In my latest youtube video “What Q3 Property Data Tell Us”, I mentioned that developers are not doing so well after the July cooling measures, even though they learn to face the reality that buyers are limited and start lowering prices at new launch.
How bad are new launches doing?
End of September, Qingjian Realty’s 27 percent sales (330 out of a total of 1,206 units) at JadeScape’s first weekend launch was already considered “strong sales”. Though this was only made possible after drawing a crowd of 9,000 buyers and agents to their six-million-dollar showflat during the preview weekend.
Early this month, CDL’s Whistler Grand only sold 21 percent (150 out of 716 units) in the first weekend of their new launch, despite an attractive price of S$1,380 psf and the psychological pricing of S$1 million for many units.
The sales numbers keep going lower and lower.
Last weekend, SPH and Kajima barely moved 30 units off the shelves for the first weekend launch of The Woodleigh Residences. That is a disappointing sales of 4 percent out of 667 units in the new project.
Honestly, SPH could have easily achieved the sales target of 30 deals through an internal offering – with discounts given to their board members, senior executives and staff in SPH and all the subsidiaries. They can then launch the project to the public and declare that 30 units have already been snapped up even before the official launch.
This not just creates the impression that the project is in demand, but also saves the hassles of spending so much on advertising, rushing to build a presentable sales gallery, and drawing an impressive crowd of 2,000 there at the preview weekend.
Isn’t it a waste of time and resources for the 1,970 property agents, when only 30 customers are actually buying?
By the way, are the 30 buyers who submitted their blank cheques two weeks ago balloting for the queue number to pick from the 50 units, or the chance to buy limited penthouses or ground floor units with PES?
The face-saving article that follows
Nonetheless, it is definitely a draw. At least this is what The Straits Times believes in.
In its follow-up article “Convenient location makes The Woodleigh Residences a draw for home buyers” (The Straits Times, November 11, 2018), the journalist repeated the paper’s usual new launch sales pitch – reasons why the project attracts buyers; how a satisfied developer found the first weekend sales encouraging; interviews with “lucky” buyers at the sales gallery; quotes from upbeat spokespersons from the project’s marketing agents …
The article said the developer launched 50 units earlier on October 27, followed by another 50 units over the weekend “due to good demand”.
It is not about market demand. It is about market confidence.
Selling 30 out of 100 or 667 units shows that there is a lack of demand from the buyers. Releasing units in small batches shows that there is a lack of confidence of the developer.
(Remember my 2014 post “To launch or not to launch, that is the question”? Four years later, developers are playing the same trick again.)
Who can forget the good old days when Hundred Palms Residences, The HIlford, Alexandra Central and J Gateway launched 100 percent of their units and 100 percent sold out on the first day?
Who needs preview, VIP launch, soft launch, official launch, balloting for 50 units … so many time-consuming gimmicks to sell just 30 units?
Who has to spend $2 million on a sales gallery, open for two weekends, and close and re-open again the following year?
Who wants to hold back from selling everything if they can, when they know that more projects are queuing to be launched, and at lower prices for a diminishing pool of buyers?
What are the developers, property agencies and journalists thinking about?
How difficult is it to bite the bullet and admit that initial sales of the project is short of expectation?
Since when developers’ new launches have become the emperor’s new clothes?
Do they really think that the naked truth of poor sales is invisible to everyone?
Are they expecting the public to follow them, act smart and cheer for something non-existing?
Am I stupid if I can’t see anything and yell like a small boy to proclaim that the emperor has no clothes on?
With 2018 drawing to a close, the worst performing new launch of the year is …
And the best face-saving article on first weekend new launch sales goes to …
A lie will fly around the whole world while the truth is getting its boots on.
– Mark Twain
How wrong pricing kills a new launch
We all know that Singaporeans love to buy properties the way the emperor loves to wear new clothes. And both are willing to pay a heavenly price for their desire on earth.
It is irrefutable that many Singaporeans have high liquidity, comparable to the emperor who can afford any expensive new clothes available in the market.
Just look around. We don’t lack buyers who have the need and the money to buy. But we lack buyers who know where and what to buy.
What buyers in their right mind will buy a home near a funeral parlour in Upper Aljunied at over S$2,000 psf in this market?
Can they see that the resale units in nearby condo projects are going for merely S$1,300 psf?
The Woodleigh Residences is composed of two- to four-bedroom units. A two-bedroom unit starts from $1.088 million, while a four-bedroom unit is priced from $2.55 million up.
Developer Kajima and SPH may be overly optimistic to assume that extensive advertising and advertorial in the papers can work wonders.
