Top of the market: Test of strength ahead

/ EdgeProp Singapore |
The bungalow at Coronation Road West that was sold for $50.128 million($2,043 psf) last month, after being purchased for $36 million over a year ago (Photo: Samuel Isaac Chua/EdgeProp Singapore)
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EDGEPROP (SINGAPORE) - A month ago, a Good Class Bungalow (GCB) at Coronation Road West was sold for $50.128 million ($2,043 psf). The seller, Danny Yong, chief investment officer and founding partner of private equity firm Dymon Asia Capital, had purchased the property in trust for $36 million ($1,468 psf) last year, according to a property title search. The title transfer took place in early December, according to transfer documents, but the option to purchase is believed to have been signed sometime in the middle of last year.
Yong’s capital gain before taxes and duties is 39.2% based on a holding period estimated at 15 months. Even if the deal is subjected o an 8% seller’s stamp duty (SSD), and a 4% buyer’s stamp duty is factored in, the gain is still well over 27%. That is equivalent to about $9.72 million, or the price of a detached house in Chip Bee Gardens, on Holland Road. Before May 9, those who purchased residential property in trust were not subjected to a 35% additional buyer’s stamp duty (ABSD).
The GCB at Cluny Hill was purchased by Sean Shi, chairman of Yihai International Holdings and Haidilao for $50 million ($2,739 psf) [Photo: Samuel Isaac Chua/EdgeProp Singapore]
Two other GCBs that changed hands in 3Q2022 were also transacted at around the $50 million mark. One is a GCB sitting on an 18,255 sq ft site at Cluny Hill that was sold in early September to Sean Shi, chairman of Yihai International Holdings and Haidilao hot pot restaurant chain. The purchase price of the GCB was $50 million ($2,739 psf).
The other is a 27,000 sq ft bungalow site on Belmont Road that fetched $55.5 million ($2,056 psf). The buyer was Andy Adhiwana, group CEO of Auric Pacific, according to a caveat lodged in August. It is also the highest-priced GCB transacted in the three months from July to September.
The 27,000 sq ft bungalow site on Belmont Road sold to Auric Pacific group CEO Andy Adhiwana
This brings the tally of GCB deals to 12 in 3Q2022, and 40 for the first nine months of the year, according to Huttons Asia’s 3Q2022 Prestige Report released on Oct 18. Based on the number of transactions for the first three quarters of 2022, it is 51.2% lower y-o-y.
The total transaction value in 3Q2022 was $379.8 million, according to Huttons. This is 30.5% higher q-o-q, but 47.6% lower y-o-y, notes Lee Sze Teck, senior director of research at Huttons. GCB deals for the first three quarters of 2022 rang in at $1.1 billion, 62.1% lower than the same period in 2021.
This GCB at White House Park was sold for $45.5 million or $3,017 psf (Photo: Samuel Isaac Chua/EdgeProp Singapore)
According to Mark Yip, CEO of Huttons Asia, global market uncertainties have resulted in fewer bungalow listings and a price mismatch, which translated to lower transactions in 3Q2022. “The tech sell-off and crypto meltdown have also affected interest,” he says.
William Wong, managing director of RealStar Premier, reckons the contraction in transaction volume could be due to the widening chasm between sellers’ and buyers’ price expectations. He estimates the price gap to be in the 5% to 10% range. “Sellers have adjusted their GCB prices upwards so rapidly that it will take some time for buyers to come to terms with this surge in pricing,” he adds.
Property consultants attribute the accelerated repricing to the sale of the GCB at Nassim Road for $128.8 million or $4,005 psf in March last year. Since then, the barometer in the Nassim Road enclave has moved beyond the $5,000 psf mark, as seen in the launch of a trio of bungalows at Nassim Road by Cuscaden Peak Investments in late September.
One of the three GCBs at Nassim Road that is on the market for sale at $5,200 psf by Cuscaden Peak Investments (Photo: RealStar Premier)
The GCBs at Nassim Road sit on land sizes ranging from 15,131 to 15,542 sq ft. Asking prices are from $78.68 million to $80.82 million, or an average of $5,200 psf.
RealStar Premier, the exclusive marketing agency for the bungalows at Nassim Road, has received interest from more than 15 potential buyers who visited the sites. “It’s a healthy number, considering these are high-quantum GCBs,” says Wong.
A few parties are looking at acquiring all three plots and amalgamating them, while several others are looking at the individual sites, he adds. “It’s a good mix.” In Wong’s view, that also shows that there are ultra-high-net-worth individuals who are still seeking to purchase big-ticket properties. “They are a combination of local and newly minted citizens, mostly from Indonesia, China, Hong Kong or Taiwan,” he adds.
The GCB at Leedon Park was just sold for $34 million or $2,229 psf (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Interest in GCBs has not abated, according to an agent with Huttons. Anecdotally, there are 30 to 50 Chinese groups waiting to purchase a bungalow in the coveted neighbourhoods of Cluny, Nassim, Chatsworth and Tanglin, he says.
If anything, this has been an even busier year for Bruce Lye, co-founder of SRI, who focuses on the luxury residential market. He has been busy helping clients find suitable GCBs and conducting ongoing negotiations between sellers and buyers.
“Transactions are still taking place, but many are off-market deals,” he says. “Buyers are willing to pay a fair premium for the GCBs that they like. But there isn’t much available inventory.”

