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27th April 2014

Singapore Real Estate

Property developers pulling out the stops to boost sales

Source: Channel News Asia / Singapore

SINGAPORE: Some are giving big discounts, while others are going on marketing blitzes -- property developers are pulling out all the stops to boost sales which have been hit by cooling measures.

Statistics from the Urban Redevelopment Authority (URA) on Friday showed a 1.3 per cent decline in prices in the first quarter of this year. It is the largest drop since the second quarter of 2009, when prices fell by 4.7 per cent.

The Interlace condominium was launched in 2009 and some residents have since moved in.

However, the project by CapitaLand still has 183 unsold units as of March 2014.

Over at Whampoa East Road, the Eight Riversuites condominium has 205 unsold units. However, the 862-unit project was one of the top sellers last month, when it sold 44 units.

It was the project's highest sales volume in a single month since June 2013, when the government tightened property loan rules. Under the Total Debt Servicing Ratio framework, home buyers can only loan up to 60 per cent of his or her income.

The units were sold at a median price of about S$1,100 psf -- almost 20 per cent lower compared to when the project was first launched some two years back, when it was sold at S$1,340 psf.

Property watchers Channel NewsAsia spoke to said developers may be under pressure to cut prices in order to boost sales.

Nicholas Mak, executive director at SLP International Property Consultants, said: "If a certain residential project has been launched for quite some time and still has substantial unsold units, and this project is quite near to its completion date, the developers may be under some pressure to increase sales.

"Because if let's say the development is completed and there is still quite a number of unsold units, they (the developers) could also be facing competition from other developments that could be newly-launched in the vicinity."

Jones Lang LaSalle's national director of research and consultancy Ong Teck Hui said: "Since the TDSR was introduced in June 2013, the number of unsold units in launched private residential projects has increased significantly by 19 per cent from 5,243 units in Q2 2013 to 6,247 units in Q1 2014.

"This is reflective of the slower take-up of units at new sales launches, resulting in the build-up of unsold units."

Besides cutting prices, developers are also trying other tactics.

Sales for the Sky Habitat project at Bishan Street 15 picked up in April, after a marketing blitz. In a statement issued on Friday on its first quarter earnings, developer CapitaLand said 106 units were sold in April -- after more than six months of single-digit sales volume, according to URA's figures.

"Another strategy that some developers may embark on is to increase the sales commission for agents," Mr Mak added.

"For example, a one percentage point reduction may not be that attractive to buyers. However, if developers were to raise the commission by one percentage point of the price, that absolute amount will give a lot more incentive to the property agents to work harder in attracting buyers."

The competition is expected to intensify with close to 15,000 units, including executive condominiums, to be completed for the rest of the year. This brings the total number of units to be completed in 2014 to almost 20,000 -- higher than the some 14,400 units in 2013. 

- CNA/ac

Singapore Real Estate

'Modern kampung' to launch in July BTO

Source: Straits Times

Homes in Woodlands' upcoming "modern kampung" - the first of its kind - will be launched in this July's Build-to-Order exercise. To be completed in 2017, the all-in-one Kampung Admiralty includes two blocks of Housing Board studio apartments, centres for medicine, childcare and eldercare, and shops.

Global Economy & Global Real Estate

Toyota Said to Plan to Move U.S. Sales Office to Texas

Source: Bloomberg / News

Toyota Motor Corp. (7203) is moving substantial parts of its U.S. headquarters in Torrance, California, to suburban Dallas as the world’s largest automaker seeks savings from its U.S. sales unit, people familiar with the matter said.

Employees will be informed of the plan today, said the people, who asked not to be identified disclosing private conversations. Steve Curtis, a Toyota spokesman, didn’t immediately return a call on the matter.

The surprise move is a blow to the Golden State, the biggest U.S. auto market and proponent of the strictest clean-air rules. Toyota’s Prius hybrid has been California’s top-selling model for the past two years and helped secure a leading 22 percent market share. It also represents a victory for Texas Governor Rick Perry, who’s made repeated visits to California to lure businesses to his state with promises of lower taxes and easier regulations.

