Why did sales flop at Wing Tai's The Crest?

Only 18% of units have been sold.

Deep in Singapore's Core Central Region (CCR) stands The Crest, a luxury residential development by homegrown developer Wing Tai. First launched late in 2013, The Crest has haunted by extremely poor sales, with only 18% of total units sold after several years in the market.

A report by RHB Research delved on the reasons behind The Crest's poor sales performance. The Crest's sales are particularly dismal when compared to sales of rival developments Alex Residences and Mon Jervois, which have sold 58% and 40% of units, respectively.

Although it is easy to blame poor market sentiment for The Crest's misfortune, RHB Research noted that units in the development are simply too big and too expensive for average buyers.

"More than half of the units were over 1,000 sq ft which could mean that they were too large and too expensive for home buyers. Thanks to the weak property market, homebuyers are becoming increasingly price-sensitive. In terms of price quantum, a 1,000 sq ft unit at The Crest would cost approximately SGD1.7m. In comparison, if most of the units were built at half the size, it would be more affordable for homebuyer," said the report.

But all of The Crest's woes might boils down to just one reason: Wing Tai overpaid for the land that the development sits on.

"The root of the problem may lie in the hefty price Wing Tai paid for the land. The developer may not have been able to set lower prices for The Crest units, as it may have paid too much for the land back in Sep 2012," the report noted.

Wing Tai paid $960 psf/ppr for The Crest's land plot, which is significantly higher than land acquisition prices for neighboring developments.

"It would be easy to place the blame for The Crest’s weak performance on the weak sentiment in the market, although this was not entirely true. Both Alex Residence and Mon Jervois were launched at around the same period as The Crest, but sold more units than the latter,” the report said.