Is the love affair between investors and Singapore's luxury property market over? For a long time, it seemed the Lion City's prestige market could do no wrong, achieving what one industry player observed as 'crazy prices'.
'Sometimes I wonder where people get the money to pay such prices,' says Colin Tan, of Chesterton Suntec International, reflecting on December data that showed an investor paid a record S$61.4 million (HK$384 million), or S$1,467 per square foot, in the prime district of Leedon Park.
But even that price paled in comparison with Sentosa Island, where sites were said to have changed hands last year for more than S$2,400 per square foot.
However, the latest data from Jones Lang LaSalle (JLL) suggests Singapore lagged behind other luxury markets in Asia in the fourth quarter of last year.
Dr Yang Liang Chua, JLL's head of Singapore research, says demand for luxury properties has softened. 'There is currently a supply-demand mismatch in this market,' he says. 'Many people are looking for large four-bedroom units with entertaining space to accommodate their families, but this type of property is in limited supply, with many of the new developments providing smaller units that are less in demand.'
He says the latest government cooling measure, introduced in January to target speculators, removed many investors looking to make a quick profit, leaving behind only genuine buyers.
Nonetheless, JLL still anticipates some growth in the luxury market in line with GDP growth, but says it is unlikely to be as strong as that of the past 12-18 months. 'After a quiet start to 2011, demand is starting to filter back, especially from employees in the legal sector and funds from the US,' he says.