Why Singapore’s property curbs will not stop the affluent and foreigners from buying luxury homes
With the recent slew of cooling measures, many expected a slowdown in the purchase of luxury homes – but it seems that the opposite has taken effect. Six super luxury homes that were sold at $10 or above were made right after these cooling measures were implemented.
OrangeTee & Tie has observed that even with the cooling measures placed in July, the affluent and foreigners still made their way over to Singapore to invest in luxury properties, as they believe that Singapore’s properties still have room for growth, and are relatively cheaper in comparison with our Asian counterparts like Hong Kong.
In fact, more data from OrangeTee & Tie has shown evidence that 474 luxury homes that are $3m and above (but less than $5m) were sold in Q3, which is definitely higher in comparison to the four-year average. And as quoted from OrangeTee & Tie head of research and consultancy Christine Sun, “The robust demand for pricier luxury homes suggests that Singapore remains a top investment destination amongst high net worth individuals (HNWI) and affluent foreigners”.
A study by UBS also showed that average forecasted returns in Singapore’s property market from the years 2018 to 2022 would surpass the Eurozone, US and even the global average. This certainly says a lot about the potential of the luxury property scene in Singapore. As quoted from the USB report, “In developed markets such as Japan, Australia and Singapore, the already strong property market fundamentals will be further enhanced by the increased regionalisation of investment and capital flows,”
In addition, OrangeTee & Tie also recognised that luxury condominium transactions that are valued $3m and above remained positive and growing, with an increase to 187 units in comparison to the five-year average sales of 173 units.
For luxury condominiums recently released, both new and resale luxury condominiums also saw a rise in prices instead, which reached $2,819 psd and $2,063 respectively. The highest transaction goes to Urban Resort Condominium, which was a 438 sqm resale unit that was settled at $13.9m (i.e. $2,948 psf). Notable mentions also include Bishop Residences, which a 273 sqm unit was sold for $11.5m. Another transaction would be a 290 sqm unit from Twentyone Angullia Park sold at $11m. Finally, a 284 sqm unit at 336 River Valley also fetched a hefty price of $11m too.
However, it is noted that generally, Singaporeans still take up the majority of condominium buyers in Q3 2018 itself, making up 78.2% of the purchases. This is an increase from the 75.4% observed in Q3 2017, also showing a rising increase in purchasing interest among Singaporeans. In addition, the newly imposed property curbs also did not affect foreign purchases, as it only saw a small drop of 0.5 ppt QoQ to 6.1%. Even Permanent Resident buyers saw only a small dip of 1.4 ppt to 15% in the same quarter.
According to OrangeTee & Tie’s extensive study, majority of the foreign interest still came from the Mainland Chinese. This continues to be so in Q3 of 2018, where they took the top spot, while the Malaysians and Indonesians followed closely. Most of them prefer to purchase homes within the $1.5m budget as well.
With the recent current affairs regarding the ongoing US-China trade war, it has also been observed that there are numerous chinese investors looking to divest into areas less contentious and to also hedge against the devaluation of their own currency. The same goes to the Indonesians, where they are also moving their monetary funds to Singapore to hedge again further depreciation of the rupiah to protect the value of their funds.