Launch of Cape Royale spurs interest in Sentosa Cove homes

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/ EdgeProp Singapore
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September 8, 2022 7:00 AM SGT
Cape Royale was completed in 2013, and has 302 units across eight 17-18 storey blocks (Photo: Samuel Isaac Chua/EdgeProp Singapore)
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SINGAPORE (EDGEPROP) - Originally from Rajasthan, India, chartered accountant and businessman Rajesh Bafna came to Singapore in 2001. In the 21 years he has been here, he has moved 14 times: the first 10 times as a tenant, and the next four, as a home owner-investor. His current residence is a penthouse at a private condominium, Waterview, in Tampines in the east.
He has now set his sights on Sentosa Cove. “It’s a different lifestyle,” he says. “We have enjoyed the views of the reservoir, the CBD and Marina Bay Sands. Now we want to enjoy a view of the sea.”
A fortnight ago, Bafna visited Cape Royale, a 302-unit luxury condo at Sentosa Cove developed by Ho Bee Land and IOI Properties in a 35:65 joint venture. He viewed two units, both four-bedroom apartments of 3,000 sq ft. The asking rent is $22,000 a month for these units. “They have beautiful sea views,” says Bafna. “They have a huge covered deck that you can enjoy even when it rains. You have a lot of privacy because you don’t see the other units. You’re directly facing the sea.”
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Bafna is considering to rent first, and then purchase a home in Sentosa Cove after about two years. As a foreigner, he will be subjected to a 30% additional buyer’s stamp duty, hence he is selective about the unit he purchases.
“Sentosa Cove is one of those places where you feel mentally more peaceful,” notes Bafna. “You feel like you’re in a different place, but you’re still in Singapore.” He likes the fact that he will be able to hold weekend parties and invite his friends over if he wishes and he can work from home several days a week, saving travelling time. However, he has timed it — it takes just seven minutes to drive from Sentosa Cove to the city, even though the speed limit at Sentosa Cove is just 40 to 50 km per hour, he says.
Balcony view - EDGEPROP SINGAPORE
View of the sea from the balcony of a four-bedroom unit at Cape Royale (Photo: Ho Bee Land)

Lifestyle changes, price comparisons

Sentosa Cove is not lacking in amenities, says Steve Tay, senior associate vice president of List Sotheby’s International Realty. There is a Cold Storage supermarket, 24-hour 7-Eleven convenience store, and more than 40 F&B outlets including those at One degree 15 Marina, he cites. There is also a free shuttle to VivoCity shopping mall that is linked to Harbourfront MRT Station. “There is a misconception that Sentosa Cove is inaccessible, expensive and has no amenities,” says Tay.
He says this misconception is one of the key reasons for the lacklustre sales at Sentosa Cove prior to Covid. However, an appreciation of Sentosa Cove’s lifestyle attributes was rekindled during the pandemic in the past two years.
Another motivating factor is the new 99-year leasehold condominium project launches in the Rest of Central Region (RCR) and Outside Central Region (OCR) of Singapore in the last four months. It started with Piccadilly Grand and Liv @ MB in the RCR this May, where average prices achieved at launch were $2,150 and $2,387 psf respectively.
The most recent launch was Amo Residence, a 372-unit, 99-year leasehold project at Ang Mo Kio Avenue 1, in the OCR. Units were sold in July, and over 98% were snapped up at an average price of $2,110 psf within the first day of launch.
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Ho Bee Land had released 50 units for sale at Cape Royale in July, at an average price of about $2,100 psf. Within a month, more than 40 units were taken up.
“If you look at the recent launch of Amo Residence in Ang Mo Kio and Cape Royale at Sentosa Cove, the psf prices are almost the same, but they have very different lifestyle attributes,” notes List Sotheby’s Tay.
CAPE ROYAL 4BR - EDGEPROP SINGAPORE
View from the 2,530 sq ft, four-bedroom show unit at Cape Royale that was sold for over $5.4 million (excluding the furnishing) [Photo: Samuel Isaac Chua/EdgeProp Singapore]

