Luxury penthouse deals fuelled by Chinese buyers

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/ EdgeProp Singapore
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June 22, 2019 2:20 PM SGT
A super penthouse that found a buyer recently was the 11,098 sq ft, triplex penthouse at Boulevard Vue. The transacted price of the penthouse was $52 million ($4,686 psf). The buyer is believed to be a Chinese national. This latest transaction means that the 28-unit ultra-luxury condo by Far East Organization is fully sold to date.
There has been a rash of big-ticket purchases of luxury penthouses in the prime districts, driven predominantly by Chinese buyers.
The multimillion-dollar views from South Beach Residences (Credit: Samuel Isaac Chua/EdgeProp Singapore)
At Boulevard 88, the latest penthouse of 6,049 sq ft, which is also the biggest in the ultra-luxury condo, was sold for $31 million ($5,125 psf), according to a caveat lodged on June 3. The price of $5,125 psf is also the highest price psf achieved for a penthouse since the super penthouse at Sculptura Ardmore was sold for over $60 million or $6,000 psf two years ago (see table: Top 10 penthouse transactions: 2009-2019YTD on EP11).
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This latest deal at Boulevard 88 was the last of the four penthouses in the 154-unit luxury condo sold to date (see table: Penthouse deals from May 2018 to 2019YTD).
Three of the penthouses at Boulevard 88 were purchased by foreigners, of whom two were Chinese buyers, according to Dominic Lee, PropNex’s head of luxury team. The remaining penthouse was sold to a local Singaporean buyer.
At 3 Orchard By-the-Park, the 6,555 sq ft penthouse that was sold recently for $31.5 million ($4,805 psf) went to a Chinese buyer. The deal was said to be brokered by Savills Residential.
The 6,555 sq ft penthouse at 3 Orchard By-the-Park was sold recently for $31.5 million ($4,805 psf), and the buyer is said to be a Chinese national (Credit: Samuel Isaac Chua/EdgeProp Singapore)

‘Limited supply’

“There has certainly been some interest in penthouses in the past 12 months, including some that are centred around new projects in the Orchard area, such as Boulevard 88, 3 Orchard By-The-Park and New Futura,” says Leong Boon Hoe, COO of List Sotheby’s International Realty (List SIR).
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Leong attributes this to “the limited supply” of such quality homes. “In addition, the well-heeled foreigners are unable to buy landed properties in Singapore, except at Sentosa Cove,” he adds.
The 11,098 sq ft, super penthouse at Boulevard Vue was sold for $52 million to a Chinese buyer (Credit: Samuel Isaac Chua/EdgeProp Singapore)
URA data shows that demand for new homes is still soft compared to 2018 due to factors such as a slowing economy and uncertainties in the global environment, says Han Huan Mei, director of research at List SIR. In the first six months of the year to date, there were 143 transactions above $5 million in the Core Central Region (CCR), which is less than half of the 398 transactions in 2018.
Comparing the number of buyers who were foreigners and permanent residents (PRs) this year and last, there were 100 such buyers up to early June this year – also less than half of the 233 such buyers last year, points out Han.
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While the number of transactions may have contracted, the proportion of foreign buyers of properties above $5 million in the CCR has increased from 36% in 2018 to 50% in the first six months of 2019, based on caveats lodged as at June 9.
However, URA Realis data did not reflect any increase in transactions attributable to Chinese buyers, says Ong Teck Hui, JLL senior director of research and consultancy. Prime district transactions for non-landed homes attributable to foreign Chinese buyers stood at 68 in 1H2018; 44 in 2H2018 and 24 in 1H2019 to date, he adds.

‘Domino effect’

This current wave of buying began with the launch of Gramercy Park in mid-2016, rolled onto New Futura in early 2018 and South Beach Residences last September, then crested at Boulevard 88 and 3 Orchard By-the-Park, notes Alan Cheong, executive director of research and consultancy at Savills Singapore. Savills defines luxury property as those priced above $3,000 psf.
In fact, the prime sub-market started to pick up in 2H2017 together with the recovery in the rest of the private residential market, observes JLL’s Ong. “In response to increased demand, more prime district projects were launched for sale including luxury developments,” he adds. “This stimulated interest among potential high-end buyers, including foreigners who have not seen new luxury developments on the market for quite a while.”
Three units at South Beach Residences were sold on a single Saturday, on June 15, and all the three buyers were Chinese, with the sales brokered by agents from Savills Residential (Credit: Samuel Isaac Chua/EdgeProp Singapore)
Ong points to New Futura which sold 110 of its 124 units at a median price of $3,464 psf in early 2018. The 7,836 sq ft penthouse fetched the highest price in the development both in terms of absolute and psf price – $36.3 million or $4,630 psf – in May last year.

