Singapore cooling: Discounts offered but raises concerns

By Romesh Navaratnarajah: Some property developers are providing "incentives" to home buyers in response to the government's latest round of cooling measures which is expected to hit the market hard.

For instance, Frasers Centrepoint Homes announced that it will be offering discounts to buyers of Q Bay Residences, a new condominium development launching in Tampines this weekend. The project is being jointly developed by Frasers Centrepoint, Far East Organization and Sekisui House.

In a statement to PropertyGuru, Cheang Kok Kheong, Chief Executive Officer, Frasers Centrepoint Homes, said: "We are offering a stamp duty discount of 5% to 7% to all buyers of Q Bay Residences."

The project is the first to launch since property curbs were announced on January 11. Averaging S$985 psf, prices range from S$525,000 for a one-bedroom unit to S$1.7 million for a five-bedder inclusive of all discounts. A source told PropertyGuru that this includes a 15 percent early bird discount as well as the seven percent stamp duty discount.

Recently, Far East Organization offered a five percent discount for most of its projects.

"We offered a limited period discount of 5% last weekend to assist buyers who had been considering our properties, but were not able to act before the latest round of measures took effect," noted Chia Boon Kuah, Chief Operating Officer for Property Sales at Far East.

Other developers have also implemented discounts to maintain interest from buyers. CapitaLand's d'Leedon project is providing up to 15 percent in discounts for buyers. Previously, only three percent was being offered.

Such promotions are not new in Singapore. Just last month, Far East offered festive discounts ranging from two to three percent over a period of two weeks for selected projects, including key launches in 2012 such as eCO and Watertown. According to the developer, this was to cap a successful year whereby its projects were well-received.

Moreover, when the December 2011 ABSD measures first came into effect, developers were offering various discounts to offset the effects of the stamp duty hike. One condo project in Pasir Ris may have even been discounted by up to 14 percent at the time.

An industry insider told PropertyGuru that such promotions are pre-emptive measures taken by developers to soften prices in response to the government's regulations. But he added that developers will do away with such discounts if market conditions are favourable.

This could take some time though. PropNex CEO Mohamed Ismail had predicted that the sales volume could drop by more than 50 percent as buyers and investors take a wait-and-see approach.

Meanwhile, some consumers feel that discounts and rebates being offered by developers are "market-distorting" and counter-productive to the spirit of the cooling measures.

In a forum letter to The Straits Times this week, one reader wrote: "By professing to absorb the stamp duty increase, it is possible for developers to keep supporting the headline price (it could even be higher), even though the actual prices that end-buyers see, after rebates, are in fact lower than before."

The reader added: "For any set of measures to be truly effective, the authorities should be alert to any "creative" marketing and sales tactics that could potentially be adopted by the developers and sales staff."

PropertyGuru understands that regulators have been monitoring the situation for some time to ensure transparency and if the practice begins to affect property prices and loan values, the government will intervene.

In an earlier report, the Ministry of National Development (MND) said: "As long as they (developers) do not distort prices, there is no need for the government to intervene against such business decisions and practices."

Going forward, Chia said: "We will continue to monitor the situation and respond to the needs of home buyers, to contribute to stable and sustainable value in the property assets of end-users and investors in Singapore." Romesh Navaratnarajah, Senior Editor of PropertyGuru, wrote this story. To contact him about this or other stories email romesh@allproperty.com.sg

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