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Despite of the decline in Singapore’s property prices for 14 quarterns, still, developers had bought high prices with 29 percent on land sales, alongside to the cool housing markets in March. Here’s the core of their interest:
Developers grab the chance in retrieving land markets
Here’s the hypothesis: the aggressiveness of developers in buying land is significantly correlated to its property condition. If they thought the property won’t work better, then they wouldn’t purchase the land. Simple as that.
However, it’s oversimplified to say “developers are purchasing=markets are recuperating”.
More so, other considerations are taken into account why developers have to bear up the supply of their land.
The following are some reasons why they are still getting and bidding land instantly, regardless of the fact that the market is turning down.
Future projections vs. Present Prices
The baseline here is, property developers don’t acquire lands thinking of the present prices but, how they will be market in the following years. Seemingly futuristic, right?
Be reminded that once a land is acquired, you have to wait for the time before it is sold out. And, developers may even hold in to launch as a strategy to attain a better price.
Meanwhile, developers also consider price changes in other regions. As an example, in Hongkong and Australia, if the property markets there are deteriorating, they will choose Singapore, for sure, to go on far-off investors.
As such, it is usual to find developers in rush, buying a land, although the present property is uncertain. Much to say, developers may decide to purchase when…
Developers sense ‘bottomed out’ in Market
It requires much observation for such to sense a market is bottoming out. And, one of its sign is when the property reached its lowest point, seeing the primary stages of an ascending trend. Developers find this ‘bottomed out’ a time to purchase a land. Herewith, property sales volume rises in February to March. To be exact, 1,806 privy houses were sold for this month of March.
Prices haven’t moved significant that suggests we’re at the curve. Perhaps, the developers might be at risk not to start to acquire land this time – the final thing they may want is not to have projects ready, until the land recovers.
Property market isn’t can be purchased as many as you want
It isn’t that easy to buy, folks. Purchasing a land property is much different from any other business industry.
As an example, car merchandise may just ask raw materials as much as needed in their production. In contrast, property developers have had such a hard time in land acquisition.
Collective sales, land with zoning permits, and pricing land processes take a period of time.
As already mentioned, pricing is a matter as market producers can’t perceive land amounts in the coming years. Though they may try, but will not be accurate.
In addition, there is a sort lack of interested investors during land sales for, developers can’t depend on the property at present and whenever they need it.
Land’s location is where as it is. It has no replicable quality
Plots of lands are not similar, unlike wheat, oil, and gold of bars. That is, each unit of land has different demands and the taste of developers depends according to the condition – plot’s rare location than with typical property qualities.
To cite one, Toh Tuck property market had hooked 24 offers because its land lot is near to Beauty World MRT point and the Bukit Timah housing area. Those are not typical ones, qualities that can’t be replaced by other lands, thus, developers bid with aggressiveness despite of our slowing down market.
Therefore, when the parcel is right, the demand is as well right. Developers can still rely of having a profit even it isn’t as great as it supposed to be in a recovering market.
Above all, developers’ confidence is correlatively significant to the market
Developers’ statements do have a relation to the trends of the property market. Indeed, they are related.
Nevertheless, we shouldn’t expect much to presume a revival is assumed to be in the year 2020, just for the reason we see these investors occupying the land.
On the contrary, there’s no assurance that the trust of these developers will be recompensed – they’re not fortune experts, they’re businessmen taking risks.