Residential Market News Extract - 4 October 2012

Exec condo market facing potential headwinds

The executive condominium (EC) market is facing a potential supply glut as the government rolls out a record number of EC sites.

A total of 25 EC sites (from both Confirmed and Reserve list) were released to the market via the Government Land Sales (GLS) programme between H1 2010 and H2 2012.

This year, 11 sites were put on the Confirmed List (one site was moved from the Reserve List in H1 2012 to the Confirmed List in H2 2012). The site at Upper Serangoon View/Upper Serangoon Road (developed into Heron Bay) has since been launched for sale.

Of the remaining 10 EC sites, five have been sold and are awaiting developer's sales launch. The remaining five have not been launched yet for sale under the GLS programme, or are waiting for the tender period to close.

Some 5,600 units from these 10 sites are expected to come on stream by end-2013, which translates to an average annual supply of 4,500 units.

By comparison, the average annual supply over the last two years has been about 3,600 units, with average take-up of 3,300 units.

There is also the record allocation of some 27,000 Built-to-Order (BTO) flats to contend with.

That BTO flats are significantly cheaper than EC units - even though both are subject to the same Housing Board rules - may push potential buyers towards BTO flats.

Potential buyers have to fulfil certain criteria, too. For instance, their combined household income must fall below $12,000 and they must be a married Singaporean couple.

The fact that dual ownership of a HDB unit and EC is not allowed also limits the pool of buyers.

Despite these factors, demand for ECs may remain strong based on historical performance.

Eugene Lim, key executive officer at ERA Realty Network, does not expect demand for ECs to fall. Interest in EC sites has been keen following the raising of the income ceiling to $12,000 in August last year, he said.

"EC demand will continue to remain healthy especially after the government increased the allocation limits for second-timer buyers from 5 per cent to 30 per cent of units in the first month of an EC project's launch," said Mr Lim.

Heron Bay offered novel features such as a jacuzzi-cum-pool of up to six metres for some ground floor units. The project in Upper Serangoon View was 4.2 times oversubscribed.

Other examples of projects that have sold well include Esparina Residences, Prive and Riverparc Residences.

Source: Business Times – 5 October 2012

 

Book a home and get a book

Prospective buyers at Heron Bay, an executive condominium (EC) development not only get a tour of the showflat, but come away from that with a paperback too.

The book, with its light brown, textured cover, has sketches of butterflies, dragonflies and dandelions floating in the air on it. Together with the words heron bay river.refine.relax on its cover, it could easily pass for a coffee-table book.

At 140 pages, this marketing brochure for the EC in Upper Serangoon View is believed to be the thickest one around.

Such brochures, distributed to entice buyers and retail information on the project, generally contain a location map, artistic renderings of the facade and other common areas, a list of facilities, the different types of apartments available and their floor plans, specifications on materials used in the units, terms and conditions on the purchase and photographs of the surroundings.

Many brochures, including those produced by other condo developments, become mementos of what is probably one's biggest purchase of a lifetime.

Mr Vincent Ong, managing partner of Evia Real Estate Management, one of Heron Bay's developers, said such hard-copy publications are still a key marketing tool, even in the digital age.

He said most home buyers still prefer printed brochures when it comes to making an investment as big as one's home.

"Comparison of floor plans and simultaneous reference to the site plan simply cannot be done on a digital brochure," he said.

The consortium behind Heron Bay, comprising Ho Lee Group, See Hup Seng, CNH Investment and Evia Real Estate Management, engaged a design firm to produce the brochure for the 394-unit project.

Mr Tiah Nan Chyuan, a director at design firm Farm, said three months went into its production, including research into the wildlife found around the condo site; the National Parks Board and Nature Society were sources of information.

This is how African fountain grass, the flowering Lantana camara, butterflies, ladybugs, the grey heron and collared kingfisher came to feature in the pages.

The brochure also has discount coupons valid in businesses in the area, such as SmileArts dental studio and the restaurant Uncle Leong Seafood.

Evia Real Estate's Mr Ong said: "We wanted a marketing brochure that is not just sleek and glossy; by incorporating a lifestyle guide into the brochure, we hope to give potential buyers a bigger picture of the area where the project is located."

The discount coupons are an invitation to interact with nearby merchants, he added.

Global Property Strategic Alliance, the developer behind Watercolours EC in Pasir Ris, produced not one, but two brochures with starkly different covers - one in black and the other in white - which buyers could choose.

Its spokesman Jeffrey Hong said the two cover designs were a hit with buyers, with the black edition popular among the younger set.

Tew Sun Ne, creative director of Pinkocchio, the design firm behind Watercolours' marketing brochure, said his team would first identify the distinctive qualities of every project, and then visualise, communicate and project these.

"We believe buyers will also retain the brochures for keepsakes," he said.

The marketing brochure for The Centris, a condo above Jurong Point mall, even came with a plastic cover with cut-out handles for portability.

A few years ago, Keppel Land produced a series of magazines for the launch of its Suites at Central. Each magazine featured photos of show suites designed by three personalities. Copies were given away to potential customers, in addition to the usual marketing brochures.

Developers say that because brochures are important sales aids, no expense is spared in producing them.

Two to three copies are needed for every unit up for sale, so a 400-unit condominium project will normally require a print run of 800 to 1,000 copies.

Global Property Strategic Alliance's Mr Hong said some of these publications even go into reprints when the projects have longer sales cycles.

Each brochure may cost $5 to $10 to produce depending on the finishing, print run and number of pages; better-quality ones may cost more.

Although developers are aware that most of these are likely to end up in the bin, they still go ahead and produce them.

Mr Hong said the cost of printing brochures is a relatively small proportion of the total advertising and promotion cost. However, because these brochures can contribute to environmental wastage, some developers go with recycled or other environmentally friendly paper.

Farm's Mr Tiah said: "To give the book a longer lifespan, we added some interesting snippets about the site, such as the nature trails and wildlife, in the hope that clients will keep the book for information sake."

Source: Business Times – 5 October 2012