Property giant City Developments (CDL) is taking a drastic move by contemplating to turn some of its upcoming high-end condominium projects into serviced residences.
According to CDL Executive Chairman Kwek Leng Beng, thinning profits from property development in a rapidly slowing market has led to this proposition as property prices could shrink up to 10% this year.
Other developers of luxury condos have also contemplated such a conversion recently. Last year, developer OUE was said to be planning to convert part of its Twin Peaks condo at Leonie Hill into serviced apartments, though that has not happened yet.
CDL's Group General Manager Chia Ngiang Hong said that though converting some of its unlaunched high-end residential projects into serviced apartments may be difficult, it is something CDL would not rule out, provided that the project is not sold yet. CDL's Nouvel 18 at Anderson Road, which is still unsold, was on track to be completed by the end of this year.
Separately, Mr Kwek called on the Government to modify its qualifying certificate (QC) rules this year, saying that these rules were driving up land tender bids. With QC in place, Mr Kwek said there is competition for every site. Conversely, without any sites, business comes to a standstill. Hence, developers are left with no choice but to bid higher and higher.
Furthermore, the QC rules effectively mean developers cannot hold onto sites very long, since a QC gives them up to five years to finish building a project and two more years to sell all the units. They are not allowed to rent out unsold units.
Last year, CDL successfully applied to extend the QC construction deadlines for its Gramercy Park condo on the former Lucky Tower site at Grange Road and its New Futura condo on Leonie Hill Road to until the end of next year. In addition, CDL plans to open the whole South Beach complex by next year, before the project's 2016 completion deadline.
There are also plans to launch a 944-unit condo at Pasir Ris Grove in March or April and then an 845-unit condo at Commonwealth Avenue in the second quarter of this year.
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