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New launches same area, lower priced than previous launches? Post-GST ‘trick’?

I always think when market is slow, new launches tend to give prices which are more realistic just to sell faster instead of selling slowly. Well, my friend just spoke to me the other day on two projects by two different developers which is selling their new projects on similar areas at prices which is very slightly below that of earlier launches. Both the developers are pretty well known and I think they would need to get ready some explanations to their buyers of earlier projects. While the type, the density etc are not really exactly the same but if project is by the same developer, in the same area, do you normally launch at prices per sf which is lower than your previous launch 2 years ago? Actually, these are not the only two examples. I think the developers who could not wait are now willing to sell with a lower margin. Thus, this reinforced the idea that for GST next year, even if there are some rumours saying that residential prices will increase, I think it will be easily absorbed by the developers. My earlier article here:  Property prices up due to GST? Developers should just absorb it. Especially if the current situation persists.
Oh yeah, I think the pressure for the higher end units would be higher by one notch soon as well. I read in a report stating that by end of Q4 2014, there would be a total of 4,604 high-end residential units entering the market. They include the following: The Elements (1,040 units) by Elite Forward, Sky Residence-Phase 2: Celesta & Divina (450 units) by SP Setia and Icon Residence (260 units) by Mah Sing Group. I know of one which is a little late, Icon Residence by Mah Sing. I pass it every morning and there was a banner which said that keys would be handed over by August 2014. Well, if it’s within the 3 year building period, I suppose it’s ok. As for The Elements, this is quite a famous project as it was marketed in Penang as well few years ago. How strong would be the holding power of the owners of these 4,604 units? Assuming 50% bought because they wanted to stay, perhaps there are some still good deals for buyers who love the area where these properties are. As for losses, I think not likely because the prices that the first batch of buyers who bought previously is definitely below the current market rate of today. Furthermore, all are by the top developers. Hmm….
Another friend said he will wait a bit more. Just after GST would be the best. I think there are some truths to his belief. Remember, the selling or buying is always based on sentiment or even herd mentality. Suppose the sales continue its downtrend, what do you think will happen when GST starts? Well, there would be lots of articles saying that prices are going up. There would be even more reports about how the lower income group is going to suffer etc. Don’t get me wrong. For those who are feeling the hardship today in terms of prices, come GST, it would not change by a lot. However, the sentiment will turn totally bearish if every newspaper and online media kept reporting on the adverse effects of GST. By then, I think my friend may have a hard time identifying the best and possibly lowest priced property. Note: Only if everything remain as today moving into post-GST months.
written on 10 Nov 2014
Next suggested article: Buying a Property, away from Analysis Paralysis
 

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of kopiandproperty.com He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. kopiandproperty.com is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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0 Responses

  1. I doubt it … most likely it appears to be cheaper … instead it will be at the same price with less deliverables … smaller unit sizes, less facilities, cheaper finishing.

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