Luxury apartment sector feels the rush

More deals clinched as sentiment improves, foreign buyers sniff around

Luxury apartment deals picked up in the second and third quarters of this year as a more cheerful mood spread to the upper realms of the private residential market.

The number of apartments priced above $4 million changing hands rose rapidly from just 15 deals in the first quarter of this year to 87 in Q2 and 210 in Q3.

The total of 312 apartments in this price range sold in the first nine months of this year are 11 per cent more than the 280 transacted for the whole of 2008, which was generally a quiet year for the Singapore residential market following the global financial crisis, notes CB Richard Ellis (CBRE). It analysed caveats information from URA’s Realis system up to Oct 12.

During 2007 – the peak year for the luxury housing market – a total 1,740 apartments were sold at over $4 million each.

CBRE studied caveats data for condo and apartment deals in the Core Central Region, which includes the prime districts 9, 10 and 11; the financial district; and the HarbourFront and Sentosa Cove locations. The transactions include both primary and secondary market transactions but exclude collective sales.

Joseph Tan, the firm’s executive director (residential), says that some investors feel this is a good time to buy luxury apartments as they stand to net capital gains before the price surge sweeps this segment.

‘In addition, with the appreciation of foreign currencies against the Sing dollar in recent months, foreign investors could have found prices of luxury apartments here fairly attractive,’ he said.

Looking ahead, he sees an increase in high-value transactions with upcoming new luxury projects such as Marina Bay Suites and Seven Palms Sentosa Cove as there will be investors interested in these projects. ‘Buying interest will be project-driven, based on the uniqueness of each project,’ Mr Tan added.

Developers report a pick-up in sales of luxury apartments to both Singaporeans and foreigners.

Wheelock Properties (Singapore) CEO David Lawrence says: ‘A lot of foreigners talk to us about buying quality property assets in Singapore. They include high-net-worth (HNW) Indians and Chinese who are thinking of becoming Singapore permanent residents and wish to move their families here.’

Savills Singapore managing director Michael Ng also says the Republic has been a beneficiary of wealthy Asians from places like China, Malaysia and India coming out again to buy luxury properties with renewed confidence upon sensing that the worst is over in the overall global economy.

‘A lot of them see Singapore as a safe place to park their family and money,’ he added.

The thinking in property circles is that foreign buying will strengthen further when Singapore’s two integrated resorts (IRs) open next year. And this should translate to stronger demand for luxury apartments.

CBRE’s data showed that about 86 per cent or 268 of the 312 units sold at above $4 million in the first nine months of 2009 were in the ‘above $4 million to $7 million range’.

They included developer sales in projects like Volari at Balmoral Road, Residences@Killiney, One Devonshire, Latitude at Jalan Mutiara, Madison Residences in Bukit Timah, and The Orchard Residences. This segment saw the biggest recovery in transaction volume over full-year 2008.

A total of 35 caveats were lodged for properties that cost between $7 million and $9 million in the first nine months of this year. The transactions, which were mostly in Q3, include The Hamilton Scotts and The Orchard Residences in the primary market (developer sales), and Ardmore Park, St Regis Residences and Scotts Highpark in the secondary market.

There was a caveat lodged for a unit at Nassim Park Residences that cost nearly $13.3 million in July and two in August (at about $9.6 million and $9.8 million), based on URA Realis caveats data as at Oct 12.

However, BT understands that since then, two more units were sold in the development in September, followed by a further two so far this month.

The four units were sold at prices ranging from $9.6 million to $14 million, or from about $2,850 per square foot to $3,480 psf.

BT understands there have been close to a dozen transactions at Nassim Park Residences since mid-year. However, buyers of some units have yet to lodge caveats.

Source: Business Times, 15 Oct 2009