launches in 2023 saw varying degrees of success. Factors like limited competition, optimized unit mix, bold pricing strategies, explosive regional demand, and timing relative to cooling measures all played crucial roles. The popularity of smaller one-bedroom units, unique pricing strategies, and pent-up demand in certain areas significantly influenced sales. Understanding these dynamics can help buyers and sellers navigate the market effectively.
In today’s housing market, it’s pretty tough for first-time buyers and those looking to upgrade their HDB flats. Despite this, some new condo launches are hitting it out of the park with impressive sales. Sure, pricing and buyer attitudes play a big role in driving success, but there’s more to the story. There are other, less obvious factors that can seriously affect how well a condo sells.
So, what’s the secret sauce? What makes these newly minted condos stand out from the pack, particularly in 2023, when many others like The Continuum and Pine Tree Hill haven’t fared as well? Let’s peel back the curtain and explore some surprising reasons why particular new launch condos are thriving in a sluggish market.
Some folks might argue that J’den faced a rival in the form of Lake Garden Residences, which launched earlier this year. However, despite their close quarters, there’s no real overlap between these two properties.
Lake Garden Residences is strategically situated away from the hustle and bustle, leveraging its nearness to Jurong Lake District parks, hence its name. On the other hand, J’den isn’t just a stone’s throw away from major shopping centers and the MRT station but is a mall itself, having been transformed from the former J’cube shopping center.
For those who gave resale a thought, there were only two other options in the nearby vicinity: Ivory Heights, a much older establishment built in 1993 and lacks any commercial aspects, and J Gateway, which was finalized in 2016. J Gateway might seem like the closest contestant, but one aged condominium doesn’t quite make for intense competition.
Meanwhile, over on Singapore’s east end, fresh property launches like Tembusu Grand, The Continuum, and Grand Dunman received a more lukewarm reception. The Continuum only managed to sell about 23 percent of its units at launch, while the other two condos barely sold more than half their units, which was considered pretty decent at that time. This was partially due to all three projects being launched around the same time and sharing a similar location.
A similar situation occurred in the Holland area where seven new property launches took place almost simultaneously. Unlike other parts of Singapore where new property launches were selling like hotcakes during the same period, the abundance here meant some establishments had to lower their prices to sell units. That being said, it’s noteworthy to mention that most of these properties are nearly sold out as of now in 2024.
In a nutshell, when it comes to condominium sales, the smaller one-bedroom units are usually the first ones off the shelf. Even with an average price of $2,100 per square foot, a compact 500 square foot unit barely crosses the $1 million mark making them an attractive investment. These units often attract investors looking to expand their property portfolio, or well-off singles buying their first home.
On the flip side, the priciest and largest units, like five-bedroom or penthouse suites located on higher floors, typically take more time to sell. This trend suggests that condos with a higher ratio of small units tend to do better during initial launch periods.
Let’s consider The Continuum as an example. It’s a new project that’s been moving at a slow pace, with a current occupancy rate of only about 33%. Out of its 816 units, just 68 are one-bedroom units. Most of the units are three-bedroom ones, accounting for 224 out of the total available units, with another 72 being 3+1 layouts. These units vary in size from 872 square feet to 1,087 square feet and have an average price above $2,700 per square foot, which makes them more challenging to sell.
Contrast this scenario with a launch back in February 2020, when Covid was just emerging as a significant economic threat. Despite the circumstances, The M at Middle Road managed to sell 70% of its units at launch, priced at $2,450 per square foot, which was considered high by that year’s standards.
The successful sales can be attributed to its unit distribution. 144 out of its 522 units were variations of one-bedroom units, with sizes ranging from 409 to 495 square feet. An equal number of units were two-bedroom ones, with sizes between 592 and 667 square feet. Since over half of the units at The M were smaller one and two-bedroom ones with a lower price quantum, they became an easy sell at launch.
This pattern is also visible in situations where a mismatch in unit mix results in sluggish sales. This was evident at RoyalGreen, where the larger four-bedroom units sold out first, leaving the smaller ones unsold even after project completion. This trend was confirmed by the recent successful launch of Watten House, located in the same vicinity and offering three-bedroom units and larger. Despite its launch timing, Watten House did well, highlighting the demand for larger units in that area.
Scoring a significant deal can be like finding a needle in a haystack. These juicy offers are rarely broadcasted and often as fleeting as a shooting star, lasting only during an exclusive phase. Yet, some property developers don’t shy away from this loss-leader approach, even if the sole aim is to boast impressive launch weekend figures.
We’ve spotted unique incentives such as “one price fits all floors” deals, where a high-rise apartment could cost the same as a mid-level one. Or even a temporary waiver of added charges for superior views, private elevators, and so forth.
Now, these special deals can be a magnet for risk-loving investors who buy property at a bargain, only to flip it after a short four-year period once they’re clear of the Sellers Stamp Duty (SSD).
However, it’s not all sunshine and rainbows. The uncertainty remains that the developer might slash prices further down the line. You can get the full lowdown on the tactic here. Nevertheless, there’s no arguing that word of a steal travels at warp speed, encouraging buyers to quickly write a cheque while the offer is still “hot.”
This rush can paint a misleading picture of triumph. Launch reports may fail to mention that the success was spurred by transient price reductions for premium units or brief offers to shift less appealing floor plans.
In the property realm, when there haven’t been any new developments in a location for a significant amount of time, we often talk about pent-up demand. This simply means folks who’ve been hoping to live in that particular area haven’t had many choices and are likely to jump at the first opportunity that comes their way.
Take the case of Amo Residence. It was nearly sold out (98% to be exact) when it hit the market. This was quite a spectacle, considering it was the first development to launch since 2014. So, when it did finally launch in July 2022, people were quick to purchase, making it a record-breaking event.
But, before we get carried away, let’s not forget that these factors don’t always secure a win. Not convinced? Consider Pinetree Hill at Pine Grove. It was the neighbourhood’s first major development in over a decade. But, despite this, the sales have been underwhelming since its launch. However, slow sales don’t necessarily spell doom for a project’s potential. There could be other reasons behind the disappointing performance, showing just how intricate property market dynamics can be.
Developers aren’t exactly thrilled when cooling measures roll out around the same time as their property launches. The market, being a sensitive beast, usually reacts with a sudden pullback – the infamous “wait-and-see” approach. In layman’s terms, buyers play the waiting game to check if prices will dip and then decide to buy later.
Take for instance the recent scenario where CDL decided to hit pause on the preview of Newport Residences, thanks to the new cooling measures. The major reason? The hefty 60% ABSD slapped on foreign buyers that could potentially make the buyer pool shallower – especially since rich foreigners are a significant player in the luxury segment.
Interestingly though, it’s not hard to find stories of condos doing just fine even when they launch near cooling measures. It’s almost like the developer flexing their muscles, implying that their project is so top-notch that even higher ABSD or loan restrictions can’t scare off buyers. Naturally, developers love to publicize such wins while keeping hush about delayed launches or sluggish sales.
We’ve also noticed that many condos initially suffered poor sales due to launching near new cooling measures, but later picked up steam. Hence, don’t write off a condo just because of a slow start; it might be more about bad timing than anything else.
If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?
It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.
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