Penthouses attempt a rebound

By Michael Lim / The Edge Property | April 1, 2016 10:00 AM SGT
A decade ago, penthouses were fashioned as bungalows in the sky. The higher the altitude and the bigger the penthouse, the loftier the price per sq ft. The period after the global financial crisis marked an era in which luxury came with smaller spaces and more palatable price tags. Punitive property cooling measures and the total debt servicing ratio imposed in 2013 also led to forced austerity among homebuyers. In 2013, 89.6% of a record 22,584 new homes sold were worth less than $3 million each. In 2014, the number of transactions worth below $3 million was 10,922 units (86%) of 12,691 units sold by developers. Last year, 87.6% of 13,567 new homes sold were worth less than $3 million each, according to DTZ in its March 16 report.
If recent transactions are an indication, some foreign buyers have returned, and are bringing some of the shine back to the luxury condo segment. According to Tan Kok Keong, CEO of REMS Advisors, there was a noticeable spike in the number of foreign buyers in March. Based on caveats lodged and downloaded as at March 29, transactions by foreigners who are not permanent residents (PRs) made up 11.8% (105 units) of 874 private residential units sold in the month. The last spurt in buying activity was in November 2014, when 120 units (12.1%) of a total of 992 units were sold to foreigners that month (see chart).
Chart
First a nibble Foreign buying interest returned to the top end of the market in the Core Central Region (CCR) last year. However, transactions were initially focused on the smaller one- and two-bedroom units, says Samuel Eyo, managing director of Singapore Christie’s International Real Estate.
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It was only from 2Q2015 that foreign buyers started nibbling at the ultra-high-end segment. Notable transactions of penthouses in the luxury segment last year were the sale of the 13,874 sq ft duplex penthouse at Le Nouvel Ardmore for $51 million ($3,676 psf) in April; followed by that of a penthouse at Nassim Park Residences for $22.5 million ($3,271 psf), an 8,514 sq ft duplex penthouse at Marina Bay Suites for $19.5 million ($2,293 psf), and a townhouse at Bishopsgate Residences for $21.1 million ($3,465 psf) in August.
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Such penthouses or ultra large units in luxury condos tend to attract mainly foreign high-net-worth individuals, as Singaporeans who can afford such price tags tend to gravitate towards landed homes, especially Good Class Bungalows (GCBs), says Eyo.
Eyo: With current asking prices at 10% to 20% below the peak in 2013, this is a good time to
snap up a penthouse
Discounted haven A main draw for foreign buyers today is the fact that prime residential prices in Singapore are now significantly more affordable than those in global cities such as Hong Kong, London and New York, according to JLL in a March 8 report. Prices of high-end homes in Hong Kong are 165% higher than those in Singapore. Meanwhile, prices of prime homes in New York and London are now 80% to 90% higher than those in Singapore. This is because prices in New York and London rose 20% to 25% in the last five years whereas those in Singapore fell 20% over the same period, adds JLL.
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According to Regina Lim, JLL national director of advisory and research, despite the increase in buyer’s and seller’s stamp duties, the cost of home ownership in Singapore is 19%, comparable to that of other global cities, which range from 14% to 26%.
Attracted by the recent dip in prices, foreigners believe prime residential properties in Singapore have greater upside potential than those in other global cities over the next five years, notes Joseph Tan, executive director of CBRE residential services.
In February, a 5,543 sq ft penthouse at St Regis Residences was purchased by an Indo nesian buyer for $15 million ($2,706 psf). Foreign buyers have also snapped up the last two penthouses at CapitaLand’s Urban Resort Condominium, with the 4,715 sq ft penthouse on the 17th floor sold for $8.5 million ($1,803 psf), and the 6,857 sq ft penthouse on the 19th floor sold for $12.2 million ($1,779 psf), accord ing to caveats lodged in February.
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Testing the waters Some developers are now motivated to roll out their top-of-the-line penthouses. At GuocoLand Singapore’s Goodwood Residence, a 9,612 sq ft, five-bedroom penthouse — the largest remaining one — is now on the market for $17.68 million ($1,839 psf). The penthouse comes with a living and dining room and a generous open-concept kitchen fully equipped with Gaggenau appliances and ample concealed storage space. There is also an en suite entertainment area to the living room. The five bedrooms, including the master suite, are located on the first level. The master suite comes with a palatial bathroom of more than 430 sq ft, which is the size of one-bedroom apartments today.
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The roof terrace commands a breathtaking view of the sprawling grounds and swimming pool. The penthouse comes with private lift access as well as a separate service lift at the yard for delivery and service staff. The unit has been fully furnished with top Italian brand Minotti and Divani furniture hand-picked by renowned interior designer Patty Mak of Suying Metropolitan Design Studio. The penthouse will be sold fully furnished, says Eyo, who is marketing it.
