Ups and downs
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.
Agents on the ground remain more upbeat. While conceding that further softening is expected, Singapore realtor Ken Lee expects the luxury market to be less affected. 'Record prices achieved of late should taper off. However, it won't stay that way for long because Singapore's luxury properties still have quite some way to catch up to those of Hong Kong and some of the mainland's first-tier cities.' He also points to a scarcity of land that should drive up prices.
Lee says wealthy mainlanders are venturing into Singapore after cooling measures curbed property investment in their own country.
Markus Tay, managing director of LUXE Group (Singapore), says rich mainland buyers have helped push Singapore's luxury prices up by as much as 200 per cent. He cites The Sail @ Marina Bay, launched in 2004 at about S$1,000 per square foot, with some units later selling for more than S$3,300 per square foot.
'Prices of top-end property reached as high as S$5,600 per square foot for a penthouse unit in The Orchard Residences in 2007,' says Tay, who believes prices have recovered to pre-financial crisis levels.
Good Class Bungalows, defined by their location and plot size (at least 1,400 square metres), are among the rarest of prestige real estate in Singapore. Only an estimated 2,500 exist. Last month, a Cluny Road bungalow sold for S$33 million, or about S$2,038 per square foot.
At The Sail @ Marina Bay, a three-bedroom apartment of 1,184 sqft, on a high floor with a panoramic view of Marina Bay and the urban skyline, is for sale at S$4.5 million. In Sentosa South Cove, Turquoise, a four-bedroom apartment of 2,400 sqft with sea and golf course view, costs S$6 million.
As for Good Class Bungalows, DTZ has one for sale in District 10 for S$30 million.