As ultra-wealthy purchasers help reverse three quarters of decline, luxury condo sale

As ultra-wealthy purchasers help reverse three quarters of decline, luxury condo sales see a pick-up in the second quarter

The recent recovery may not be sustainable in the current sluggish property market, according to economists, despite the fact that foreign purchasers contribute to sales.

Aug 6, 2024

It was stated by real estate professionals that sales of luxury condominiums began to increase during the second quarter of 2024. This was due to the gradual comeback of the ultra-rich in Singapore, which had been declining for three quarters.

According to the findings of an analysis conducted by Huttons Asia, the market for luxury non-landed residences remained consistent during the second quarter, with 57 units valued at least S$5 million apiece changing hands. Despite the fact that this was 7.5% greater than the previous quarter, it was still 9.5% lower than the second quarter of 2023.

The overall value of non-landed luxury residences was S$482.5 million, representing a 26.2% increase from the S$382.4 million recorded in the first quarter.

The sales value of luxury non-landed residences increased by 28.2 percent to S$736.7 million in the first six months of 2024, according to a study on prime residential property that was compiled by Knight Frank. This figure is substantially higher than the S$574.7 million that was recorded in the same period of the previous year.

According to Mark Yip, the Chief Executive Officer of Huttons Asia, "It is important to take note that activities in the luxury non-landed homes market are almost back to the days before the cooling measures were implemented." It is anticipated that ultra-high-net-worth (UHNW) individuals will gradually return to the luxury property market in Singapore during the second quarter of 2024.

In the second quarter of this year, there were 52 acquisitions that were each worth more than ten million Singapore dollars, according to Alan Cheong, who is the executive director of research and consultancy at Savills Singapore.

According to Cheong, the total number of 41 landed houses and 12 "high-end" apartments is comparable to the 53 transactions that were seen during the same time period in the previous year. "It may suggest that the buying sentiment has gradually returned to the level before the negative impact caused by the most recent increase in Additional Buyer's Stamp Duty (ABSD) rates, as well as in the aftermath of the anti-money laundering investigations that began last year," the statement reads.

There is also the possibility that permanent residents are now entering the luxury property market. According to Cheong, this is due to the fact that they only pay five percent of their income in ABSD for their first residential property.

The real estate firm Knight Frank mentioned that buyers continued to look for "family-sized, ready-to-move-in units" primarily for their own personal use, rather than for the goal of making an investment. In the first half of 2024, the volume of transactions grew to 98, which is a rise from 72 in the previous year, according to Knight Frank's count.

It was reported by Singapore Realtors Inc (SRI) that the most successful luxury condo transaction in the first half of 2024 was the sale of a unit at the mixed-use complex Skywaters Residences that was 7,761 square feet (sq ft) in size. In May, a penthouse unit located on the 57th floor was sold for a price of S$47.3 million, which is equivalent to S$6,100 per square foot (psf). This price is a record-high price for a 99-year leasehold property in terms of psf.

"The unit was purchased by a foreign buyer, highlighting the underlying interest from wealthy international purchasers in Singapore's luxury real estate market," said Mohan Sandrasegeran, the head of research and data analytics at SRI. "(The unit) was purchased by a foreign buyer."

32 Gilstead in Novena and Watten House in Bukit Timah are two examples of other recently launched luxury complexes in Singapore's coveted Core Central Region (CCR) that have been able to secure deals totalling more than ten million Singapore dollars.

In addition, there was a significant increase in the number of real estate transactions at Sentosa Cove, which is a part of the CCR, with 101 transactions in the first half of 2024, compared to 58 transactions in the previous year. This came about as a result of the island's median prices decreasing significantly to S$1,801 per square foot in the second quarter, down from S$1,999 per square foot in the first quarter.

According to the data provided by SRI, there were at least nine non-landed private property deals in the resale market that were worth at least ten million Singapore dollars apiece in the first half of 2024.

S$16.5 million, or S$5,397 per square foot, was the highest price paid for a unit that was 3,057 square feet in size and was located in The Ritz-Carlton Residences Singapore, Cairnhill, in the month of January.

According to a previous article, the seller of the freehold luxury development unit on the 33rd level made a profit of S$4.9 million from the selling of the unit. Additionally, it was the first time since June 2023 that prices in the premium residential sector had managed to surpass the mark of S$5,000 per square foot.

Sandrasegeran pointed out that the increasing activity in the luxury real estate market is a result of a "modest" increase in the number of international buyers for residences in the Central Coast Region. This group of purchasers increased their number of non-landed CCR properties from 21 in the previous quarter to 45 in the second quarter.

According to Sandrasegeran, this also represents the biggest number of CCR units purchased by non-native buyers since the second quarter of 2023, when a total of one hundred units were sold.

Yip of Huttons believes that the luxury non-landed private residential market may see some headwinds in the near future, despite the fact that it performed well in the second quarter that was just completed.

He stated that the market is experiencing an increase in friction as a result of the Singapore government's increased checks on the sources of wealth of ultra-high net worth individuals. "Some people are reconsidering their plans to relocate to Singapore, and they may decide to relocate to Hong Kong or Dubai instead."

Even if there has been a recent increase in the number of transactions, Nicholas Keong, who is the head of residential and private office at Knight Frank, stated that the prime non-landed home market is still uncertain because of the cooling measures that have been implemented.

"Singaporean homebuyers who are looking for prospects in prime areas have also become more selective in their search for an ideal home," said Keong. "They are interested in finding the perfect home."

Due to the current low demand in the high-end market segment, it is likely that prices will remain unchanged during the entire year, ranging from a negative one percent to a negative two percent. This is because sellers who are under pressure to sell in the resale market may adjust their expectations to fit the levels that are currently prevalent in the market.

According to Yip, the number of transactions in the market for luxury non-landed residences may wind up being fewer in the second half of 2024.

Cheong, who works at Savills, is of the opinion that even though the future will be unpredictable over the course of the next few quarters, the market might experience a minor upward trendline.

"The premium properties of the CCR, which are bolstered by their strategic locations and exclusive amenities, are expected to maintain their attractiveness to both local and international buyers," Sandrasegeran shared further.