Navigating a treacherous high-end market

December 2, 2014 8:59 AM SGT

Join our Telegram channel and follow our Facebook for the latest update.

SINGAPORE: Even before Goodwood Residence was launched, Jerry Tan of JTResi, who specialises in the marketing of luxury properties, sold 27 four-bedroom units in the upscale condominium to his network of high-net-worth clients in the preview stage in 2010.

The 210-unit project by developer Guoco- Land Singapore was designed by acclaimed local architect WOHA.

Completed last year, 153 units in the freehold development had been sold as at end-September, with the latest median price of $2,435 psf.

This leaves just 57 unsold units in the project.

According to Tan, Goodwood Residence is the latest “spectacular development” he has marketed in recent years.

Prior to that, he was involved in SC Global Developments’ The Marq on Paterson Hill, which still holds the record for the most expensive condo when prices hit $6,393 psf in August 2011.

Tan sold more than 10 units in the ultra-luxury condo, with $5,842 psf being the highest price he achieved in the project.

He has also sold a handful of units at China Sonangol’s recently completed Twenty- One Angullia Park, where prices started from $3,950 psf, with a high of $5,560 psf achieved in June last year.

“Buyers today won’t go for run-of-the-mill projects,” Tan says in a recent interview with The Edge Singapore.

“In the kind of market we are in, you need to have a product that is very different and that will make people sit up and take notice.”

Owner-occupier’s market

Tan has four clients who recently took possession of their units at Goodwood Residence and are contemplating whether to put them on the market for sale or to hold on to them.

They are reluctant to rent out their units, given that buyers today are predominantly owner-occupiers and prefer units that are “untouched”.

For example, an owner of a ground-floor unit of 4,682 sq ft — one of the largest in the development after the penthouses — had purchased the four-bedroom apartment in April 2010 with the intention of moving in.

He paid $8.5 million ($1,815 psf) for the unit that Tan was involved in marketing.

Following the completion of the project last year, the owner installed lights, roller blinds and curtains, as well as landscaping and water features.

An overseas buyer, having viewed several units at Goodwood Residence, including that particular unit on the ground floor, decided that she wanted to purchase it even though it wasn’t on the market.

She paid $11.5 million ($2,456 psf) for the unit, according to a caveat lodged in May, and is believed to have moved in recently.

“In a way, the deal worked out well for the buyer, who wanted a brand-new place that she could live in when she is in Singapore, as well as for the owner, who decided to sell it,” says Tan, who brokered the sub-sale.

The unit has a spacious private enclosed space and swimming pool adjoining the living room and open kitchen, hence, it is ideal for those who like to entertain at home, says Tan.

Like other units at Goodwood Residence, the flooring is of travertine, the kitchen is fully fitted with Gaggenau appliances and the bathrooms come with Hansgrohe and Laufen sanitaryware.

There is ample concealed storage space, including a walk-in pantry.

The master bathroom is spacious, with a double-sink vanity top, stand-alone bathtub as well as a separate shower and water closet.

‘Hang on’

Investors in the top-end residential market are wondering what to do next.

“While they still want to have a foothold in Singapore, they realise that it may be several years before prices in the luxury-condo segment recover,” Tan says.

For investors who have bought units in developments that are unreplicable and have been completed well, with top-quality finishing, Tan’s advice is that they should hold on to them.

He recognises that it also boils down to the individual’s needs.

“If the owner needs the cash, he will have to succumb to market pressure,” he concedes.

“But if money is not an issue, our advice would be to hang on to the property and rent it out for the next two years.”

The higher acquisition cost, as a result of the additional buyer’s stamp duty (ABSD), the total debt servicing ratio (TDSR) and other restrictions will mean that it will be more expensive for purchasers to re-enter the market once they have sold their existing property, he explains.

Tan is therefore helping his clients at Goodwood Residence rent out their four-bedroom units.

He has successfully leased out some of the units that range from 2,508 to 2,928 sq ft at $13,000 to $17,000 a month.

This year marks Tan’s 40th year in the property business.

Having experienced numerous property cycles and crises since the mid-1970s, the 57-year-old has this to say: “Traditionally, prices of our prime freehold sites have always been higher than the previous high in the last property cycle.

The scary part is that when [prices] start to run, they really gallop.

And that’s when the herd instinct comes into play.”

As part of his job, he has to interview prospective clients and identify their needs before bringing them to view properties, says Tan.

For instance, he was recently introduced to an investor from Monte Carlo who was interested in buying a property in Singapore and had a budget ot $50 million.

“After speaking with him over a few glasses of wine, we figured he was more interested in buying a commercial property rather than a residential property, as he didn’t think it made sense for him to pay a 15% ABSD,” says Tan.

He put the client in touch with Savills, and the gentleman eventually bought the entire 19th floor of Samsung Hub from Kishore Buxani and a group of investors.

The buyer paid $41.7 million ($3,175 psf) for the property with a strata area of 13,121 sq ft, according to an Oct 1 caveat lodged with URA Realis.

The deal was brokered by Savills.

“There is still a lot of liquidity in the market,” says Tan.

And while enquiries are still trickling in from overseas buyers, they tend to be very discerning.

The preference is still for new property, and therefore, developer’s stock in the primary market.

“They want to buy into a project of international standard, where four-bedroom units have quality finishing,” Tan notes.

“They are not interested in subpar properties.”

This article appeared in the City & Country of Issue 650 (Nov 3) of The Edge Singapore.

Tags:

Follow our channels to receive property news updates 24/7 round the clock.

Subscribe to our newsletter