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Singapore luxury units see more interest from foreigners

08 Jul, 2019

Political and social tensions in the region are sparking renewed interest from ultra-high-net-worth foreign investors for luxury apartments in prime districts here, List Sotheby's International Realty (List SIR) said.

Wealthy residents of Hong Kong, which has been roiled in recent weeks by the worst social unrest since the former British colony returned to Chinese rule, seem to be among those looking to Singapore as a property safe haven in more turbulent times.

In one sign that more investors from Hong Kong are looking to park some of their wealth here, agents here handling commercial property and hotels have seen a pickup in inquiries in the past few weeks from family offices and funds in the territory, starting from $200 million to more than $500 million.

"Some have invested in Singapore before and are looking to diversify further in the Asia-Pacific, Australia and Europe," said Mr Ian Loh, head of investments and capital markets at Knight Frank Singapore. "They are exploring the market here, in particular, CBD offices, three-to four-star hotels or boutique hotels."

Two realtors and a fund manager also told The Sunday Times last week they had heard private and local banks here have seen more capital flowing from Hong Kong in recent months.

The luxury property market is certainly showing signs of life, with interest among high-net-worth investors in trophy assets. Luxury apartments, as defined by List SIR, are branded developments in this region with a price quantum of $5 million and above.

List SIR cited an increase in new high-end projects launched in recent months, with the sales momentum likely to be bolstered by upcoming releases such as Eden at Draycott Park, Cuscaden Reserve at Cuscaden Road, 19 Nassim at Nassim Hill and Nouvel 18 at Anderson Road. Some of these projects may test the market with new benchmark prices, it added.

Prices in the super luxury segment are expected to be supported, as a majority of projects to be launched in the second half of the year are "on collective sales sites acquired at sequentially higher prices between 2016 and first half of last year", said Savills Residential managing director George Tan.

The buzz over high-end freehold Boulevard 88 in Orchard Boulevard helped boost the number of caveats lodged for luxury apartments in the prime district or Core Central Region (CCR) by 18 % to 164 units in the first half of the year, compared with 139 in the second half of 2018. But cooling measures implemented last July meant sales were down 29 % from 232 in the first half of last year.

Foreigners and permanent residents made up 70 % of the 164 transactions in the first half of this year in the prime district or CCR. That was up from 61 % a year ago with mainland Chinese comprising the biggest group, followed by Indonesians, Americans, Cambodians and Britons.

The 154-unit Boulevard 88 moved 59 units in the first four months of its March launch. All four penthouses in the twin 28-storey tower project were sold at between $28 million and $31 million.

The $31 million penthouse achieved a rate of $5,125 per square foot (psf) - the second highest after New Futura, which achieved around $6,000 psf in 2017, according to List SIR.

Even more eye-watering was a 11,098 sqft super penthouse in Boulevard Vue that was sold for $52 million while a 6,555 sqft penthouse in 3 Orchard By-The-Park went for $31.5 million, reportedly to a Chinese national.

The caveats for these two sales, which were reportedly done in the first half of the year, have yet to be lodged. In addition, a 7,395 sqft unit in Corals At Keppel Bay was sold at $19 million and a 3,918 sqft unit in V On Shenton went for $10.8 million, both also in the first half of the year.

Another luxury asset, Good Class Bungalows, managed to hold their own amid a slowing economy, with 17 deals closed in the first half of the year, unchanged from a year earlier. But sales are down from 25 deals in the second half of last year. "Some of the (25) deals could have been due to sellers lowering their price expectations," List SIR said.

Two of the 17 sold in the first half crossed the threshold of $2,000 psf. One in Jervois Hill sold at $30.88 million or $2,032 psf. The other was a newly completed freehold bungalow in Belmont Road, which transacted for $39.8 million or $2,653 psf.

Only three bungalow deals were sealed at Sentosa Cove in the first half of the year, compared with six a year earlier. The total investment value of $63.5 million in the first half was 21 % lower than a year ago.

The sales included a seafront bungalow named Copper House in Cove Drive. The two-storey home, which sits on land area of over 18,000 sqft and boasts a 41m ocean frontage, was sold for $32 million or $1,773 psf.

Development plans for the Greater Southern Waterfront, of which Sentosa island is a part, will likely breathe new life into Sentosa Cove, List SIR said.

Adapted From The Straits Times, July 8 2019