“It would be very consequential for Southern California,” said Jack Nerad, executive market analyst for vehicle-price data service Kelley Blue Book in Irvine, California. “There might be some brain drain and tumult for employees, though it should be largely seamless to the consumer. This kind of thing can create some disruption of momentum.”

Toyota fell 0.9 percent to 5,447 yen at 9:25 a.m. in Tokyo trading, matching the decline in the Topix index. The Toyota City, Japan-based company’s shares have dropped 15 percent this year.

Destination Texas

Toyota has more than 5,300 California employees, most at its Torrance campus in sales, finance, marketing, engineering and product planning. Details on which functions will move and when may be announced as soon as today, after the employee meeting. When Nissan Motor Co. (7201) moved its North American headquarters to lower-cost Tennessee in 2006, only 42 percent of employees initially chose to relocate.

The new regional sales headquarters may be in or near Plano, Texas, said three of the people who asked not to be named as the plan isn’t yet public. The majority of Toyota’s Torrance operations may move to Texas over a two-year period, the people said.

Lucy Nashed and Felix Browne, spokesmen for Perry, didn’t respond to e-mails on the matter.

Perry, in his final year as governor, began airing radio commercials in California during his March swing through the state that highlighted its high taxes.

Perry’s Commercials

“A year ago, I was here, in California, encouraging companies to look to Texas for expansion and relocation,” he said in the ad, paid for by a group called Americans for Economic Freedom. “Over the past year and a half, more than 50 California companies have announced plans to expand or relocate in Texas, creating more than 14,000 jobs.”

While Texas is home to Toyota’s pickup truck plant in San Antonio and a General Motors Co. (GM) factory in Arlington, the state traditionally hasn’t been a center of auto industry activity.

Separately, Toyota said it’s restructuring the Torrance-based U.S. marketing organization as part of an efficiency push without detailing how many jobs may be eliminated. Some employees are being reassigned to other parts of the company and there is a “voluntary exit program” for people who choose to leave, Toyota said yesterday in a statement. The revamped marketing unit will begin operating from May 1.

Toyota Earnings

Toyota’s decision to scale back in California, where it established operations in 1957, comes as the company expects to report a record 1.87 trillion ($18.3 billion) of net income when it releases fiscal year results next month. Along with rising sales in North America and other international markets, Toyota’s earnings this year are benefiting from a decline in the value of the yen, which surged in 2011.

Since the company made that forecast, it agreed to a $1.2 billion fine to settle a U.S. Justice Department investigation into how it delayed recalling popular models after complaints of unintended acceleration.

U.S. sales for Toyota last year totaled 2.24 million cars and light trucks, off a record 2.62 million in 2007. Combined sales for the carmaker’s three brands fell 1.6 percent to 520,997 in the year’s first three months.

Toyota Motor Sales USA and Toyota Financial Services, based in Torrance, in suburban Los Angeles, have more than 9,400 U.S. employees. Torrance is home to Toyota’s Lexus and Scion lines, as well as its namesake brand.

Additional Toyota units in Torrance include parts and logistics operations to support dealers. The company’s Toyota University training center is nearby.

Auto Center

Southern California rivals Michigan as a U.S. automotive center. While it lacks large-scale vehicle manufacturing, the region has U.S. sales and marketing headquarters for Honda Motor Co. (7267), Hyundai Motor Co., Kia Motors Corp., Mazda Motor Corp. and Mitsubishi Motors Corp., along with Toyota. It is also the nation’s top automotive design center with 14 major studios, the largest concentration in the U.S.

Toyota Financial Services, the biggest auto finance company in the U.S., and Honda’s American Honda Finance Co. also in Torrance, makes the region a hub of lending and loans for dealers and car buyers.

-By Alan Ohnsman

In Australia: Housing becoming less affordable

Source: Straits Times