LEVEL 15 is probably the "luckiest" floor in new condominium project Parc Riviera at West Coast Vale, thanks to an unconventional pricing strategy by its developer.
In what could be unprecedented for new property launches, EL Development is adopting a "one-tier pricing" scheme for the first day of sales this Saturday for each unit type from the lowest floor to the 15th floor of the 36-storey development.
This means that a buyer of a 15-storey unit on that day pays the same price as another buyer of the same unit type on the lowest floor.
For instance, one-bedders of 463 sq ft are priced at S$550,000 from the 5th floor to the 15th storey. A four-bedroom unit of 1,184 sq ft is priced at S$1.275 million from the second floor to the 15th storey.
Such a strategy goes against the industry norm of pegging price premiums to floor levels, views and other variables. It is seen as stirring a sense of urgency among potential buyers after a slew of negative news on the economy and a steep quarterly fall in private home prices in the third quarter present more reasons for potential buyers to hold back their purchases.
The 752-unit project comprises two blocks of 36-storey apartments ranging from one-bedroom to four-bedroom units. Some 278 units are placed under the scheme on booking day, though the developer has not decided whether the scheme will apply for the full booking day or only for the balloting session that day.
EL Development managing director Lim Yew Soon told BT that under the one-tier pricing scheme, the price quantum difference between a 15th unit and a 16th unit will be about 5 per cent instead of the original differential of a few thousand dollars.
He conceded that this move to incentivise early birds is prompted by the economic climate.
"A couple of years ago, people wanted to buy early as subsequent launches or releases would be more expensive. But now, people are concerned that prices will drop," Mr Lim added.
Ismail Gafoor, CEO of PropNex Realty which is marketing the project with ERA Realty, estimated that the cost savings for initial buyers can be substantial under the pricing scheme.
Assuming the price difference for every higher floor is S$3-8 per square foot (psf), there may be average savings of S$50 psf over 10 storeys.
"In a good market, this (scheme) will not happen at all," he pointed out. "This will eat into the developer's profit margin but that's the reality."
Clearly, the developer is seen to stomach this for the sake of drumming up excitement and sales momentum in an otherwise languid market. Such pricing strategy is feasible in a high-rise project, as price premiums can be loaded on the higher floors.
While the average pricing for the whole development is slightly above S$1,200 psf, units from the 15th floor and below are priced at above S$1,100 psf on average based on the prices listed under the one-tier pricing scheme. More than 60 per cent of the 752 units are one- or two-bedders priced below a million dollars.
Also slated for launch this Saturday is Queens Peak at Dundee Road, a 736-unit project by Chinese developer Hao Yuan Investment.
The project, which has direct sheltered access to Queenstown MRT station, is perceived to be targeting a slightly different pool of buyers given its average pricing of S$1,630 psf.
OrangeTee managing director Steven Tan, whose agency is not marketing either of these projects, noted that EL Development's one-tier pricing scheme is "an innovative idea to create excitement so that buyers have urgency to commit ASAP (as soon as possible)" and is certainly unheard-of for large-scale projects. "The Q3 numbers may cause developers to be more cautious when they set their pricing," he added.
Prices of private homes marked their steepest fall in Q3 since the correction in 2013.
The 1.5 per cent price fall from a quarter ago was led by landed homes, which dropped 2.7 per cent in price. Non-landed home prices slipped 1.2 per cent, after a 0.1 per cent dip in the preceding quarter, with the prime area or the Core Central Region (CCR) falling the most by 1.9 per cent.
This article was first published on November 1, 2016.
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But rental decline was most pronounced in the suburbs at 2.4 per cent over the previous quarter.