Here's why District 19's biggest projects suffered from lower than expected take-up rates

Affinity at Serangoon and The Garden Residences take-up rates played around 10-15%.

Two of the largest projects in District 19, Affinity at Serangoon (Oxley Holdings) and The Garden Residences (JV between Wingtai and Keppel Land), was launched for sale and cumulatively secured over 170 buyers.

JP Morgan economist Brandon Lee previously said that the two were beaten by better-located and better-priced projects (namely Margaret Ville and 120 Grange), which had more decent take-up rates. About 110-140 units were sold at Affinity at Serangoon, indicating an 11-14% take-up, whilst 60-90 units were sold were sold at The Garden Residences (10-15% take-up).

The build-up to the launches was widely anticipated as the take-up for these projects will be a pre-cursor to demand for new units in the location which is expected to see a fair amount of new supply from recent en blocs, DBS Equity Research analyst Derek Tan said.

However, iCompareLoan chief mortgage consultant Paul Ho noted that the projects might have had flaws that led to lower-than-expected take-up rates over the weekend. “The Affinity at Serangoon and The Garden Residences are not near to MRT stations. For the Affinity at Serangoon, their plot is rather triangular in shape, I'm not sure how much of that plays into the psyche of the property buyer.”

Tan noted that the Sales for Affinity at Serangoon was well-spread over one-bedders to four-bedders-plus-study apartments with three out of ten strata houses sold at an average of $2.33m. He said, “Prices for both projects set a new benchmark for the location with Affinity at Serangoon achieving an average selling price of $1,550 psf whilst Garden Residences units were sold at a tad higher at $1,660psf.”

Based on selling prices, if sustained, these translate into a margin of 14% (The Garden Residences) and 19% (Affinity at Serangoon) respectively.

However, for Ho, their pricing of around $1,500 psf is “very expensive” considering that there are cheaper freehold options such as the Kensington Park Condominium that goes for much less. “These properties will need to have some ‘superlatives’ to be able to command that premium. Also, the Affinity at Serangoon encourages direct developer sale, this may also lead to a poorer response as there is no incentive for the property agents to market their new launch condominium,” he said.

Ho argued that mass market launches are usually unable to price with the rarity factor. “Any superlatives, such as Private Lift lobby, largest lobby or things such as ‘park your car at your doorstep’ where you have a special car lift, [that adds to a condominium's appeal are] unlikely to be built in a non-prestige location as the ability to price them at the high end of pricing is restricted by their location and snob appeal,” he said.

Tan noted that Affinity at Serangoon has more varied unittypes and has more flexibility and space to cater to a wider range of family types. “Comparing the 1/2/3-bedroom units, it appears that Affinity at Serangoon's average unit sizes (by type) are generally bigger by 30-50 sqft. Therefore, we believe that buyers who are restricted by total quantum will prefer slightly larger units at Affinity at Serangoon vis-à-vis The Garden Residences. The differentiating factor will then come from buyer perception of ‘good quality and prestige’ from a Keppel-Wingtai project compared to ‘practicality and value’ from Oxley,” he said.

Given the competition, buyers' attention appears to be split and we believe this had somewhat affected the weekend sell-through rates for both projects, Tan said.

“The journey, whilst early, is still long with close to 1,665 units for both projects (1,052 for Affinity at Serangoon and 613 for The Garden Residences) looking for buyers. Given that both projects are located near a sprawling Serangoon landed estate and a sizeable population living in nearby HDB flats, we believe that inherent demand for upgraders (new families) to be located near existing homes will remain strong,” he added.

Moreover, some other District 19 projects in the pipeline such as Rio Casa and the former Florence Regency, which are expected to add 2,800 units could mean more choices for buyers and sales momentum could slow somewhat.