By Mr. Propwise
Thomson Grand has set a new benchmark for the mass market segment, priced at an average of $1,330 psf. Developed by Hong Kong developer Cheung Kong, it was launched late last week and reportedly sold out all 50 launch units on the first day. This represents around 20% of the 361 units. Thomson Grand is a 99-year leasehold private residential development located in Upper Thomson.
The price for units at Thomson Grand ranges from $1,100 to $1,600 psf and the developer offered a ~5% “discount” on the first day of launch. The average ASP of $1,330 represents a 25% premium to the nearby Meadows at Pierce, a freehold project launched in mid-2009.
For potential buyers, do understand that buying an apartment at a “discount” does not mean the same thing as buying it cheap. Developers, like many other retailers, tend to set the list price high, and then offer buyers a “discount” to increase the perception of getting a good deal. It also gives them more flexibility in terms of pricing – if sales is good they can reduce the discount for further tranches, and thus effectively raise prices without having to do so explicitly. Reportedly the discount at Thomson Grand was reduced to 4% over the weekend after the brisk first day sales.
At Thomson Grand, the size of the units range from 900 sq ft 2-bedroom units to 6,500 sq ft strata-titled homes. The absence of small shoebox units is notable. Also, the landed-strata titled sold briskly – reportedly 11 of the 22 strata units have been sold while most of the remaining have been reserved. These units appeal in particular to foreigners as it allows them to get around the buying restrictions on landed property.
Given that the apartment sizes (and thus total quantums) are fairly large, it appears that most of the buyers are potential end-users. It was estimated that 70% of the buyers had bought the units for own-use while 30% were investors, coming mainly from Singapore, Malaysia, China, and Indonesia.
More cooling measures on the way?
Thomson Grand’s launch may have sold out, but the initial weekend’s 20% take-up rate of units was lower than the average 30% to 35% for other recent mass market projects. This could be due to the developer controlling the rate of sales but is also likely due to buyer resistance to the high per square foot prices.
While prices have not come down, volumes seem to be slowing across most segments. Blossom Residences, an Executive Condominium at Bukit Panjang, sold around 150 of a total of 602 units (a 25% take-up rate) at an average psf of S$685 on the first day of launch. Centrale 8, a DBSS project that has been featured a lot in the news recently due to its pricing, sold only 35% of the total 708 units despite being 2x oversubscribed before the launch. It seems that potential buyers are staying away as there is the perception that upcoming policy changes could bring down the prices of HDB flats.
We are currently at a critical juncture – a standoff between sellers and buyers, represented by the gap between sellers’ asking prices and what buyers willing to bid. As long as prices keep rising, the government is likely to introduce more measures to curb further speculation and exuberance, especially on the public housing front, and this should have a negative impact on the private residential mass market segment.