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).
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.
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...