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Singapore high-end homes back in vogue with foreigners

DTZ analysis shows that units costing over S$5m make up 19% of their April purchases, up from 6% in Q1

PUTTING ON THE GLITZ: The family room in a show unit of a 4-bedroom Marina Bay Suites apartment.

THE proportion of private homes bought by foreigners that are priced more than S$5 million has gone up in April, shows a caveats analysis.

This confirms ground feedback from property agents who have noticed a pick-up in viewings as well as sales of luxury apartments since last month, including among foreign buyers.

Singapore high-end homes look more attractive, as they have posted a bigger price drop compared with properties in the suburbs. Moreover, private residential property prices on the island are relatively more attractive compared with Hong Kong - and this has sparked a revival in buying interest from mainland China buyers in Singapore.

DTZ's analysis of URA Realis caveats data found that homes costing above S$5 million accounted for 19 per cent of private homes bought by foreigners in April, up from a 6 per cent share in the first quarter of this year.

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The absolute volume of transactions is still low, though numbers are expected to go up as more caveats are lodged. So far, 36 caveats have been lodged by foreign buyers for private homes in April, of which seven were above S$5 million. In Q1 this year, only 6 per cent, or nine of the 145 caveats lodged by foreign buyers were for units that cost more than S$5 million. The share has increased steadily from a low of 3 per cent in the second quarter of last year. "The findings support what has been observed on the ground, where there is an increase in foreign investors displaying interest in luxury apartments," said Lee Nai Jia, associate director, research, at DTZ.

"Despite facing higher stamp duties to buy properties in Singapore, foreign investors continue to be drawn to the Republic's transparent property market. There is also more smart money flowing in, as investors scour for value-for-money properties."

George Tan, senior director at Savills Residential, said that over the past couple of months, his agents have been busier in terms of viewings as well as transactions of high-end properties - in both the new sale and resale segments. "Prices are more reasonable now."

Market watchers highlight that the reduction in prices in luxury apartments can be seen in resale prices at the freehold Ardmore Park. Based on SRX Property data, a 10th floor unit changed hands for S$2,524 per square foot or S$7.28 million last November, down from S$3,155 psf or S$9.1 million for an 11th floor unit in the same block back in October 2012.

Said Savills's Mr Tan: "A good proportion of buyers are foreigners including PRs (permanent residents). Many of them are China buyers who are Singapore PRs."

Singapore PRs pay lower additional buyer's stamp duty (ABSD) on residential property acquisitions here compared with foreigners who are not PRs. Joseph Tan, executive director (residential) at CBRE, too said that "PRC citizens with Singapore PR - that is one of the most common buyer profiles in the high-end market now".

Many of them would have looked at Hong Kong as well. "Singapore and Hong Kong have introduced similar sort of property cooling measures. However, the Hong Kong market, which has seen a rebound in home prices over the past one and a half years, is now looking toppish. In comparison, Singapore property, following price declines, offers better value."

Additional reasons CBRE's Mr Tan cites for the increased interest among mainland Chinese in Singapore property are the buoyant stock markets in China and Hong Kong and the appreciation of the Chinese yuan against the Singapore dollar in the past year or so.

At Marina Bay Suites, which CBRE is marketing jointly with DTZ, the developer has sold 10 units so far this year, which means it is now left with only eight units for sale in the 221-unit condo. Standing on a site with 99-year leasehold tenure starting March 2007, the project received Temporary Occupation Permit in June 2013. At least half the buyers of the 10 units are PRs or foreigners, BT understands.

The sales follow an increase in discount to list prices at the project to 25 per cent this year from 10 per cent previously. The developer moved only two units in the project last year.

The 10 units sold so far this year are said to include two of the three penthouses in the condo. A nearly 4,700 sq ft penthouse went for close to S$11.3 million or a tad above S$2,400 psf earlier this year.

The buyer is understood to be a US citizen. US citizens are treated the same as Singapore citizens for ABSD, under the US-Singapore Free Trade Agreement, that is, no ABSD is payable on the first Singapore residential property purchase.

Talk in the market is that the other penthouse, an 8,500 sq ft duplex unit on the top two levels of the 66-storey project, is being sold. An option is said to have been granted for the unit recently for slightly over S$19.5 million - or about S$2,290 psf. The buyer is a Chinese citizen who is a Singapore PR.

Based on information in the project's brochure, the unit has five bedrooms, living and dining areas, wet and dry kitchens on the 65th storey and a swimming pool, steam room and lounge area on the 66th storey.

DTZ's analysis based on URA Realis caveats data downloaded on May 14 also suggests that China buyers are returning to District 10. Of the 48 private homes here that China buyers purchased last month, almost 17 per cent or eight units were in District 10.

This is higher than the 7 per cent share in Q1 2015 and 10 per cent share in Q4 2014. CBRE's Mr Tan noted that that luxury apartments - 200 sq m (2,153 sq ft) and above - are mostly found in the traditional prime districts, which includes District 10.

Savills's Mr Tan believes that the nascent recovery in foreign buying in Singapore's high-end residential market is likely to continue. "Prices are still at a low point and there are a lot of savvy, rich people on the lookout for good investment opportunities to take a position just before the market turns. This is the correct time for the rich (to enter the market)."