More snapping up luxe condos even as new private home sales in April slow

Singapore

BUYERS continue to fork out for posh condos amid a more sanguine economic outlook. This is even as new private-home sales in April have dipped slightly from March.

Developers moved 1,262 units in April, down 2.6 per cent from March's 1,296, according to consultants' flash estimates. Including executive condominiums (ECs), sales reached 1,342, easing 2.3 per cent against March. ECs are a private-public housing hybrid.

The Urban Redevelopment Authority will release monthly sales data on May 17. While overall sales in April were slightly lower, the more expensive homes were snapped up. The proportion of homes (landed plus non-landed excluding ECs) sold above S$3 million rose from 5.6 per cent in March to 7.2 per cent in April, said Christine Sun, OrangeTee & Tie senior vice-president, research & analytics.

In absolute terms, April saw 91 homes costing more than S$3 million sold versus 71 in March. The most expensive was a 470 sqm sized unit in 15 Holland Hill which went for S$15.2 million.

"The proportion is also higher than the 2.7 per cent in January. This uptrend indicates that demand for luxury homes has continued to rise in tandem with better economic prospects," said Ms Sun.

Developers achieved another month of healthy private home sales in April 2021, said Ismail Gafoor, PropNex chief executive.

April's sales volume - based on caveats lodged - is fairly comparable to that of March 2021, being just 2.6 per cent lower, he said.

"However, on a year-on-year basis, new home sales in April 2021 surged by 355.6 per cent from the 277 units shifted in April 2020, when Singapore implemented the circuit breaker to curb the spread of Covid-19," he said.

New home sales in April were led by the central regions.

Specifically, the Rest of Central Region (RCR) recorded 507 transactions - driven by sales at One-North Eden and Normanton Park; while the Core Central Region (CCR) sold 444 new units, with Irwell Hill Residences accounting for the bulk of volume there.

In the Outside Central Region (OCR), developers sold 311 new homes of previously launched projects.

Once again, the monthly sale volume was buoyed by new launches, said Mr Ismail.

In April 2021, two new launches - Irwell Hill Residences and One-North Eden - spurred sales, shifting 315 and 141 units respectively. They collectively accounted for about 36 per cent of April's transactions.

"Generally, buyers' response to new launches in recent months has been extremely encouraging, reflecting their growing confidence in the property market amid the brighter economic outlook," he said.

Last month, the Monetary Authority of Singapore noted in its half-yearly policy statement that full-year growth "is likely to exceed the upper end of the official 4-6 per cent forecast range, barring a setback to the global economy".

"Our observations also suggest that buyers are particularly drawn to projects with a strong story - be it being situated in an area seeing ongoing transformation or a place with exciting future development plans or perhaps in a convenient and accessible location," he said.

Irwell Hill Residences, off River Valley Road and a stone's throw from the soon-to-be-completed Great World City MRT, sold 315 units or 58 per cent of the 540-unit project. One-North Eden was 85 per cent sold, as buyers snapped up 141 units out of the 165-unit development.

Ms Sun said One-North Eden's attractions included its good location and it is also near trendy Holland Village.

"The project is also in close proximity to One North industrial park and NUS (National University of Singapore), and makes it attractive for rental and long-term investment," said Ms Sun.

But slow sales at two launches this month has prompted one analyst to wonder if buyer fatigue is setting in.

"Subdued take-ups at two high-end launches (representing 6th and 7th high-end launches, out of total 12 year-to-date) over the weekend suggest to us that buyer fatigue may be setting in within this segment after decent sales at three preceding ones (Irwell Hill Residences, Eden and Midtown Modern), though elevated pricing and relative lack of foreign buyers (albeit signs of nascent return) could have played a part as well," said Brandon Lee, Citi investment research analyst.

Singapore's MCC Group and Hao Yuan Investment said that on May 9, over 80 units or 80 per cent of the first phase of 100 units released at their joint venture project One Bernam were sold. This translates to a 23 per cent take-up rate out out of a total of the 351 units in the 99-year leasehold, mixed-use development.

On May 7, five units were sold at Park Nova, a super luxe condo in the Orchard Boulevard-Tomlinson area, according to EdgeProp.

The five units sold for over S$100 million with the two biggest five-bedroom penthouses in the 54-unit project fetching S$34.438 million and S$26.026 million respectively, it said.

But Mr Ismail sees things differently. "We do not think that 'luxury fatigue' has necessarily set in just from the initial sales performance at the two launches (One Bernam and Park Nova).

"Without commenting specifically on the two projects, our market observations are that the CCR generally still presents compelling options for buyers and the take-up rate would mainly depend on which segment of buyers the developers are targeting, and curating the unit mix and sizes as well as pricing strategy accordingly," he said.

Generally, many buyers of CCR properties are investors, and they likely fall into two broad categories: first, the mass affluent market where buyers tend to be more quantum-sensitive; and second, the ultra-high net worth individuals who are less concerned about pricing but are seeking larger homes that are super posh and well-designed, he said.

"Recent sales transactions have reflected this trend too, as smaller units with more affordable price quantum were snapped up by buyers at launch. Meanwhile, larger units that are pricier on an absolute quantum basis generally take a bit more time to transact," said Mr Ismail.

"If you look at the first group of investor-buyers who are more quantum sensitive, I would say the pricing sweet-spot (assuming for CCR 99-year leasehold property) for a one-bedder would be around S$1 million to S$1.2 million, for a two-bedder at about S$1.5 million to S$1.6 million, and for a three-bedroom unit at the S$2 million to S$2.2 million range," he said.

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