More than 75% of units released taken up

To date, 60 units at Cape Royale have been released, and about 75% of them sold at an average of $2,200 psf, according to a Ho Bee Land spokesperson. Units were sold at $3.528 million ($2,101 psf) for a 1,679 sq ft, three-bedroom unit on the eighth floor, to $10.107 million ($2,120 psf) for a 4,768 sq ft penthouse on the 17th floor, based on caveats lodged.
According to Ho Bee’s spokesperson, a majority of the buyers of Cape Royale are local residents as well as a mix of Singaporeans and newly minted citizens. For most of these buyers, their intention is to move into the units themselves. “A lot of them appreciate the view,” says the spokesperson. “Nowhere else in Singapore can you have a home directly facing the sea.”
While at least 45 units at Cape Royale have been sold, only 23 caveats have been lodged to date, as many of the buyers are said to have paid in cash. There were also a number of multiple-unit buyers, with one party snapping up three units, and two other groups buying two units each, mainly family members purchasing units together.
When Cape Royale was launched for sale, the units were 95% leased, with monthly rental rates ranging from $10,000 to $22,000. The 99-year leasehold condominium has eight blocks of 16 to 18 storeys. Typical units are a mix of three- and four-bedroom apartments with sizes from 1,679 to 2,713 sq ft. There are also 10 penthouses, with sizes from 2,939 to 4,672 sq ft.
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For units at Cape Royale that are tenanted, buyers have the flexibility of renewing the lease, or to move in themselves at the end of the lease. There is no price difference for units sold with vacant possession or tenanted, according to Ho Bee.
Completed in 2013, Cape Royale is one of only two high-rise condominiums in Sentosa Cove. The other is the 293-unit The Oceanfront. The other condominiums in Sentosa Cove are low-rise.
Bedroom view - EDGEPROP SINGAPORE
Unblocked view of golf course, bungalows and the sea from the bedroom of a three-bedroom show unit at Cape Royale (Photo: Ho Bee Land)

Prices still on an uptick, transaction volume slides

For sure, transaction volume of luxury homes has slowed in 2022 to date, and the drop was most pronounced in July, when inflation and interest rates spiked, and recession risks in the US, Europe and China heightened, observes Han Huan Mei, director of research, List Sotheby’s International Realty. “This was on top of uncertainties from geopolitical fronts,” she adds.
Bungalow transactions are the barometer of the luxury home segment. In Sentosa Cove, detached house transactions in the first eight months (from January to August) of 2022 totalled just 10, compared to 26 for the whole of 2031, according to List Sotheby’s. However, average transacted price was up 4.9% y-o-y to $1,865 psf in 2022 year-to-date from $1,778 psf in 2021.
Luxury home sales - EDGEPROP SINGAPORE
Luxury home sales - EDGEPROP SINGAPORE
Luxury non-landed transactions - EDGEPROP SINGAPORE
Good Class Bungalows (GCBs) on the mainland saw transaction volume contract to just 36 in the first eight months of the year, from 90 in 2021. However, average transacted prices were up 9.4% y-o-y to $1,851 psf, from $1,692 psf a year ago.
Meanwhile, median price of luxury apartments in the Core Central Region (CCR) saw a modest increase of 1.8% in the first eight months of 2022, compared to a 3.3% increase over the same period for luxury apartments in the Southern Islands Planning area, where Sentosa Cove is located, points out List Sotheby’s. Median price of luxury apartments at Sentosa Cove increased 3.3% to $2,129 psf, compared to $2,060 psf in 2021.
Marina top view - EDGEPROP SINGAPORE
There has been a significant increase in foreign visitors to Singapore since travel border restrictions were lifted in the middle of March (Photo: Ho Bee Land)

Increase in foreign visitors, family office applications

However, there has been a significant increase in foreign visitors to Singapore since travel border restrictions were lifted in the middle of March, says List Sotheby’s Tay. According to Singapore Tourism Board data, the number of visitor arrivals to Singapore was 726,601 in July, compared to 121,200 visitors in March. This brings total visitor arrivals to 2.23 million from January to July 2022.
Consequently, the number of foreigners flying to Singapore to view Sentosa Cove detached houses as well as properties in the CCR has risen in recent months, says Tay. Interest has come mainly from the high-net-worth individuals (HNWIs) from countries in the region, such as mainland China, Indonesia and Malaysia. There has been an increase in interest from those from Hong Kong, Taiwan, the US and Europe as well, he adds.
There has also been a corresponding increase in the number of family offices (FOs) set up by the HNWIs and ultra-high-net-worth individuals (UHNWIs) following the easing of travel restrictions to Singapore. In 2020, the number of FOs totalled 400, and by 2021, it had jumped to 700. By April 2022, the Monetary Authority of Singapore (MAS) had approved another 100 FO applications.
Of these, 44% of new FOs came from the Greater Bay Area of Guangdong-Hong Kong-Macau, compared to 38.6% in 2021, says Loh Kia Meng, Dentons Rodyk senior partner and COO.
“So we can extrapolate that more than half of the new FOs probably came from Chinese-speaking territories of China, Hong Kong and Taiwan,” says Loh. “Our firm’s own experience is that the other FOs are from neighbouring countries in Asean, in particular Malaysia and Indonesia, followed by Europe and the US.”
A popular route of entry for foreign UHNWIs is via the Economic Development Board’s Global Investor Programme. One of the options is to set up FOs, with $200 million of assets under management, says Loh. Based on MAS data, there were about 800 FO applications as of April 2022.
The easing of travel restrictions has also led to an increase in foreign property purchases. It was most significant in the non-landed residential segment in 2Q2022, says Alan Cheong, executive director, research, Savills Singapore. Sales volume by foreign buyers more than doubled from 143 units in 1Q2022 to 294 units in 2Q2022, he adds.
Foreign buyers accounted for 4.9% of total non-landed property transactions in 2Q2022, an increase from 3.1% in 1Q2022, according to Cheong. It is also the highest since 1Q2020, when foreign purchases accounted for 5.7% of total non-landed transaction volume, he points out.
CAPE ROYALE COVE WAY BUNGALOWS - EDGEPROP SINGAPORE
As Cape Royale is one of just two high-rise developments in Sentosa Cove it towers over the houses and other low-rise condominium blocks, units above the sixth floor enjoy unblocked views (Photo: Samuel Isaac Chua/EdgeProp Singapore)