The largest penthouse at Goodwood Residence is 12,766 sq ft and was sold in April 2010 for $18.8 million ($1,473 psf). The next two largest penthouses are 10,710 sq ft. One was sold in November 2013 for $15.68 million ($1,464 psf), while the neighbouring unit fetched $15.6 million ($1,457 psf) in June 2014. The project was designed by acclaimed Singapore-based WOHA Architects and completed in 4Q2013.
GuocoLand has also just released its penthouse series at Leedon Residence. The biggest penthouse at the upscale condo on Leedon Heights is a 7,007 sq ft, five-bedroom triplex. On the first level are a living and dining area with a double-volume ceiling, an open kitchen as well as a guest bedroom. The second level contains four bedrooms, including the master suite. The topmost level houses the private lap pool and roof terrace, which commands a 270-degree view of Leedon Park and the Belmont Road GCB estate.
Leedon Residence is designed by SCDA Architects, which also designed the landscape and interiors. The price tag of the biggest penthouse at Leedon Residence is $15.2 million ($2,166 psf).
Both the 210-unit Goodwood Residence and 381-unit Leedon Residence have been substantially sold. Less than a handful of units remain unsold at Goodwood Residence. Meanwhile, 257 units at Leedon Residence were sold as at end-February.
The living room of the penthouse at Leedon Residence has a double-volume ceiling height.
It is going for $15.18 million ($2,166 psf).
This five-bedroom penthouse at Goodwood Residence was designed by Suying Metropolitan Design Studio and is going for $17.68 million ($1,839 psf).
Cautious comeback At Bishopsgate Residences, a luxury 31-unit boutique residential project located in the GCB enclave of Bishopsgate, a 5,974 sq ft penthouse — the largest of four penthouses in the project — has been put on the market at $22 million ($3,682 psf).
The project was developed by Kajima Overseas Asia and completed in 2013. The developer sold only three units from 2012 to 2014, or one unit a year. Prices ranged from $10.4 million ($3,292 psf) for a 3,165 sq ft, five-bedroom apartment on the first level to $25.8 million ($3,899 psf) for a townhouse.
It was only last year that Kajima started releasing units for sale at roadshows in Hong Kong and Kuala Lumpur. According to the developer, half of the units in the development have been sold.
The penthouse at Bishopsgate Residences features Italian travertine flooring in the living and dining areas as well as corridors. The bedrooms have Russian oak flooring and the kitchen is fully fitted with top-end Gaggenau appliances and Poggenpohl cabinetry. While the penthouse may measure 5,974 sq ft, it has an efficient layout, making the unit feel more spacious, says Christie’s Eyo.
At Belle Vue Residences, a luxury project by Wing Tai Holdings designed by famous Japan ese architect Toyo Ito, a 4,004 sq ft, four-bedroom penthouse is on the market for $7.8 million ($1,834 psf). The unit is currently tenanted at $16,000 a month and the lease expires in August, says Eyo, who is marketing the penthouse on behalf of the owner.
The 34-unit Ferrell Residences on Bukit Timah Road was completed in 2012. The only available unit is the penthouse, a 5,608 sq ft duplex on the 23rd and 24th floors of the tower. The penthouse was designed such that the private lift opens outside the unit, which offers spectacular views towards MacRitchie Reservoir.
The main entrance to the penthouse is from the 24th floor, where the private pool, living and dining rooms as well as kitchen are located. On the lower floor, there is a second living room and en suite private pool as well as the four bedrooms, including the master suite. The asking price of the penthouse is $10.5 million ($1,872 psf), notes Eyo, who is also marketing it.
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“With current asking prices at 10% to 20% below the peak in 2013, this is a good time to snap up a penthouse, especially one that is freehold and located in the traditional prime districts of 9, 10 and 11,” says Eyo. “All the five penthouses fit the criteria.”
View of the Bishopsgate GCB area from the living room of the 5,974 sq ft penthouse at Bishopsgate Residences that has a price tag of $22 million ($3,682 psf).
The living room of the four-bedroom, 4,004 sq ft penthouse at Belle Vue Residences, which has an asking price of $7.8 million ($1,834 psf)
A rally? Whether the increased activity at the top end of the residential market will translate to higher prices will depend very much on demand, which in turn depends on the health of the economy, says Ku Swee Yong, CEO of Century 21. Supply and a high vacancy rate in CCR is a major concern among developers and individual investors, he points out.
Singapore’s Budget 2016 announced on March 24 brought no relief to the beleaguered property market. In fact, what it results in is an even-tighter inflow of foreign talent and wellpaid expatriate professionals who can afford the rental rates in the CCR. “Lower demand means lower rental rates, which will in turn put pressure on prices,” says Ku. With interest rates heading up and rental rates due south, the holding power of homeowners and investors will be further eroded and could lead to more distressed sales, he warns.
For the super-rich, however, it is a good time to go shopping for a penthouse, as developers will be offering perks in the form of furnishing, renovation package or an outright discount, says CBRE’s Tan. “At the top end of the market, every high-end sale is different,” he notes.
This article appeared in the City & Country, Issue 722 (April 4, 2016) of The Edge Singapore.