When developer’s new launch becomes emperor’s new clothes

When developer’s new launch becomes emperor’s new clothes

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, Singapore Press Holdings (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 comprised 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.

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