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Developers finding it tough to locate showflats on project site

Developers finding it tough to locate showflats on project site.

SOME developers are housing their showflats in unconventional places - from malls, industrial buildings, to even several kilometres away from the actual condo site.

A more crowded new launch landscape and slower residential sales could make this even more common.

But this can complicate marketing efforts for developers, and househunters will have to work harder to understand their potential purchases, industry players say.

The sales gallery for SingHaiyi Group's Bartley developments The Lilium and The Gazania is on the second floor of 16 Tai Seng Street, an industrial building in Paya Lebar.

Amara Holding's 10 Evelyn is in Newton, but the showflat is in the group's 100AM mall in Tanjong Pagar.

Roxy-Pacific Holdings' Arena Residences is in Guillemard, but the showflat is at Kallang Leisure Park.

Sustained Land's One Meyer and Coastline Residences are in the east coast, but the showflat is near City Square Mall, off Serangoon Road.

It was common in the past to have the showflat on the site where the condo would be built, analysts say. But that can interfere with construction, particularly for smaller sites.

Ong Choon Fah, chief executive of Edmund Tie & Company, said: "Smaller sites don't have the space and because of qualifying certificate rules and additional buyer's stamp duty, developers want to build as fast as possible, so its challenging to have something on-site."

Another option would be to rent state land elsewhere, with Ms Ong estimating an ideal distance of within 2 kilometres of the project.

But developers say securing suitable land is not easy, in part due to the many new launches.

Teo Hong Lim, executive chairman and chief executive of Roxy-Pacific, said: "The moment we buy the site, we start running (to secure) the showflat location... Quite a lot of our sites are in the city fringe area or Dunearn - and we are concerned that all the other developers that bought sites there are also going to look for showflat locations there."

Another reason: with slower sales, some developers may be extending existing showflat leases, making available land for showflats for others even harder to obtain.

Developers also report facing rejections for their applications to authorities to use state land close to their site.

That includes Aurum Land for Nyon at Amber Road, and The Hyde in Balmoral Road. The company told BT: "Ideally, the respective showflat locations should be within the immediate vicinity of the actual development."

Nyon's showflat is in Kallang Airport Way. The Hyde's showflat is in King's Road, previously the site for the company's The Asana showflat.

SingHaiyi deputy chief executive Gregory Sim said after several rejected applications to authorities for its Bartley developments, the developer also approached a charity and a football club to use their land before choosing the industrial building.

Applications to SLA can take over two months for one potential showflat site at a time. Should the application be rejected, developers say they have to start all over again.

Building showflats on-site allows the developer to save on rental costs since they already own the land. It can cost S$10,000 to S$20,000 a month to rent city-fringe state land of 7,000 sq ft to 8,000 sq ft for a mid-sized showflat, said Alice Tan, director of residential project marketing for Knight Frank. Building a showflat carcass generally ranges from S$2 to S$5 million with exceptionally large and luxury showflats going up to S$10 million, she estimates. (see amendment note)

Amara Holdings chief executive Albert Teo said the decision to rent space for 10 Evelyn in Newton at its 100 AM mall in Tanjong Pagar allowed for cost savings and faster build-up. It was unable to find a suitable site near the property to set up the showflat.

Mr Teo said: "100 AM draws its own crowds and has consistently had a strong footfall; it is a prominent building and we do not feel that we are losing out on the prominent frontage."

Roxy-Pacific Holdings previously rented space in Westway Building for its Harbour View Gardens showflat. The group's Mr Teo said: "The good thing is there is already aircon and parking so we don't have to provide that. It's cheaper in a way to build the showflat there, but in exchange you pay commercial rental."

In addition, the developer would have to make sure the space can still deliver the showflat's specifications, including factors like ceiling height, he said.

Ms Tan of Knight Frank said visitors are more used to built-up sales galleries that are at road level.

To help buyers find the showflat and improve visibility, she suggested that developers provide more signs to direct drivers, showflat maps in marketing materials and even have shuttle buses to ferry visitors from MRT stations or the actual site to the sales gallery.

Sustained Land boss Douglas Ong said distance shouldn't be a concern for interested homebuyers. "If they want to buy, they will come. If they don't want to buy, there is no point in having the show flat next to the site."

But some wonder if having the showflat too far from the actual project makes it harder for buyers.

Ku Swee Yong, chief executive, International Property Advisor, said the "buyer's imagination would have to be stretched further" when they try to understand where the nearest bus stop might be or what the view could be.

Ms Ong of Edmund Tie & Company said: "Most clients are pretty savvy. They will visit the site and then pop by and see the showflat, but if it's a totally different district, that might be a bit more challenging... Most buyers have accepted off-site showflats as long as they are not too far away."

Source: https://www.businesstimes.com.sg/real-estate/developers-finding-it-tough-to-locate-showflats-on-project-site

Adapted from The Business Times 26  April 2019

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