Developers feeling the heat in Singapore

Aren't you feeling the heat? Developers certainly are.. From a tougher operating environment as property valuations slide, as well as a combined pincer movement from the government from both the buyers's duty as well as the seller's duty....

From the Business Times: "Wheelock Properties has made an accounting provision of $110 million for The Panorama, a 99-year leasehold condominium in Ang Mo Kio, while OUE has declared a net fair value loss of $76.8 million on its investment properties. Wheelock posted a loss of $91.3 million for its fiscal fourth quarter, wider than the $30.8 million a year ago. For the full year ended December, the developer posted a net profit of $40 million, down 36.7 per cent from the $63.3 million a year ago. Meanwhile, OUE posted a net attributable loss of $36.6 million for the full year ended December, compared with a net profit of $90.1 million a year earlier. In the case of Wheelock's The Panorama, the developer paid $550 million for the land in Ang Mo Kio Ave 2. This translates to about $790 per square foot per plot ratio (psf ppr), higher than the range of $560 and $650 psf ppr put forth by analysts when the site was first launched."

It has been said that Standard Chartered had estimated the break-even cost to be around $1,280 psf and a net profit margin of about 5 per cent based on a selling price of $1,350 psf. In January, Wheelock moved 58 units at about $1,343 psf. 

"Other listed developers with projects potentially with similarly thin margins (0-7 per cent) include Frasers Centrepoint Limited's Rivertrees, UOL Group's Riverbank and CapitaLand's Sky Vue and Sky Habitat," noted Standard Chartered.

According to the Urban Redevelopment Authority's figures, developers sold a total of 14,948 private residential units in 2013, one-third below the previous year's 22,197. For the full year, prices of private residential properties rose 1.1 per cent, compared with 2.8 per cent in 2012.

Meanwhile, for the hdb segment, it has been said that COV practice has been cut giving another blow to the hdb market.