Surge in luxury condo prices for 2018

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/ EdgeProp
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December 30, 2018 8:00 AM SGT
At Gramercy Park, an apartment that fetched $24.5 million was the second most expensive condo unit sold in the CCR (Credit: Samuel Isaac Chua/ The Edge Singapore)
Prices in the luxury condominium market have made a comeback this year. The 10 highest prices for luxury condos have improved from a year ago. In 2018, the 10 highest condo prices ranged from $16.8 million to $36.28 million, above the range of $16.02 million to $25.58 million in 2017, according to List Sotheby’s International Realty (List SIR).
Luxury property prices have “recovered from the doldrums”, says Leong Boon Hoe, chief operating officer of List SIR.
The highest price fetched for a condo in the Core Central Region (CCR) from Jan 1 to Dec 4 was at New Futura, on Leonie Hill Road (see Table 1). The unit sold was a 7,836 sq ft, five-bedroom penthouse that fetched $36.28 million ($4,630 psf). It was ranked the highest price in terms of absolute and psf prices.
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The condo unit that fetched the second-highest absolute price was at Gramercy Park, on Grange Road. The 7,287 sq ft, five-bedroom penthouse was sold for $24.5 million ($3,362 psf) on Feb 28.
The third-highest price paid for a condo unit was at Bishopsgate Residences, off Chatsworth Road. The 6,641 sq ft, four-bedroom unit on the ground floor was purchased for $24 million ($3,614 psf) on Nov 30.
The most expensive condo unit sold in the CCR was at New Futura; it went for $36.28 million (Credit: Samuel Isaac Chua/ The Edge Singapore)
How did Singaporean buyers fare?
In terms of buyer profile, the number of new homes in the CCR bought by Singaporeans in 2018 up to Dec 13 stood at 272, down from 534 in 2017, based on figures provided by List SIR (see Table 2). This marks a decline in the proportion of Singaporean buyers in new projects at the top-end of the market to 46%, from 59% last year.
Singapore permanent resident (PR) buyers have also purchased fewer luxury condos in the CCR this year. They bought 95 units, compared with 142 in 2017. On the other hand, foreigners purchased more new luxury homes this year (184 transactions) compared with last year (181). Proportionally, foreigner purchases have risen to 33%, from 20% last year.
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Purchases of resale units in the CCR were a more popular option for Singaporeans. In 2018 up to Dec 13, 1,699 purchases were recorded. This was still down from the 2,555 transactions recorded last year.
Meanwhile, for both new and resale non-landed homes in the CCR, properties priced between $2 million and $5 million were the most sought after by PRs and foreigners (see Table 3). This trend has held throughout 2017 and 2018.
What’s in store for 2019?
List SIR’s Leong believes the performance of the wider residential market will give a good indication of the outlook for the luxury market in 2019. The 0.5% increase in URA’s private residential price index for 3Q2018 shows that “home prices are stabilising, having climbed by about 7% in the first half of the year”, he notes.
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However, the luxury property market is expected to be slow-moving in 1H2019. “Investors — both local and foreign — [are likely to] size up the global scene with respect to the outcome of Brexit and the US-China trade war,” says Leong. Sales will pick up in 2H2019, he says. “Product differentiation and price points will be the main factors to move sales,” he adds.
There will be more choices for buyers looking at the luxury condo market next year, based on the supply pipeline for new condo units in Districts 9, 10 and 11, says Leong. Moreover, developers have snapped up prime sites at record prices, he adds. Hong Kong-listed Shun Tak Holdings purchased a 66,542 sq ft, freehold site on Nassim Road for $218 million in June. The price translates into $2,744 psf per plot ratio (ppr), including development charge.
Swire Properties, Hong Kong-listed Swire Group’s property arm, bought the former Hampton Court at Draycott Park, off Ardmore Park, for $155 million in January 2013. The purchase price works out to $2,526 psf ppr.
Then there is the government land sales (GLS) site on Cuscaden Road, which was purchased at $410 million by a joint venture between SC Global Developments and two other Hong Kong-listed property groups — Far East Consortium International and New World Development. The price tag works out to $2,377 psf ppr for the 61,597 sq ft, 99-year leasehold site.
Will these luxury projects be launched at record prices? “Developers will compete on product differentiation, creative pricing and marketing strategies, and timing,” says Leong. “The five-year time frame to complete the projects and sell all the units to avoid paying the 25% additional buyer’s stamp duty will steer pricing strategies. We believe this will be good for the market as a whole, keeping price rises in check and sales volume chugging along at a healthy pace.”
He believes the Singapore market is “simply playing catch-up” to other global cities. “As an international gateway to global businesses and trade, Singapore’s residential market has stayed muted for 15 quarters,” he says.