‘More demand than supply’

The increase in the number of HNWIs and UHNWIs coming to Singapore have also put realtors in a tight spot. “We have more demand than supply,” says Jacqueline Wong, executive director and head of the Private Office, Savills Singapore.
According to Wong, the typical HNWI home buyers are seeking four-bedroom units that are at least 3,500 sq ft in size. With such size requirements, they have to look at penthouses or landed property, she adds. “That’s why you see the large units at the likes of The Marq at Paterson Hill, Les Maisons Nassim and Le Nouvel Ardmore transacted at prices above $5,000 psf.”
The top 1% want to be surrounded by other one-percenters. “Size matters — from the size of the lift to the size of the unit,” notes Wong. “They want to know the profile of the potential neighbours. We have to pre-select condominiums where the starting price of a unit is at least $5 million.”
Such UHNWIs may consider detached houses at Sentosa Cove given their rarity, says Wong. There are only about 350 such houses in Sentosa Cove. However, as most of these detached houses sit on land sites of about 7,000 to 8,000 sq ft, these UHNWIs want “double plots” of at least 15,000 sq ft, the equivalent of a GCB. “There is a very limited supply of such plots that are at least 15,000 sq ft at Sentosa Cove,” she adds.
Rents of high-end homes have easily doubled, with detached houses in prime District 10 that were previously tenanted for $15,000 a month now rented for $30,000, notes Wong.
In March this year, a 4,800 sq ft unit at Seven Palms in Sentosa Cove was rented out for $45,000 a month. The deal was brokered by Tay’s team at List Sotheby’s. Tay had also received a rental offer of $80,000 a month for a detached house. However, the owner is a foreigner and is not eligible to rent out the house, he says.
In Sentosa Cove, foreigners are allowed to purchase just one detached house, and it has to be for their own use. Only Singapore citizens are allowed to purchase more than one detached house and to lease them out. “That is another reason why detached houses for rent are in such short supply in Sentosa Cove,” laments Tay.
Rental demand for detached houses in Sentosa Cove is typically driven by foreign expatriates who are drawn to the waterfront lifestyle. Rents have also doubled for such houses in Sentosa Cove, adds Tay, from $18,000 to $25,000 a year ago, to $40,000 to $50,000 today. New listings have asking rents of at least $60,000 a month, he notes.
CAPE- ROYAL 4BR - EDGEPROP SINGAPORE
There has been a noticeable increase in enquiries for condominiums in Sentosa Cove (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Luxury condos, investors

Lisa Koh, principal consultant of Citi Commercial, has lived in Sentosa Cove for more than a decade, and specialises in marketing homes there. “Buyers today are seeking regular-shaped houses where they don’t need to do too much renovation, and can move in almost immediately,” she says. “It’s hard to find such houses that are well-maintained, and require minimal addition and alterations. Such houses can command prices of at least $2,000 psf.”
Koh points to three detached-house transactions that were done at prices above $2,000 psf this year. Based on caveats lodged, the latest was for a bungalow sitting on a 17,110 sq ft plot on Ocean Drive that fetched $34.5 million ($2,016 psf) in July. Another was for a bungalow sitting on a 10,116 sq ft site at Cove Grove that changed hands for $21 million ($2,076 psf) in April. In March, a bungalow sitting on an 8,944 sq ft site at Cove Way was sold for $18.4 million ($2,057 psf). “Realistically, buyers have to offer around $1,800 to $2,000 psf for a bungalow, depending on the configuration of the house and the facing,” she says.
Sentosa Cove has become an interesting market, notes Samuel Eyo, managing director of Lighthouse Property Consultants. “While the buyers of the bungalows are mainly owner-occupiers, the apartments are attracting Singaporean investors for their rental rates,” he says. “There are also an increasing number who want to move in themselves, and use it as a vacation home or a party house.”
Savills’ Cheong agrees. “There has been a noticeable increase in enquiries for condominiums in Sentosa Cove and this has to do with the attractive pricing of the properties there which in some cases are cheaper than some RCR and OCR non-landed properties on a psf basis,” he says. “For landed homes on the island, although there have been enquiries, they are not as active as for the non-landed ones.” This bodes well for Cape Royale.

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