But they are wrong.
Investors buying their second, third or more private homes have disappeared. First-time buyers are shrinking in number. Buyers of mass market condo projects are the practical and cost-conscious type.
The developer should have followed the nearby newly-released Park Colonial to price at a more affordable level of S$1,600 psf. At least developer Chip Eng Seng managed to sell 65 percent of Park Colonial so far. The project started selling much earlier in July, on the night of July 5 before the cooling measures kicked in.
The swindlers can promise to make the finest new clothes that only clever people can see. They can make the most out of human nature’s greed and vanity.
But after watching the repeated motions of fictitious weaving, there is nothing magnificent produced. Do we dare to confess that we are less intelligent than others, or insist that only smart people know how to appreciate a masterpiece?
Anyway, the sales gallery of The Woodleigh Residences will be closing by next week when school holiday begins. When it reopens in 2019, maybe the developer can consider giving away Chinese New Year hongbaos for Chinese buyers to buy new clothes for the new year. Hopefully, they can move more units before the oversupply floods the market.
Bought your book when it first came out, and refer to it like a bible. Thanks for sharing your thoughts and opinions. When I first read the ST article on Woodleigh, I really felt that they were trying too hard to make it sound optimistic even with horrendous sales.
Hi Tony, I’m so happy that you find my book useful. Readers like you convince me that it’s worth it to spend a year to write a book.
Yes, they are trying too hard. Buyers and readers alike, honesty, credibility and trustworthiness are all what are looking for.
May I know what’s the name of the book?
We are referring to my humble book No BS Guide to Property Investment (http://www.propertyclubsg.com/resources}
I went down to Woodleigh Residence just to take a look two days before the launch day.
The agents actually say that they are releasing 200 over units over the launch weekend.
But of coz we all know that this was changed to “50” units just so that they can report of having 60% sold.
Sigh. Sometimes I wonder whether it is bad communication, white lies or simply lies. Buying a private home is a million-dollar commitment. Yet as the ones footing the bill we can’t even get the developer, their marketing agent or our property agent to share the facts and tell us the truth.
I can assure you that in this case it’s not miscomm. I have the physical brochure copy which marks out specifically which stacks and which level/units are to be launched. and it did numbered over 200.
It’s clearly a face-saving technique for them to be able to say they achieve ~60% (28 out of 50) and that they decide to launch another 50. My guess is that the 28 units were spread out such that they can’t justify that these 28 units were selected based on 50 units released.
Thanks for the additional information.
What a shame for the developer!
Ok lah, ‘sold 31 of the 50 released’. This is not even the official launch, new show flat coming up in 2019..this means we assume the emperor’s clothes are very elegant as the emperor has not even stepped out of the house for all of you to see !!!
Amazing what stories these people can spin.
Nice article, but the general news i gather from the agents around is that the prices are going to go up for all the new developments, specially those around Potong Pasir (Tre Ver) and case in point is that Park Colonial has already increased the prices from Oct 6th.
So how is it that Park Colonial has managed to increase the prices after the launch when they still have about 35% of the units to sell ?
They can lie. But the data won’t. . For actual selling price after hidden discount, we can check the latest transactions published in all major property portals. For actual sales numbers, we can check against URA transactions and squarefoot.com rmonthly eturned units.
I feel ashamed for agents who try to deceive potential buyers with fabricated data and facts. It is downright unpleasant and embarrassing having to face someone who is lying in front of you with eyes wide open.
Many vested parties (agents, media etc) remained extremely silent on this launch flop, pretending that emperor is wearing some beautiful cloths. Why can’t they be honest as the launch results clearly showed market slowing instead of treating everyone as a fool?
We need more honest bloggers like you.
Thanks. Just can’t keep quiet whenever I see fake news, deceiving sales pitches or dishonest salesmen. It is unfair for the good guys when the bad ones continue to damage the reputation of the industry.
If whistler grand (cdl) sells at 1,3xx psf avg, twin view at 1,4xx average and Parc Rivera was sold at 1,2xx average, when the market sinks, it is more likely twin vew buyers sink first, followed by whistler. Parc Rivera looks safest.
WHistler’s developer is cdl whereas twin is China Developers. Twin vew buyers bought because of FOMO and rushed in to purchase 87% of units
Take the basis of 1br cheapest. Whistler is 608 k, twin 650 k and parc R is 550k, when rental market weakens, whistler can drop rent about 8% below twin and Parc R can reduce 18% below twin if all else being equal, for same leverage and Roi.
