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    Published August 11, 2011

    A choice of luxury projects to pick from

    Unlike the boom year of 2007, developers must now cater more to owner occupiers rather than investors and speculators, reports KALPANA RASHIWALA

    THOSE looking for brand-new luxury residential properties can look forward to a string of still-unlaunched projects in some of the choicest locations in Singapore - including Ardmore Park, Nassim Hill and Sentosa Cove.

    Property consultancy group CB Richard Ellis' compilation lists 10 such developments totalling slightly over 1,000 units which have obtained the pre-requisites for sale.

    It has also identified seven other projects with 574 homes that have planning approval from the Urban Redevelopment Authority (URA) but without pre-requisites for sale. These include City Developments and IOI's South Beach project, which has approval for 180 residences, and YTL Corporation's 89-unit development at Orchard Boulevard.

    Some of these developers are getting their showflats ready but don't seem to be in any hurry to launch their projects. As one developer said: 'There's no lack of money among potential buyers but an inertia to commit. There is caution with general negative news flow around.'

    Potential buyers may also look at a string of earlier projects, some of which have even received Temporary Occupation Permit (TOP), with units that have yet to be sold. These include The Orchard Residences, Cliveden at Grange, The Marq on Paterson Hill and Hilltops.

    Completed luxury condos have their appeal, especially as buyers these days, whether foreigners or Singaporeans, are more likely to be purchasing for their own occupation, rather than for investment or speculation as seen during the 2007 luxury market boom, says JTResi managing director Jerry Tan.

    Owner occupiers

    'There are more of these buyers who pay high per square foot prices wanting to see the final product. They're particular about how the project is built and finished. Developers have to realise they have to cater to owner occupiers. Gone are the days when developers could expect the market to accept whatever they built, without taking into account people's expectations on design, style and layout.

    'All the little extras you put into the design and finishes will always be appreciated by the owners who occupy their homes,' says Mr Tan.

    Foreigners buying luxe condos in Singapore these days tend to do so with a view to occupying them for a few months in a year. Says Mr Tan: 'They feel the vibrancy in Singapore, with the integrated resorts, the arts and cultural scene, the proliferation in dining options. Singapore may be a stop for high net worths' travel patterns throughout the year along with other places like London, New York, Shanghai and Sydney. Some are also buying for portfolio diversification.'

    Earlier this year, Mr Tan brokered the sale of a three-bedroom apartment at The Orchard Residences at about $4,800 psf or nearly $8.7 million to a young East European couple that intends to occupy it for two to three months in a year. He also brokered the sale of a 3,003 sq ft four-bedroom unit at The Marq on Paterson Hill at a record price of $5,842 psf to a South-east Asian tycoon who plans to live in the apartment during his visits to Singapore.

    Buyers are looking for properties more for their own occupation rather than for investment or rental income as 'rental yields in the luxury market are shrinking, with so much stock being completed', says Mr Tan. That's why investors are switching to commercial property such as shophouses which offer higher yields. There's also not much likelihood of a revival in speculative buying anytime soon, given the hefty seller's stamp duty rates announced in January to deter short-term speculators.

    But while speculative and investment demand have taken a back seat, the luxury market is still appealing to buyers who aim to live in the properties.

    While a few high-priced deals have been done this year in specific developments, this is not yet a broad-based phenomenon. For instance, CBRE's analysis shows that just six caveats have been lodged for new sales and subsales of non-landed private homes above $4,000 psf in the first half of this year, compared with 50 in 2007.

    The URA's price index for uncompleted non-landed private homes in Core Central Region (which includes the traditional prime districts 9, 10 and 11 as well as the financial district and Sentosa), has risen 32.2 per cent from its post-global financial crisis low in Q2 2009 but is still 5.8 per cent shy of the peak in Q1 2008. On the other hand, the comparable indices for Rest of Central Region (which covers places such as Bukit Merah, Queenstown, Geylang, Toa Payoh and Katong) and Outside Central Region (where suburban mass-market condos are located) have risen by slightly over 50 per cent each from their Q2 2009 lows and also surpassed their previous highs in Q2 2008 by 8.3 per cent and 22.8 per cent respectively.

    'The biggest attraction in investing in the luxury market here today is that price points have not crossed the previous peak, unlike all the other segments of the Singapore residential market,' says Cushman & Wakefield Singapore vice-chairman Donald Han.

    'Another compelling reason to buy a luxury residential property now is that it is likely to be the least affected by any impending property cooling measures or government policy to ramp up public housing supply for instance.'

    Mr Han says that while demand for luxury homes in Singapore is stronger this year than last year, foreign high-end investors have a lot of places to put their money, not necessarily Singapore. 'A lot of opportunistic money especially from China is shooting for faster growth markets like Hong Kong, London, New York, Los Angeles and Vancouver.'

    More options for Chinese money

    Agreeing, CB Richard Ellis executive director (residential) Joseph Tan says that these days, the Chinese are a major buying force, and Singapore is not necessarily on their radar. They tend to go to Western markets such as Europe, Canada and Australia.

    Market watchers generally say that foreign buying has yet to recover in the luxury market to the levels seen in 2006-2007, when the initial excitement of the development of two integrated resorts, the Marina Bay Financial Centre and the positioning of Singapore as a hub in many fields put the Republic on the radar of high net worth overseas property investors. Now as Singapore's economy reaps the fruits of these investments, luxury residential developers can still count on a staple of both local and foreign buyers keen on purchasing high-end homes for their own occupation.

    Or as JTResi's Mr Tan puts it: 'There is more purposeful buying in the luxury segment these days.'

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