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Passage To Luxury

Luxury Homes H1 2018

Confidence in luxury apartments

The luxury market was led by a buoyant luxury apartment segment in H1 2018 with caveats for 229 units lodged, reflecting an average price of $2,671 psf. Both the sales volume and price registered increases of 30% and 12% from H1 2017 respectively. The total investment value of $1.824b is 38% higher than the $1.323b seen in H1 2017.

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This points to the confidence of astute investors in the prospects of the luxury apartment segment. Current prices are at attractive levels as this segment of the market is still in its early stages of recovery.

The bungalow market treaded carefully in H1 2018. 17 Good Class Bungalows (GCBs) were sold, compared to 22 in H1 2017. In Sentosa Cove, six bungalows were sold, compared to nine in H1 2017. In terms of the price per square foot, GCBs reflected an average of $1,490 psf, 20% higher than in H1 2017. Sentosa Cove’s bungalow sales averaged $1,598 psf, marginally higher than the $1,574 psf in H1 2017. The 17 GCBs raked in a total amount of $419 mil, some 10% lower than a year ago, though the average value per transaction increased 17% to $24.66 mil. The more subdued Sentosa Cove bungalow market registered a total investment value of $80 mil, 40% lower than the amount in H1 2017 and the value per transaction fell some 10% to an average of $13.35 mil.

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Good Class Bungalows (GCBs)

There were three notable deals among the 17 GCBs sold in H1 2018. A bungalow at Leedon Park was sold for $57.50 mil in January 2018, a historical record price for a single GCB sold. The property comprises two buildings and a swimming pool and was let out at $15,500 per month at the time of sale. The last record price of $56.58 mil was set by the sale of a 36,365 sq ft land at Nassim Road – carved out of British High Commissioner's residence, Eden Hall – in August 2016 to developer OUE.

The other two significant deals were the $48.00 mil GCB at Bin Tong Park, and the $41.20 mil GCB at Jervois Hill. The former is a two-storey bungalow with a built-up area of 15,600 sq ft that was completed a few years ago. The latter bungalow was recently completed with a built-up area of 12,000 sq ft. On land area, both deals were the only ones that crossed the $2,000 psf threshold in H1 2018. The $2,730 psf fetched by the Jervois Hill property broke the previous record of $2,350 psf held by a Cluny Hill GCB that was sold in November 2017.

Separately, Villa D’Este – a condominium comprising 12 spacious units – located at Dalvey Road, was acquired by KOP Limited for $93.00 mil. According to the Master Plan 2014, the site is located within the White House Park GCB Area. Based on its land area of 55,480 sq ft, it can either be redeveloped into one to three GCBs, or a high-end condominium based on the existing gross floor area of 49,072 sq ft. KOP has announced that it will choose the latter option.

As GCBs are restricted properties which only Singapore citizens can own, it remains within the domain of local ultra high-net-worth individuals and families who are on the lookout for such trophy homes. With the residential market on track to strengthen further, supported by a stable economic climate, we expect another 15 to 20 GCB transactions in H2 2018, with possible new price benchmarks set by new builds.

Sentosa Cove Bungalows

For the six bungalows that were sold in H1 2018, two units are located at Cove Drive, two at Ocean Drive and two on Paradise Island. Two of them were sold at above $2,000 psf due to their aesthetic attributes, while the other four were transacted between $1,300 psf and $1,550 psf.

The marginal fluctuations between the H1 2018 price level and those in H2 2017 and H1 2017 could signal that Sentosa Cove bungalow prices are bottoming out. With the recovery in the luxury residential market gathering pace, it is a matter of time a price rebound in the Sentosa Cove bungalow market will take place. This presents a window of opportunity for investors to assess this segment of the luxury market and take a mid- to long-term position.

Sentosa Cove has been positioned as a luxury waterfront enclave targeting the global rich. Response from local buyers has been encouraging in recent times as prices have fallen to attractive levels vis-a-vis similar quality bungalows on the main land. Whilst foreign purchasers were the dominant players previously, of the six bungalows transacted in H1 2018, four were purchased by Singaporeans, and one each by a permanent resident (PR) and a foreign buyer. This demonstrates a consistent trend where seven of the nine bungalows were bought by Singaporeans while a PR and a foreign buyer bought a bungalow each in H1 2017.

Though foreign and PR buyers for such bungalows – averaging in excess of $13 mil per house – have remained subdued over the past 18 months, local investors seeing good value in these bungalows helped to sustain the demand. As price consolidation continues in this segment of the luxury residential market, we expect buying momentum to maintain and probably edge up slightly for the second half of 2018 with another six to eight bungalows to be sold.

Luxury Apartments

Brisk sales was seen in the luxury apartment market in H1 2018. The 229 units sold comprised 192 units (84%) priced between $5 mil and $10 mil each, and 38 units (16%) priced above $10 mil each.

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New Futura, which was launched in January 2018, was the best-seller, accounting for 61 sales (27%), followed by The Nassim with 20 sales (9%) and Gramercy Park with 15 units (7%) sold.

The 61 caveats lodged for New Futura reflected an average price of $3,430 psf. Among them was a 7,836 sq ft penthouse on the 35th level which fetched $36.28 mil or $4,630 psf. It was the most expensive luxury apartment to be sold in H1 2018. Another unit which fetched above $4,000 psf was a 2,250-sq ft unit on the 34th level which sold for $9.02 mil. 

The 20 units at The Nassim fetched an average price of $3,257 psf. The most expensive unit was a penthouse (7,061 sq ft) on the 5th level which was sold at $19.60 mil or $2,776 psf. Over at Gramercy Park, a 7,287-sq ft duplex penthouse on the 23rd level was sold for $24.50 mil or $3,362 psf. As at May, only one unit – a similar penthouse – in this development remained unsold.

Profile of buyers

A total of 1,677 caveats were lodged for non-landed transactions in the CCR in H1 2018. Properties that were priced below $2 mil made up 39% (648 units), those in the price band of $2 mil to $ 5mil made up 47% (786 units), and 14% (226 units) were luxury units priced above $5 mil.

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Caveat data shows some consistency in the profile of buyers in the past 18 months. For properties priced below $2 mil, 73–76% of the buyers were Singaporeans. This proportion fell to 64-65% for homes in the $2–$5 mil range. However, in the luxury range, it was the foreigners and PRs who formed more than half of the buyers, as high as 62% in H1 2018. Hence, PRs and foreign buyers have always been key players in the luxury segment.

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Some 29% of the luxury homes were bought by buyers from China, 8% by Indonesians, 3% by Malaysians and 2% each by Indians and Taiwanese. In total, they accounted for 45% of the units bought by foreigners and PRs.

What’s Next

Sales momentum in H2 2018 should remain as active as the first half as more luxury projects are offered. The first to hit the market would be South Beach Residences and 3 Orchard-By-The-Park with prices at the upper end of $3,000 psf. 8 Saint Thomas, 3 Cuscaden, Boulevard 88 and Swire Group’s project at Draycott Park could also be launched later part of the year. With so many options vying for a special group of buyers, product differentiation, pricing and market penetration strategies will be the levers to achieve sales.

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