Singapore resort project reels in foreign investors

PUBLISHED : Wednesday, 15 June, 2005, 12:00am
UPDATED : Wednesday, 15 June, 2005, 12:00am

Sentosa Cove, a unique, marina resort-style development near a proposed casino in Singapore, is catching the eye of foreign investors.

It is the only place in the country where foreigners can get fast approval - within 48 hours - from the Singapore Land Authority's Land Dealings (Approval) Unit to buy landed property.

Last year, Singapore relaxed its laws on the foreign ownership of homes on the resort island in an attempt to attract investors.

On the Singapore mainland, foreigners can still only buy apartments in buildings higher than six-storeys unless they have special government approval.

Developed on the east coast of Sentosa Island - a holiday destination famous for its beautiful beaches - Sentosa Cove is expected to attract about S$3 billion ($13.9 billion) in investment. The development consists of 2,558 homes and includes a mix of 334 bungalows, 151 terrace houses and 2,073 condominium units spread over 117 hectares.

The government-backed managing company - Sentosa Cove Pte - sells sites to developers and individual buyers through tender and private treaty.

The Berth condominium project, developed by Ho Bee Development, was the first to start selling at the end of last year, with an average price of S$785 per sq ft. By last month, 85 per cent of the units were sold, and prices increased to S$830 per sq ft.

Another apartment project on the resort island, jointly developed by City Development and TID Property, is expected to be launched early next year. The site's acquisition cost S$239 million, or about S$485 per sq ft according to the potential development area. To break even, units would have to be priced at between S$770 per sq ft and S$850 per sq ft. But property agents said the average price for some units could be more than S$1,000 per sq ft.

'While there is new casino expected to be built on Sentosa Island, some investors see home prices shooting up [as they did] in Macau [with the casino concept], and are applying a similar theory to Sentosa Cove,' said Jeremy Choy, a manager of research and consultancy of DTZ Debenham Tie Leung.

However, investors might initially face difficulty in reselling properties in average locations and suffer low rental yields compared with Singapore's mainland, he said.

'Unless what you own is in a prominent location, such as those at the ocean front, it could be quite difficult to sell second-hand properties, as there are still a lot of new sites in [the] pipeline,' Mr Choy said.

Demand from the local community is relatively weak as most people prefer freehold properties to 99-year leaseholds, and transport costs to Singapore's mainland are high.

The rental yield could be as low as 2 per cent for Sentosa Cove property, compared with 4 per cent to 5 per cent in some upmarket properties on the Singapore mainland, Mr Choy said.

Sentosa Cove will hold an auction today to sell six bungalow lots. Prices are likely to serve as a benchmark for the remaining 23 neighbouring bungalow sites to be sold by private treaty.