Demand for luxury penthouses holds steady despite pandemic

Singapore

DESPITE the pandemic and ongoing border closures, demand for penthouses has proven firm, with nine transactions so far this year.

While the recent surge in the number of community cases is a temporary setback, demand for luxury homes could gather pace again in the near future, especially as travel restrictions are eased, consultants said, pointing to interest from ultra-high-net-worth individuals (UHNWI) and foreign investors.

According to data from List Sotheby's International Realty (List SIR), seven penthouses were sold in the Core Central Region (CCR) this year, based on caveats (as at May 21). List SIR defines a penthouse as an apartment or luxurious flat at the top of a tall building, typically occupying the entire top floor of an apartment block located in a prime residential enclave or the heart of downtown.

In addition, two penthouses were transacted in the Rest of Central Region (RCR) at the low-rise Meyer House on Meyer Road in district 15.

Among the properties scooped up in the CCR were two that surpassed the S$4,100 psf mark - a 3,520 sq ft penthouse at Midtown Modern at Tan Quee Lan Street, which sold for S$14.83 million (S$4,213 psf); and a 2,185 sq ft penthouse at Irwell Hill Residences, which went for about S$9 million (S$4,123 psf).

"The premium could be (due) to their strong location attributes and access to an MRT station," said List SIR's research director, Han Huan Mei.

Meanwhile, two penthouses were bought this month at the super luxury Park Nova on Tomlinson Road. A 5,899 sq ft, five-bedroom penthouse went for S$34.438 million (S$5,838 psf), while a four-bedroom 4,499 sq ft penthouse sold for S$26.026 million (S$5,784 psf). The 54-unit freehold development in prime District 10 is Hong Kong-listed Shun Tak's maiden residential project in Singapore.

And in March, SC Global Developments sold a five-bedroom, 8,385 sq ft penthouse at freehold project Hilltops in Cairnhill Circle for S$33.5 million (S$3,995 psf). It was acquired by a pair of buyers - a Cambodian citizen and a Chinese citizen.

List SIR also looked at penthouse deals in recent years (based on caveats lodged). It showed 11 penthouses were sold in 2020 - 10 in the CCR and one in the RCR.

At least 19 penthouses were transacted in 2019, of which 15 were in the CCR and four in the RCR. Not included in that tally is the triplex super penthouse in the 64-storey, 99-year leasehold Wallich Residence in Tanjong Pagar, which was bought by billionaire James Dyson and his wife for S$73.8 million in June 2019. The price worked out to S$3,496 psf based on the 21,108 sq ft strata area.

No caveat was lodged for the sale of that unit. This would lift the total number of penthouses transacted in 2019 to about 20.

The Dysons made the headlines once again in 2020 when they sold the penthouse in October for a lower price of S$62 million or S$2,937 psf. The buyer was said to be Indonesia-born, US citizen Leo Koguan, co-founder of IT provider SHI International.

Ms Han said: "The higher volume and price points in 2019 (vis-a-vis 2020) could be attributed to a relatively higher supply of penthouses from new projects, such as Boulevard 88 and 3 Orchard-By-The-Park in the CCR as well as Amber Park in the RCR."

Penthouse sales have likely been bolstered by UHNW foreign investors, some of whom might have already been in Singapore throughout the pandemic outbreak, reckons List SIR's executive director Lewis Cha. Demand could also stem from affluent businessmen amid a burgeoning of family offices here.

According to data from data analysis firm Handshakes, 221 single and multi-family offices opened in Singapore last year, rising from 129 in 2019, and 22 in 2018.

The biggest proportion of foreign directors for these family offices are from North Asia, at 27.3 per cent in 2020.

Aside from Singapore's growing status as a financial hub and its stable political environment, foreign investors may also have made a beeline to Singapore after having been reassured by the government's handling of the pandemic, Mr Cha said.

"These factors could have led them to decide to invest in an alternative home here. As foreigners are not eligible to buy landed properties in Singapore, the next best option for them is luxury penthouses in premier locations which offer the enjoyment of both living space and an opulent lifestyle."

Luxury homes are also seen as a safe long-term bet for investors looking to park their wealth for value preservation and capital appreciation.

Knight Frank's head of residential international project marketing, Nicholas Keong, pointed out that the limited availability of newly launched penthouses in 2020 prompted UHNWIs - for whom size and the quality of living space are key criteria - to turn to the resale market. "Now, with more new launches in the CCR, UHNWIs will have more choice when hunting for new units of large sizes," he added.

And while the resurgence in Covid-19 cases here is a speedbump in the short-term, foreign investors are expected to continue to underpin demand for Singapore's luxury private residential market, especially as travel restrictions are gradually eased. According to Knight Frank's Wealth Report 2021, Singapore is the leading destination in Asia for prime homes among well-heeled Asians.

Mr Keong said: "This hiccup in demand for luxury homes in the city-state is expected to be temporary, as foreign home-buyers have been making inquiries while waiting on the sidelines for border restrictions to be lifted.

"As soon as community infections come under control, together with the dogged progress made through countrywide vaccinations, it is likely that demand for luxury homes would regain momentum in the coming months."