“Demand in the luxury sub-market had already picked up for more than a year and is not a recent phenomenon, although new highs in prices were achieved recently, for example the penthouses in Boulevard 88,” concedes Ong. JLL’s table of transactions above $3,000 psf/$5 million in prime districts 9, 10 and 11, show that transactions were at the highest in 1Q2018 and 2Q2018.
It is not just the penthouses, but also the large units in these new projects in the CCR that have been snapped up by Chinese buyers. And they are not necessarily buying freehold properties only. For instance, at South Beach Residences, which is a 99-year leasehold integrated development sitting on top of JW Marriott Hotel Singapore, three units were sold on a single Saturday, on June 15. All three units were said to be sold to Chinese buyers and brokered by agents from Savills Residential.
SRI agents also brokered several deals at Boulevard 88 and South Beach Residences. The buyers are also said to be Chinese nationals. “It’s like a domino effect,” says Bruce Lye, managing partner of SRI.
“There are a few groups from Xiamen, Fujian in China. Some of them have purchased homes in Singapore and moved their families here. When their friends visiting from China saw the quality of life they have in Singapore, and, having seen their property purchases, the friends decided that they want to buy units in the same development too.”
Artist's impression of Boulevard 88, where all four penthouses have been sold, with the latest achieving $31 million or $5,125 psf (Credit: CDL)
These Chinese buyers use their friends’ purchase prices as a benchmark, and have also factored in the additional transaction cost of 20% additional buyer’s stamp duty (ABSD) on top of the 4% buyer’s stamp duty for properties above $1 million. “They are less sensitive to the hike in ABSD compared to local buyers,” notes SRI’s Lye.
This recent wave of purchases by “groups of friends and related parties” among Chinese buyers is not new, notes Lye. It started at Gramercy Park three years ago and was also seen at South Beach Residences last year.
“It’s not particular to Chinese buyers,” points out Lye. “We saw the same thing at The Trillium when it was launched in 2007, with many of the units purchased by Indonesians.” Anecdotally, there is a group of Malaysian investors “shopping for property” in Sentosa Cove.
At Amber Park, the biggest six-bedroom penthouse of 5,005 sq ft was sold for $12.6 million at the end of May (Credit: CDL)

Beyond the traditional prime districts

At Amber Park, the biggest of four penthouses – a six-bedroom penthouse of 5,005 sq ft – was sold for $12.6 million ($2,517 psf). Since its launch in early May, more than 150 units have been sold in the 592-unit freehold project. It is located in prime District 15, just a short walk to the upcoming Tanjong Katong MRT Station on the Thomson-East Coast Line. The buyer of the penthouse is said to be Chinese too, and the deal was brokered by SRI.
“If you’re looking for a penthouse today of at least 5,000 sq ft in size and in a new development, there is very little available on the market,” says SRI’s Lye.
In fact, SRI recently brokered the sale of the biggest penthouse at Sentosa Cove, namely, an 8,095 sq ft, duplex at The Oceanfront, which is said to have changed hands for “under $10 million”. A caveat has yet to be lodged. The buyer is believed to be an Indonesian. The sale price is attractive considering that the previous owner purchased it for $8.66 million ($1,070 psf) in 2006 when the 99-year leasehold, high-end waterfront project was launched.
A 7,396 sq ft, penthouse at one of the villa blocks at Corals at Keppel Bay was sold for $19 million in April - the highest absolute price for a unit in the development to date (Credit: Albert Chua/EdgeProp Singapore)
The super penthouse at The Oceanfront is on the 15th level – the highest for a Sentosa Cove condo – and offers panoramic 270-degree views of the marina, the sea and the Southern Islands. The penthouse comes with five en suite bedrooms, an outdoor entertainment deck, a private swimming pool and private lift access from the basement carpark. It also has a standalone guest suite with its own bedroom and living and dining area.
Another waterfront penthouse that was sold this year was a 7,395 sq ft unit at one of the villa blocks fronting the sea at Corals at Keppel Bay. The 366-unit luxury condo is developed by Keppel Land and designed by world-renowned architect Daniel Libeskind. The unit, which commands an uninterrupted sea view, was sold for $19 million ($2,569 psf), according to a caveat lodged in April. It’s also the highest to date, in terms of absolute price for a unit sold at Corals.

‘Safe haven for the rich’

“When there’s uncertainty elsewhere in the world, Singapore starts to look attractive as a safe haven for the rich,” notes SRI’s Lye.
KH Tan, founder and managing director of Newsman Realty, agrees. “Singapore is looking interesting to Chinese and other foreign buyers because of the recent news about the $9 billion additional investment in the two Integrated Resorts, the opening of Jewel Changi Airport and the Master Plan 2019 with a lot of new developments such as the Greater Southern Waterfront,” he says.
“Property prices in Singapore have also been soft in recent years, unlike in Hong Kong, which has continued to see prices increase,” adds Tan. “To the wealthy Chinese, many of whom are Permanent Residents in Hong Kong, Singapore looks very attractive now in comparison.”
Movement of funds to Singapore by some wealthy people in Hong Kong have been reported but it remains to be seen if this is more a knee-jerk reaction or a long-term trend, says JLL’s Ong. “If it becomes a long-term trend, it is possible that some of the money will find its way into the Singapore property market. ABSD rates applicable to foreigners are unlikely to be raised if market demand remains contained.”