Singapore luxury residence sales are declining, yet prices remain stable

Read also: In 2Q2023, resale flat prices increased by 1.4% q-o-q, above the 1% growth seen in 1Q2023

Singapore’s luxurious residential market continued to slow in 1H2023 despite an aggressive rate hike by the US Federal Reserve and a worsening macroeconomic environment as per CBRE in a new research report. The number of transactions in each of Good Class Bungalows (GCBs) and luxury apartments slowed during the first quarter in the calendar year. This is which mirrored changes in the overall property market.

The GCB market 13 properties that totalled $525.3 million were sold in the first half of 2018, which is an 14.4% decline from 2H2022 (18 GCBs worth $613.5 million) in addition to an 30.1% fall y-o-y from 1H2022 (29 GCBs worth $751.42 million).

CBRE reports that GCB prices were steady and grew 31.1% compared to 2H2022 to $2,760 per sf in 1H2023. The rise was helped by a major deal in the first quarter of the year, when three GCBs along Nassim Road owned by Cuscaden Peak Investments were bought by the family of Fangiono, which is behind the palm oil producer listed in Singapore, First Resources. The three homes were bought in April, for a price of $206.7 million that works out to $4,500 psf. This set the records for GCB land rates.

The Fangiono family also purchased another GCB located on Nassim Road in March for $88 million ($3,916 per sq. ft.) which was the largest GCB deal of 1H2023.

“Similar in 2022 and 1H2023, the year continued observe GCB demand from citizens who have recently become naturalised and top executives of traditional companies, while actively buying of entrepreneurs in the digital economy which was last seen in 2021 absent during the recession and the hard-hit tech sector.” CBRE adds.

In the market for luxury apartments in the luxury apartments market, the luxury apartments market saw 92 properties that had a total worth of $964.7 million swapped hands in 1H2023, down on the previous 106 properties that accounted for $1.085 billion that were sold in the 2H2022 period. While sales of luxury apartments increased in the fourth quarter of the year following the opening of China’s borders early January, sales slowed in June and May following the doubled amount of additional buyer’s stamp duties (ABSD) charged to overseas buyers up to 60% in effect from the 27th of April.

But prices remained steady despite the decrease in sales. Based on CBRE’s portfolio of luxury freehold projects the median luxury apartment prices increased 1.1% to $3,463 psf in 1H2023 compared to $3,425 in 2H2022.

In Sentosa Cove, which is the Sentosa Cove Enclave, property sales also fell when compared to 2H2022. 7 Sentosa Cove bungalows worth $139.4 million were sold during 1H2023, 32.8% lower than the 10 bungalows valued at $207.5 million sold in 2H2022. In the case of Sentosa Cove Condos 50 units totalling to $251.1 million were sold in the 1H2023, 29.8% lower than the 74 units that were worth $357.6 million that were sold in 2H2022.

The average prices for both condos and bungalows in Sentosa witnessed an increase in 1H2023 as compared to 2H2022 in both cases, with the former increasing 11.9% to $2,214 psf and the latter increasing 1.7% to $2,063 psf in the first quarter this year.

The future is bright, and the volume of transactions in the residential luxury market will likely be sluggish for the remainder of the year, says Tricia Song who is CBRE’s director of market research in Singapore as well as Southeast Asia. “This is due to a variety of factors such as the current cooling measures, uncertainty about the macroeconomic outlook and the rising interest rates that could cause investors to adopt a wait-and-see strategy,” she says.

Song says that current home owners who have luxury homes are likely to help support the price, as the healthy rental yields and shortage of homes with luxury features encourage owners to protect their possessions.