Larger apartments driving demand

With rising interest rates, some high-net-worth individuals have started channelling some of their wealth into Singapore treasury bills or fixed deposits. However, there are others who are still keen on investing a fraction of their wealth in real estate, adds Lye.
That explains why transactions in the luxury apartment and condominium segment have remained active too. According to Huttons Research, there were 110 transactions in the luxury non-landed segment in 3Q2022. Total deals amounted to $1 billion, 15.5% higher than the previous quarter. “There were more deals of large apartments at higher quantum done in 3Q2022 compared to 2Q2022,” notes Huttons’ Lee.
To date, 10 out of 14 units (71.4%) at Les Maisons Nassim have been sold at an average price of $5,625 psf (Photo: Les Maisons Nassim website)
At the ultra-luxury development Les Maisons Nassim, the final of three penthouses, at 11,227 sq ft, was sold for $68 million ($6,057 psf) in September. In terms of absolute and psf prices, it is the second highest after the sale of the largest penthouse of 12,077 sq ft for $75 million ($6,210 psf) a year ago.
Two other units were sold at Les Maisons Nassim in September: One was an 8,687 sq ft unit on the third floor that fetched $46 million ($5,296 psf), and the other was a 6,286 sq ft unit on the fourth floor that fetched $36 million ($5,727 psf). This brings the tally to 10 sold out of a total of 14 units at Les Maisons Nassim. The average price achieved is $5,625 psf to date.
Cape Royale was one of the top-selling high-end projects in 3Q2022 with 35 units sold (based on caveats lodged) at an average price of $2,195 psf, based on caveats lodged (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Foreign demand

The three top-selling luxury condo projects in 3Q2022 were Cape Royale, The Avenir and Nouvel 18, according to Huttons. Based on caveats lodged, about 35 units out of 50 released have been sold at Cape Royale over the three months since the project was launched at the end of June. The average price achieved for the 99-year leasehold, 302-unit waterfront condo at Sentosa Cove is $2,195 psf, based on caveats lodged to date.
At The Avenir, the 376-unit freehold luxury condo at River Valley Close, 35 units were sold in 3Q2022 at an average price of $3,276 psf, based on caveats lodged. This brings total sales in the prime District 9 project to 319 units, or an 85% take-up since its launch in January 2020.
The Avenir scale model - EDGEPROP SINGAPORE
At The Avenir, the 376-unit freehold luxury condo at River Valley Close, 35 units were sold in 3Q2022 at an average price of $3,276 psf, based on caveats lodged (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Meanwhile, Nouvel 18, on Anderson Road in prime District 10, cleared 11 units at an average price of $3,165 psf over the three months from July to September.
According to Huttons Research, the top three foreign nationals that drove buying demand in the luxury condo market in 3Q2022 were China, the US and Malaysia. Interest in the luxury segment of the non-landed market is expected to stay robust in 4Q2022.
“The high-net-worth individuals are using real estate as a hedge against inflation,” says Huttons’ Yip. “The rising US dollar makes investing in Singapore properties cheaper and will contribute to demand.”
Nouvel 18 cleared 11 units at an average price of $3,165 psf over the three months from July to September to date (Photo: Samuel Isaac Chua/EdgeProp Singapore)
However, storm clouds could be gathering ahead. “It’s similar to the period just before the Global Financial Crisis of 2008–2009,” says Samuel Eyo, managing director of Lighthouse Property Consultants.

Searching for value

Despite fears of a recession in 2023, foreigners are still coming to Singapore and looking to purchase real estate. “These are business owners who want to move their families and their businesses to a place where they feel secure, and right now Singapore looks the most attractive of all the major cities,” says Eyo.
Some of these foreigners may gravitate towards brand-new condos or apartments. Others see value in the older properties that offer larger units, adds Eyo. An example is a recent deal that he brokered at The Tomlinson, a 29-unit development in a 32-storey tower located at the corner of Tomlinson and Cuscaden Roads. The deal was for a 3,692 sq ft, five-bedroom unit on the 14th floor that fetched $8.8 million ($2,383 psf), based on a caveat lodged in July.
A 2,347 sq ft, four-bedroom unit on the seventh floor changed hands in early Sept for $5.7 million or $2,429 psf, the highest transaction on a psf-price basis recorded in the freehold condo completed in 2002 (Photo: Samuel Isaac Chua/EdgeProp Singapore)
In early September, another unit at The Tomlinson changed hands. This time, it was a 2,347 sq ft, four-bedroom unit on the seventh floor that fetched $5.7 million ($2,429 psf). It is the highest transaction on a psf-price basis recorded in the freehold condo completed in 2002.
Just across the road from The Tomlinson is the upcoming luxury Park Nova condo. Three units at Park Nova were sold in August. Two of them were 2,227 sq ft, three-bedroom units on the third and fourth floors that fetched $10 million ($4,532 psf) apiece. The third unit that was sold was a 1,432 sq ft, two-bedroom unit on the 17th floor of the 20-storey tower. It went for $7.009 million ($4,896 psf).
“There are some buyers who are comparing the new luxury condos with the resale properties in the same location,” notes Eyo. “They see value in the resale units even though they are aware that they will need to spend money on renovations before moving in.”

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