According to the New York Times, a Global Wealth 2011 report released by the Boston Consulting Group in June shows that Singapore has the world's largest concentration of millionaire households, with 15.5 per cent of all households boasting at least $1 million in assets under management. A Straits Times article released the past week also reveals that Credit Suisse's latest global wealth report expects the number of millionaires in Singapore to more than double, from the current 183,000 to 408,000 by 2016. -- 2011 October 22 SINGAPORE BUSINESS TIMES
Unlike the boom year of 2007, developers must now cater more to owner occupiers rather than investors and speculators.
As Singapore's economic recovery took hold in 2010-2011, the traditional prime districts of 9, 10 and 11 have re-emerge as residential hotspots. But new high-end enclaves have gain prominence. These hotspots will be found along the southern corridor, in places like Marina Bay, Tanjong Pagar/Shenton Way and Sentosa Cove/Keppel Bay.
Those looking for brand-new luxury residential properties can look forward to a string of still-unlaunched projects in some of the choicest locations in Singapore - including Ardmore Park, Nassim Hill and Sentosa Cove.
- Market Snapshot -- 2011 July
Property consultancy group CB Richard Ellis' compilation lists 10 such developments totalling slightly over 1,000 units which have obtained the pre-requisites for sale.
It has also identified seven other projects with 574 homes that have planning approval from the Urban Redevelopment Authority (URA) but without pre-requisites for sale. These include City Developments and IOI's South Beach project, which has approval for 180 residences, and YTL Corporation's 89-unit development at Orchard Boulevard.
Some of these developers are getting their showflats ready but don't seem to be in any hurry to launch their projects. As one developer said: 'There's no lack of money among potential buyers but an inertia to commit. There is caution with general negative news flow around.'
Potential buyers may also look at a string of earlier projects, some of which have even received Temporary Occupation Permit (TOP), with units that have yet to be sold. These include The Orchard Residences, Cliveden at Grange, The Marq on Paterson Hill and Hilltops.
Completed luxury condos have their appeal, especially as buyers these days, whether foreigners or Singaporeans, are more likely to be purchasing for their own occupation, rather than for investment or speculation as seen during the 2007 luxury market boom.
Owner occupiers
There are more of these buyers who pay high per square foot prices wanting to see the final product. They're particular about how the project is built and finished. Developers have to realise they have to cater to owner occupiers. Gone are the days when developers could expect the market to accept whatever they built, without taking into account people's expectations on design, style and layout.
'All the little extras you put into the design and finishes will always be appreciated by the owners who occupy their homes.' said a local broker
Foreigners buying luxe condos in Singapore these days tend to do so with a view to occupying them for a few months in a year. They feel the vibrancy in Singapore, with the integrated resorts, the arts and cultural scene, the proliferation in dining options. Singapore may be a stop for high net worths' travel patterns throughout the year along with other places like London, New York, Shanghai and Sydney. Some are also buying for portfolio diversification.'
Earlier this year, the sale of a three-bedroom apartment at The Orchard Residences at about $4,800 psf or nearly $8.7 million to a young East European couple that intends to occupy it for two to three months in a year, as indication of the investors who are 'part-time' residents. Another 3,003 sq ft four-bedroom unit at The Marq on Paterson Hill at a record price of $5,842 psf to a South-east Asian tycoon who plans to live in the apartment during his visits to Singapore.
There's also not much likelihood of a revival in speculative buying anytime soon, given the hefty seller's stamp duty rates announced in January to deter short-term speculators.
But while speculative and investment demand have taken a back seat, the luxury market is still appealing to buyers who aim to live in the properties.
While a few high-priced deals have been done this year in specific developments, this is not yet a broad-based phenomenon. For instance, CBRE's analysis shows that just six caveats have been lodged for new sales and subsales of non-landed private homes above $4,000 psf in the first half of this year, compared with 50 in 2007.
The URA's price index for uncompleted non-landed private homes in Core Central Region (which includes the traditional prime districts 9, 10 and 11 as well as the financial district and Sentosa), has risen 32.2 per cent from its post-global financial crisis low in Q2 2009 but is still 5.8 per cent shy of the peak in Q1 2008. On the other hand, the comparable indices for Rest of Central Region (which covers places such as Bukit Merah, Queenstown, Geylang, Toa Payoh and Katong) and Outside Central Region (where suburban mass-market condos are located) have risen by slightly over 50 per cent each from their Q2 2009 lows and also surpassed their previous highs in Q2 2008 by 8.3 per cent and 22.8 per cent respectively.
'The biggest attraction in investing in the luxury market here today is that price points have not crossed the previous peak, unlike all the other segments of the Singapore residential market,' says Cushman & Wakefield Singapore vice-chairman.
'Another compelling reason to buy a luxury residential property now is that it is likely to be the least affected by any impending property cooling measures or government policy to ramp up public housing supply for instance.'
While demand for luxury homes in Singapore is stronger this year than last year, foreign high-end investors have a lot of places to put their money, not necessarily Singapore. 'A lot of opportunistic money especially from China is shooting for faster growth markets like Hong Kong, London, New York, Los Angeles and Vancouver.'More options for Chinese money
The Chinese are a major buying force, and Singapore is not necessarily on their radar. They tend to go to Western markets such as Europe, Canada and Australia.
