Interestingly today, my property agent messaged me that Singapore Press Holdings ("SPH") and its partner Kajima had slashed the price of Woodleigh Residences by 10% to 13% from S$2,000psf to as low as S$1,733psf. This was despite their initial assertion that the VVIP launch in October 2018 was a resounding success with over 60% of the launched units sold at an average price of 2,000psf. However, for the re-launch of Woodleigh Residences in May 2019, the developer SPH and Kajima must have decided that the risk of the market downturn may not be worth it and started slashing prices drastically in order to move more units. After all, the developer was only able to sell 30 units on the first weekend of its initial launch albeit declaring that 60% were sold by proclaiming that they only launched 50 units.
For a 958sqft 3 bedder unit, prices would have dropped from S$1.92Mil to S$1.66Mil which translates to substantial savings of +S$256K for potential buyers relative to the first batch of VVIP. This does not seem fair to those first batch of buyers who had supported this integrated mixed commercial and residential project of SPH and Kajima during launch. I hope that SPH and Kajima would have given some goodwill renovation packages to compensate these initial buyers.
On the property market front, I am not sure whether other developers will also take the lead in slashing prices but I hope so for the benefit of consumers. Once the music stops, property developers holding on to the most unsold inventories would need a very strong balance sheet to wait out the economic downturn.
From the stock investing perspective, I have previously highlighted the lingering impairment risk of the Bidadari project, that is, Woodleigh Residences, due to the potential property market downturn and uncleared inventories. I am glad that SPH has decided to slash the price in order to move their inventory of unsold units. Coupled with the bad news from the US/China trade war today, SPH price has dropped to S$2.40 per share and it may be worthwhile to re-look into their newly transformed property business from the previous media giant model. The new UK student accommodation segment acquisition should prove invaluable in the event of an economic downturn due to earnings resiliency.
Note: Please refer to my previous SPH post "Singapore Press Holdings Transformation Into Property Giant Almost Completed".