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Luxe condo deals see higher transactions in 2016

More attractive pricing, availability of large units from developers in completed projects cited among reasons but agents generally don't expect a big surge in buyers - unless the additional buyer's stamp duty is adjusted

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The double-volume living area in a five-bedroom duplex garden home in Leedon Residence. The unit is being put up for sale for more than S$11 million.

Singapore

THE number of private apartments and condo units transacted at S$10 million and above each rose to 36 units last year - from 21 units in 2015 and 24 units in 2014. And the momentum continued this year, with 16 units sold from January to April.

These figures were compiled by Savills Singapore based on its analysis of URA Realis caveats data. However, a breakdown of buyer profiles into Singaporeans, permanent residents (PRs) and foreigners as well as nationality details are not available in the above-S$10 million price category in Realis.

Most market watchers believe that the bulk of buyers are foreigners or Singapore PRs. As JTResi founder Jerry Tan said: "Generally, Singaporeans, if they are looking to acquire a big-ticket property costing S$10 million or more here, would rather pick a landed home than a condo." Foreigners and PRs face restrictions on the purchase of landed residential properties but are free to pick up private apartments and condos.

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Mr Tan observes that the foreigners and PRs who are buying luxe condo units here are doing so mostly for owner occupation - that is, they are either based here, or use their Singapore home during their visits here, while leaving it empty the rest of the time rather than leasing it out.

Savills Singapore research head Alan Cheong attributes the pick-up in transaction volumes of condo units in the S$10 million and above category since last year to more attractive pricing in the sector following price declines, as well as a good selection of large, new apartments in completed projects such as Leedon Residence, Tomlinson Heights and TwentyOne Angullia Park, as their developers stepped up marketing efforts to meet regulatory sales deadlines under Singapore's Qualifying Certificate rules for foreign developers, or to at least sell as many units as possible in their projects to mitigate penalties payable to the state."Singapore's safe-haven status continues to draw foreign investors - including those who seek to derisk politically," he added.

Five of the 16 units transacted from January to April 2017 were sold by GuocoLand at its Leedon Residence freehold condo development, which received the Temporary Occupation Permit (TOP) in June 2015. They comprised three 4,704-square foot duplex units (each with its own private pool), a garden home with a total saleable area of 8,051 sq ft, that includes the first two levels and which also comes with a private garden and pool, and a 6,125-sq ft triplex penthouse. Each of these five units has five ensuite bedrooms and were sold at between S$10.15 million and S$12.50 million.

At Tomlinson Heights, Hotel Properties moved two five-bedroom apartments last month - a 34th floor-unit that fetched S$11.15 million or S$2,755 psf and a 14th floor unit that went for S$10.75 million or S$2,656 psf. The 36-storey freehold development, comprising 70 units, received TOP in August 2014.

Wing Tai sold a unit on the 23rd floor of its Le Nouvel Ardmore condo for S$15.17 million or S$4,005 psf in March.

The biggest transaction in the first four months was the S$21.8 million sale of a mid-floor apartment in the The Marq on Paterson Hill's Signature Tower. The price reflects S$3,498 psf. The unit was sold by Chinese citizen and Singapore permanent resident Chan Ki to a British Virgin Islands-incorporated company. Mr Chan made a loss, having bought the unit for S$26.4 million in 2007 from the developer.

Another large deal involved a 6,953 sq ft penthouse at Nassim Park Residences, which was completed in 2011; the unit was sold at S$21 million or S$3,020 psf by Leon Le Mercier of the eponymous furniture/furnishing group.

Elaborating on the reasons for the improvement in buying appetite in the luxe condo segment, Samuel Eyo, managing director of Singapore Christie's International Real Estate (Residential), suggests one factor could be some foreigners and PRs accepting the additional buyer's stamp duty (ABSD) rates - of 15 per cent for foreigners, and either 5 or 10 per cent for PRs on their first and subsequent Singapore property purchases respectively.

"After all, in the past year or so, several other markets including London, Toronto, Vancouver, Hong Kong, Australia - have come up with new or higher taxes on foreigners buying residential properties. "Moreover, prices of luxe condos in places like Shanghai, Beijing and Hong Kong have not softened despite cooling measures in these respective markets, unlike Singapore; this presents value-for-money opportunities here for investors," he argued. Mr Eyo estimates that luxe condo prices in Singapore have eased about 15-20 per cent on average from the peak levels in 2007/early 2008 prior to the Lehman Bothers' collapse.

Looking ahead, some agents do not expect a surge in transactions of condos in the S$10 million and above range.

For one, there is a very limited supply of big apartments in new condo projects in prime districts 9 and 10. The spread of biggish units rolled out by developers since last year are from earlier projects built on sites bought around 2006-2007 - during the heyday of the high-end residential market boom when well-heeled foreign buyers were enamoured of Singapore and developers took to minting big units in high-end projects to cater to this segment.

After the global crisis, the mass-market recovered but not the luxe condo segment - partly because of cooling measures such as the ABSD which put off foreign buyers, who are a vital source of demand in the high-end market. Big units have become scarce in new projects.

On the demand side, Mr Eyo said: "I don't think the Singapore market is going to see a big influx of buyers coming in to purchase luxe condo units in the next few years - unless there is a change in the ABSD.

"For now, among high-level executives, before they buy a big luxe apartment in Singapore, they would want to be employed here, and bring their families here too. However, the Republic is now ramping up its infrastructure before it increases its intake of foreign talent again.

"As for foreign ultra-high net worth individuals, if they are looking to invest in a property costing over S$10 million, they have many alternative destinations to consider - including Tokyo, New York, London..."

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