Market watchers generally say that foreign buying has yet to recover in the luxury market to the levels seen in 2006-2007, when the initial excitement of the development of two integrated resorts, the Marina Bay Financial Centre and the positioning of Singapore as a hub in many fields put the Republic on the radar of high net worth overseas property investors. Now as Singapore's economy reaps the fruits of these investments, luxury residential developers can still count on a staple of both local and foreign buyers keen on purchasing high-end homes for their own occupation. 'There is more purposeful buying in the luxury segment these days.' -- 2011 August 11 BUSINESS TIMES
NEW LUXURY DISTRICTS
Marina BayRef:realestatefundmanager
Homes in Marina Bay benefit from the opening of the Marina Bay Sands integrated resort, slated for end-April. But the prestige of this area also comes from the fact that Marina Bay is the newest prime office hub, where up-and-coming executives want to be seen at. Having a loft in this sophisticated new hotspot would certainly be something to flaunt.
The Sail @ Marina Bay was the first high-end residential project in the area to come on the market. Completed in the second half of 2008, the 1,111-unit Sail saw median monthly rents climb steadily, from $4.25 per sq ft in Q1 2009, to $5.15 psf in Q4 2009, going by figures from the Urban Redevelopment Authority (URA).
Although there will be no major residential projects to be launched after Marina Bay Suites is entirely released, the buzz in Marina Bay is expected to translate into encouraging resale and leasing activity.
Tanjong Pagar/Shenton Way
The excitement of city living extends beyond Marina Bay. The traditional CBD, such as Tanjong Pagar and Shenton Way, is increasingly popular with working professionals. Icon, One Shenton and The Clift are successful projects that were launched from 2003. The completed Icon condominium is enjoying monthly median rents of about $6 per sq ft. Meanwhile, Altez, a 60-storey development in Tanjong Pagar, was recently launched. Offering panoramic sea and city views, the project is priced from $2,100 psf to $2,300 psf.
UIC Building and 76 Shenton Way, both office buildings, will soon be converted into prime residential developments, enhancing the attractiveness of the area. 76 Shenton, a 39-storey condominium, is the newest launch in the area. These projects are testimony to the attractions of inner city living, where residents enjoy maximum convenience, whether at work or play.
The Economic Strategies Committee, in looking at maximising Singapore's land use, has recommended turning Tanjong Pagar into a new waterfront district, by relocating the Tanjong Pagar port to Tuas once its lease is up in 2027.
Sentosa Cove & Keppel Bay
The excitement in Sentosa Cove started with the launch of the first condominium project - The Berth by the Cove - in 2004. Since then, several other waterfront condominiums have been completed on Sentosa. According to URA figures, The Berth by the Cove and The Coast at Sentosa Cove enjoyed attractive monthly rents of between $3.50 psf and $4.80 psf at end-2009.
Sentosa Cove is poised to become more exciting this year. Two new condominiums - The Oceanfront@Sentosa Cove and Turquoise - are scheduled for completion in 2010 while the Marina Collection will be ready in 2011. Meanwhile, Seascape and The Residences at W Singapore - both at Sentosa Cove - are being released this week. When these developments are built, Sentosa Cove will be a lively residential enclave with all the supporting amenities. These developments will transform Sentosa island into a self-sufficient waterfront haven.
The Keppel Bay area, comprising Caribbean at Keppel Bay and Reflections at Keppel Bay, will also remain attractive to investors.
Traditional prime
The traditional prime residential districts are perennially attractive to home buyers and investors who prize a central location and all its conveniences, particularly the allure of shopping along Orchard Road. Generally, prices of high-end residential resale properties in the prime districts recovered by about 15 per cent in 2009, following a 27 per cent slide in 2008.
Prices this year could well hit the all-time high seen at end-2007, as experience shows that prime residential properties are the first to move in the early stages of an economic recovery.
The prime leasing market is also expected to improve, as companies boost their senior expatriate headcount incrementally and become more generous with housing allowances.
For the first time in a long while, Orchard Road last year saw the opening of three new malls - Ion Orchard, Orchard Central and 313 @ Somerset. The new malls have refreshed the shopping experience in the premier shopping belt. This will benefit existing property owners as well as help sell new projects in the vicinity, such as The Vermont on Cairnhill and Hilltops.
Property investors should be able to find opportunities in all these residential hotspots, from the southern corridor to the traditional prime districts. However, the performance of the property sector will depend on the bigger picture - the economy and market sentiment.
As such, astute investors will need to analyse the prospects for the high-end residential market, before looking for their preferred property.
The government recently introduced measures to cool speculative activity, by lowering the loan-to-value ratio and introducing a seller's stamp duty if a property is re-sold within a year. These measures, however, are likely to only impact speculators. Perhaps investors of high-end residential property can safely read that, following the latest government measures and pronouncements, there will be no further attempts for the time being to cool the residential market.
After all, the pace of recovery for the high-end segment this year will be modest compared with 2007 and can be seen as a recovery rather than price escalation. A realistic price recovery this year may offer investors who commit today a chance to enjoy gradual capital appreciation in 2011 and 2012.
Foreign interest
Owners and developers of high-end residential properties can also expect to enjoy increasing buying interest from foreigners. Although Singapore is seeing more competition from regional cities where developers are improving luxury residential offerings, escalating prices in domestic markets in China and Hong Kong could make buyers there view our high-end properties favourably.
The full impact of the IRs on the property market will be felt this year, with the opening of Resorts World Sentosa and Marina Bay Sands strengthening the appeal of high-end residential properties in the southern corridor. The benefit of the IRs could extend to high-end property throughout Singapore, as the developments take the city up a rung in international exposure.
Visitors may be increasingly interested in Singapore for work and leisure, which would lead them to consider investment opportunities in high-end residential hotspots. This could lead to an increasingly international buyer profile in the luxury market. -- 2010 March 25 BUSINESS TIMES
The authors are Peter Ow is managing director of residential services and Ong Kah Seng is manager of consultancy & research at Knight Frank Pte Ltd
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