This shows the importance of timing and result of herd mentality and FOMO. Like articles on this blog demonstrate, sometimes fools rush in and too late to regret.
Private property is a million-dollar purchase. Regardless of buying it for own stay or for investment, buyers should at least check latest transactions of nearby new projects and resale units of existing projects.
Buying a condo unit for investment without first calculating the net rental yield is no different from taking a big ticket item to the cashier without checking the price. It is sad to see amateur investors taking the plunge out of impulse or FOMO, or being influenced by the biased views of their property agent.
Really crazy prices. Cant believe how stratopheric the prices are. Even forest woods in my area was launched only ar 1400psf
Developers have the say to launch their projects at “future prices”. Whether they can sell the units, or sell all of them before the 5-year timeline is their business. As buyers, we don’t have to follow suit to buy at sky-high prices. Let’s sit back and watch the show.
If one observes, the new launches (affinity and gardens) were looking at 1,700 psf in June. Today, you see caveats of 1,500 to 1,600 psf for affinity with units moving, meaning prices have come down. Gardens are practically not moving.at 1600 to 1,700 psf.
Does it pay to jump in because of FOMO?
I agree that sometimes fools rush in and regret. There is a belief that the better deals are left behind, therefore why rush in?
Yes, developers will definitely lower prices to clear stocks in a slow market, without informing or refunding early bird buyers who bought higher.
There is a belief “save the best for last” in the industry. Because if the developers can sell those undesirable units first to those who are keen, they can definitely sell the good ones later.
Yes, the early birds catch the lower floor at higher price because FOMO. The late birds are smarter, they get higher floor and lower price, because thy can avoid herd mentality.
Don’t be swayed by agents as they are not going to compensate you for your losses, all they want is transaction, as one agent in condosingapore blog puts it ‘they say all agents the same but who cares, it is some cents in my pocket’ .
Sad but those weak mental ones are often swayed by the music.
Why we just cannot believe what they say:
Colliers said that the best-selling private residential projects in October were: Affinity at Serangoon which shifted 81 units at a median price of SGD1,499 psf; Stirling Residences which sold 75 units at a median price of SGD 1,738 psf; Riverfront Residences transacted 55 units at a median price of SGD 1,327 psf; and Park Colonial moved 52 units at a median price of SGD 1,754 psf.
http://finance.theindependent.sg/new-private-homes-sales-data-shows-market-recovery-may-be-short-lived/
Affinity at serangoon only moved 31 units but have 7 units returned
Stirling residences have 43 units returned out of 89 shifted in Oct
Riverfront moved 56 units of which 15 are returned
Park Colonial moved 80 units but have 30 returned
http://www.squarefoot.com.sg/market-watch/returned-units?t=201810
There’s an obvious discrepancy….am i missing something? What went wrong?
There are two possible reasons for the big discrepancy between what developers claimed they have sold and how many are actually sold:
1) There are really that many impulsive buyers who either regret after placing a deposit at the sales gallery or cannot get the financing they need; and
2) Developers are blowing their own trumpet and plucking sales numbers out of the air for an impressive first weekend sales report in the media.
Either way, there is no need to take it too seriously for whatever property news the local papers or property portals said these days.
Went with an agent. ‘This condo has no tennis court ‘. Agent said ‘do you play tennis?’.
Went to another show flat with tennis court, Agent said ‘these days very hard to find development with tennis court, full condo facilities’
I said ‘rental these days cannot even cover mortgage’, agent said ‘don’t look at rental, look at capital appreciation,
I said ‘looking at recent data, capital appreciation of resale also not there’, agent said ‘that’s why people now dump residential and plunge into commercial’
In conclusion, flip here flop there, I have an answer for every scenario, just do some transaction with me.
Agents have to sell in order to make their commission. So there is no need to tell the agent what exactly is on your mind. Just ask the few key questions about the seller (reason for selling, last offer, etc.) will do. The rest of the information we can always check online or offline on our own.
How would you define what a “successful” launch is ? For example, do you gauge what % of total units should be sold on launch weekend ? I’m only asking because I though “CDL’s Whistler Grand sold 21 percent (150 out of 716 units) in the first weekend of their new launch” is pretty good…. isn’t it ?
What about J Gateway, Alexandra Central, Hundred Palms Residences, The Hillford, etc. that were 100 percent fully sold on the first day? What about new projects launched before the new cooling measures that were easily 70 to 80 percent sold on the first weekend? Of course, if you are not so particular, 10 to 20 percent sold the first weekend could be considered not too bad these days. The question is when the developers can clear the rest of the 80 to 90 percent units.