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AS PRICES of brand-new luxury condominiums skyrocket, prices at lower-end projects are quietly being slashed by as much as a quarter of their original price-tag.

The developers involved are eager to unload unsold units in a market that is beginning to stir.

Some of these empty units have sat unsold for up to five years after the projects were finished, as the property sector’s downturn in recent years took its toll.

Most units where big discounts and other incentives are being offered are in large-scale, 99-year leasehold suburban projects.

This market segment has not yet enjoyed the spectacular recovery seen in prime areas, where some prices have topped the market’s peak a decade ago.

Hong Kong tycoon Li Ka-shing’s Costa Del Sol in the Bayshore area, for instance, was launched in May 2000 at $765 per sq ft (psf), or about $1 million for a 1,300 sq ft apartment.

But slow sales have since prompted Cheung Kong Holdings, which developed the 906-unit condominium during the property market peak in the late 1990s, to slash unit prices.

Last month, a new batch of units was launched for as little as $550 psf for apartments on the lower floors. That would add up to about $715,000 for a 1,300 sq ft unit. The Straits Times understands that over 400 units in the project are unsold.

At nearby Sanctuary Green, prices have fallen to about $569 psf from an average of $720 psf when the East Coast project was first launched in January 2000.

About 170 units remained unsold as at Feb 9, according to the 2005 annual report of GuocoLand, which developed the 522-unit project.

Keppel Land’s The Caribbean at Keppel Bay, launched in September 2000, has had prices cut from $850 psf to about $640 psf, with more than 20 per cent of its 969 units still unsold.

Apart from cutting prices, developers are also rolling out incentive schemes to attract potential home buyers.

At its most recent launch, Costa Del Sol offered an early move-in plan, whereby buyers could take possession of their units within two weeks of paying a deposit of just 5 per cent of the sale price, with the rest to be paid within a year.

Property consultants say developers are keen to offload these unsold units as soon as possible, as they have already been completed and have received their temporary occupation permits (TOP), which means the clock has started to tick on the 99-year leases.

Costa Del Sol obtained TOP between 2003 and 2004, while Sanctuary Green and The Caribbean did so in 2004.

To make things worse, completed projects incur maintenance and tax costs for the developers, which amount to about $5,000 a year per unit for a typical 99-year leasehold suburban condominium, he added.

And with several new launches of large suburban projects planned for the second half of this year, developers are racing to get rid of their unsold units before new competition arrives, said Mr Nicholas Mak, director of research and consultancy at Knight Frank.

Source : Straits Times - 24 Mar 2006