Developer as landlord may be short-lived

Developer as landlord may be short-lived SINGAPORE - With prices of high-end properties softening, some developers are putting aside units for leasing, while waiting for the market to turn. Mr Colin Tan, head of research at property consultant Chesterton Suntec, says the practice of leasing before selling at a better price is not an uncommon market strategy. Some 168 units at the earlier Caribbean Residences near Keppel Bay have been leased for periods of at least six months. But, some analysts highlight that the practice of leasing new units for a period before selling them, might not be possible with future developments. Said Mr Han: "Developers are not allowing prices to drop by that kind of margin, certainly margins of 10 to 15 per cent that we had provisionally expected have not come into place right now. "As Reflections matures, the quality would ensure that the price would hold and, in fact, the price would appreciate by the time we intend to sell the 150 units that we are holding now. Mr Augustine Tan, president of Keppel Land's Singapore residential unit, says: "We believe that with a good following of tenants in Caribbean, we will see an equally, if not a better following for Reflections. "There have been cases where there have been some units in some condominiums in Yishun . Keppel says strong leasing demand for luxury waterfront residences contributed to its decision to set aside 154 units as corporate residences. "Even in secondary market we have not seen a huge drop in terms of the price movement for the high-end luxury market. Reflections isn't Keppel Land's first development which has leased out, rather than attempted to sell, some units. Some analysts say the practice may be short-lived. The special adviser at HSR Property Group, Mr Donald Han, notes that withholding a portion of units from sale helps to buttress the asset price from a sharp deterioration in the market. At the soon-to-be completed Reflections at Keppel Bay condominium, 839 units have been sold. This is because a developer now needs to undertake a project and sell all the units within five years from the date of land acquisition, or else pay the additional buyer's stamp duty of 10 per cent with interest based on the full purchase price of the land. Developer as landlord may be short-lived Trade News selected by Local Linkup on 26/03/2012