Luxury Homes H2 2019
Luxury market braced against headwinds
Advanced estimates by the government showed that the Singapore economy grew by 0.7% in 2019, supposedly the lowest growth since the global financial crisis in 2009. The weakness stemmed largely from Singapore’s export-oriented economy being hit hard by the drawn-out trade war between the US and China as well as a cyclical downturn in the electronics sector.
The anaemic economic performance affected investors’ confidence and caused some investors to take a step back to evaluate the options available while others choose to wait for opportunistic buys.
In H2 2019, caveat data showed that 23 bungalows in the Good Class Bungalow (GCB) Areas were sold, fewer than the 25 bungalows sold in H2 2018. Over at Sentosa Cove, only one bungalow was sold during this period compared to five transactions a year ago. The luxury apartment market was the only segment that performed better in H2 2019 with 183 transactions, more than the 142 deals in H2 2018.
For the whole of 2019, there were 40 deals in the GCB Areas, four deals at Sentosa Cove and 362 luxury apartment sales, lower than the respective deals done in 2018. Based on $ psf on land area, GCB prices were 9.8% lower than 2018 levels, while Sentosa Cove prices were marginally higher by 0.6%. Luxury apartments also performed better with an 8.5% lead over 2018 prices.
Good Class Bungalows (GCBs)
Caveat data showed that among the 40 bungalows that were sold in 2019, the highest price went to a property at Astrid Hill at $47 mil or $1,742 psf. Another significant transaction was a 30-year old bungalow at Tanglin Hill that was sold for $31.5 mil. The buyer planned to build a new bungalow on-site. At the rate of $1,915 psf, the land value could well be the highest achieved for Ridley Park GCB Area.
Among the 23 bungalows that were sold in H2 2019, 11 were smaller bungalows with land areas less than 10,000 sq ft and were priced between $6 mil and $13 mil each. In H1 2019, there were only five of such bungalows sold. Most of these smaller bungalows are found in the GCB areas at Chestnut Avenue, Swiss Club Road and Caldecott Hill Estate. The lower prices of these bungalows caused the average price of GCBs to fall by 9.8% y-o-y to $1,366 psf in 2019.
The lower price quantum also made them more attractive and within reach of the upper middle income class who wish to enjoy the prestige and status of living in one of the 39 gazetted GCB Areas.
Besides the 40 bungalow transactions, there were four other GCB deals that were widely reported in the media but no caveats have been lodged for them. One of these is a bungalow at Nassim Road belonging to Wing Tai Holdings’ chairman that was sold for $230 mil. Another was a brand new GCB at Cluny Road that was bought by Dyson’s founder James Dyson for $41 mil.
Looking to 2020, demand for GCBs are likely to remain around 35 to 40 transactions. Investors who have put their decisions on hold would be ready to enter the market when there is more clarity with regard to the US-China trade war. The limited supply and rarity of large, well-located and well-built bungalows will support prices.
Sentosa Cove Bungalows
Demand for bungalows at Sentosa Cove had been soft since the government raised the Additional Buyer Stamp Duty (ABSD) in July 2018. Foreigners who buy residential properties now has to pay an ABSD of 20%, up from 15% previously.
There was only one bungalow transaction at Sentosa Cove in H2 2019. Located at Cove Drive, the bungalow fetched $19.89 mil or $1,669 psf. Together with the three bungalows sold in H1, a total of four bungalows had been sold through the year. This is similar to the lull years of 2014 to 2016 when four bungalows were sold in each year. Nevertheless, the average price of the bungalows at $1,717 psf was similar to the $1,707 psf registered in 2018.
The most expensive bungalow sold in 2019 was a sea-facing bungalow with a huge land area of 18,051 sq ft. Dubbed as “Copper House”, it was sold to a Taiwanese billionaire for $32 mil or $1,773 psf.
Prospective buyers who have been following the Sentosa Cove market know that the prices are currently at very attractive levels. There had been no new projects in the past five years to stimulate price growth.
Future plans for the Greater Southern Waterfront, of which Sentosa is a part, are likely to breathe new life into Sentosa Cove. These plans include 9,000 new residential developments at Keppel Club and the conversion of Pulau Brani to an island of recreation. Resorts World Sentosa will also pump in $4.5 bil to add more than 1.76 mil sq ft to its gross floor area. This will include a new waterfront lifestyle complex housing two hotels, retail and eateries.
The government did not announce any new housing at Sentosa, which means that Sentosa Cove will remain the one and only exclusive housing precinct with waterfront villas and condominiums to offer a resort lifestyle.
Caveat data showed that 183 luxury apartments were sold in H2 2019, slightly more than the 179 transactions in H1 2019. Although the total of 362 units is marginally lower than the 376 transactions in 2018, the average price of luxury apartments has risen by 11% y-o-y to $3,023 psf.
The higher price achieved could be attributed to the higher number of high-value deals in 2019. Deals crossing $4,000 psf numbered 20 in 2019 compared to only eight in 2018. Similarly, there were 93 luxury apartments sold at above $10 mil compared to 56 in 2018. This excludes the astonishing deal of the 21,108 sq ft super penthouse at Wallich Residence that was reportedly bought by James Dyson at the price of $73.8 mil.
Several other penthouses sold through the year include the $52 mil super penthouse at Boulevard Vue, four penthouses at Boulevard 88 sold between $28 mil and $32 mil, two penthouses in 3 Orchard-By-The-Park sold at $31.5 mil and $32 mil, the remaining penthouse at TwentyOne Angullia Park at $32 mil and a penthouse at Hilltops at $25.08 mil.
Profile of buyers
In 2019, 241 (68%) luxury apartments were bought by foreigners and permanent residents (PRs), compared to 233 (63%) in 2018.
A further split shows that 176 luxury homes were purchased by foreigners while 65 were purchased by PRs. The foreign buyers were mostly UHNW investors looking for big units. Economic uncertainties and geopolitical tensions have urged them to park their funds in assets that can preserve value and appreciate in value. As such, they were less deterred by the 20% additional buyer’s stamp duty that they have to pay.
The biggest group of foreign buyers came from China, followed by those from Indonesia, the USA, Taiwan and Cambodia. Their purchases made up 44% of the luxury homes sold in 2019.
More new launches ahead
In December 2019, the newly completed EDEN at Draycott Park was open for preview. There are only 20 luxury units in this development, each priced from $18 mil onwards. In early-January 2020, The Avenir at River Valley Close was also opened for preview and four-bedroom and bigger units are priced from $3,030 psf.
More upscale projects are expected to follow. Some of the more prominent ones are: two projects by Shun Tak at Orchard Boulevard and Nassim Road, the relaunch of 21 Anderson, Low Keng Huat’s project at Cairnhill Road and Dalvey Haus. While demand may weaken slightly, luxury prices are likely to hold firm with continuing support from Asian investors.