Rich Buyers are back to buying high end

Sentosa Cove sees increased interest

As posted in on 7 Dec 2009 by John

Uber-rich buyers are coming back, and they are buying bigger, more expensive homes, in Sentosa Cove at least. Is this a signal that 2010 will see a strong recovery in the mid-to-high end property sector, a 'top-down' recovery, so to speak? After all, Singapore's economy looks to be recovering stronger than expected.

According to Savills, there were 14 transactions done in September and October this year which involved homes that cost above $10m. By comparison, there were only 17 such transactions in the period between Q4 2004 to Q4 2008. Prices have also risen, but have not yet reached the peaks of Q1 2008.

And in another Savills report, foreign buyers have also increased their share of homes in Sentosa Cove too. Compared to the period between 2007-2008, which saw 38-30% foreign ownership, the first 10 months of this year saw foreign buyers taking 43% of the homes transacted.

Let's remind you readers once again that Sentosa Cove is the only place in Singapore where foreigners don't have to be PRs to buy homes.

Analysts say the imminent opening of the two casinos, the near completion of the Marina Bay Financial Centre and the fact that prices are still low compared to places like Hong Kong as factors contributing to the increased interest.

Via Business Times - "It's getting hotter at Sentosa Cove" and "Foreign buyers' share of Sentosa Cove homes on the rise". Fancy graphic here and here.

It's getting hotter at Sentosa Cove

As posted in Business Times by Kalpana Rashiwala

Homes in Sentosa Cove drew strong interest from high-net- worth investors in the first 10 months of this year - more properties costing $10 million and above were transacted during this period than in the preceding four years.

Property consultancy Savills Singapore said that its analysis of URA Realis data as at Dec 1, also shows that September and October this year were particularly active months.

In fact, the three biggest ever residential transactions in Sentosa Cove - at $20.18 million, $22 million and $30 million respectively - took place during this period. The largest involved a completed bungalow at Ocean Drive which changed hands in the secondary market in October. The $30 million sale price works out to $1,753 per square foot, based on a land area of 17,115 square feet.

BT understands that the bungalow was purchased by two Chinese citizens who are also Singapore permanent residents. The seller is a locally incorporated company.

The second and third largest deals involved subsales of two villas at Paradise Island for $22 million and $20.18 million in September.

Overall, Savills' analysis shows that the number of caveats lodged for homes in Sentosa Cove costing $10 million and above shot up to 24 in the first 10 months of 2009 - from just 17 between Q4 2004 and Q4 2008.

Over half or 14 of the 24 deals were sealed in September and October. The firm said that a more positive global economic outlook at the time, before the recent news of Dubai World's debt problems, gave confidence to investors to make big-ticket purchases such as super-luxury homes.

Other above-$10 million homes sold in the two months include four condo units at SC Global's Seven Palms Sentosa Cove; a villa at Sandy Island that fetched $16.57 million or $1,950 psf of land area in the resale market; and a bungalow at Treasure Island which sold for $14.25 million or $1,662 psf, also in the resale market.

Savills said that the steady recovery of the Singapore economy in the past few months and the Republic's renewed prominence on the global financial map have helped fuel optimism among investors to park monies here.

Singapore is also a 'relatively cheaper' destination to buy luxury properties compared with, say, Hong Kong. Luxury property prices here are still below their peak levels.

Savills director of investment sales & prestige homes Steven Ming offered another reason for the surge in transactions in October: according to anecdotal evidence, some high-networth mainland Chinese were in Singapore shopping for properties during their National Day Golden Week holiday.

Across all price bands, the total number of caveats lodged for private homes in Sentosa Cove shot up from 72 in the whole of last year to 133 in the first 10 months of 2009. Even so, the latest figure is just 26 per cent of the peak 516 transactions in 2006.

Savills said that the bulk of the 2009 transactions were in the subsale and resale markets. Primary market deals involving developer sales accounted for just 9 per cent of caveats, reflecting the limited release of new projects this year.

A breakdown of 2009 transactions shows that the number of caveats (both primary and secondary markets) lodged rose from nine in Q1, to 49 in Q2, and 51 in Q3. In October, there were 24 deals - the highest monthly figure for 2009 - bucking the trend of slowing property sales seen generally in Singapore.

Savills credits the approaching opening of the integrated resorts (IRs) with helping to generate a renewal of interest in the super-luxury residential market.

Prices also appreciated with the increase in transactions - the average unit price for landed homes rose from the recent low of $1,150 psf of land area in Q1 this year, to $1,533 psf in Q3 - up 33 per cent. It was up 12.2 per cent from September to $1,647 psf in October. But this figure was still about 38 per cent below the peak figure of $2,643 psf in Q1 2008.

Condominium prices in Sentosa Cove have also firmed. The average price climbed from a low of $1,200 psf in Q4 2008, to $1,804 psf in Q3 this year and $2,117 psf in September before easing to $2,030 psf in October.

The latest figure is 16.5 per cent shy of the $2,431 psf high seen in Q1 last year. Savills said that the October figure was shored up by four caveats lodged for units at Seven Palms Sentosa Cove with prices ranging from $3,091 to $3,353 psf.

Excluding these transactions, the average price for the month would have slipped to $1,658 psf.

DTZ executive director (consulting) Ong Choon Fah reckons that Sentosa Cove prices will continue to appreciate next year, although a lot will depend on the wider property market. 'Prices in Sentosa Cove could be more volatile than in the prime districts on the mainland because Sentosa Cove buyers are relatively more investment driven than motivated by owner occupation, compared to the prime districts.

When markets go up or down markedly, investors may be more inclined to sell than owner-occupiers, whether it is to cut loss or realise a gain,' she added.

Foreign buyers' share of Sentosa Cove homes on the rise

Foreigners, including permanent residents, picked up nearly 43 per cent of the homes transacted in Sentosa Cove in the first 10 months of this year, up from about 38-39 per cent in 2007 and 2008.

A Savills analysis of caveats data captured by URA's Realis system also showed that buyers from 'Western' countries - which it defined as those from Europe, North America, South America, Australia and New Zealand - made up four out of every 10 foreign buyers in Sentosa Cove between the fourth quarter of 2004 and Q4 2009.

In that period, such buyers were more active in Sentosa Cove than in the other sought-after districts of 1, 9, 10 and 11.

DTZ executive director (consulting) Ong Choon Fah observes: 'Buyers from Western countries appreciate the lifestyle elements in residential developments a lot more. In their home markets, units in a project that face the water or bay can sometimes be priced double that of units that don't have such a view.'

Savills found a total of 1,297 caveats lodged for purchases of private homes in Sentosa Cove over the five-year period, of which 487 (or 37.5 per cent) were from foreigners (including permanent residents). Singaporeans bought 705 units, giving them a 54 per cent share.

In the first 10 months of 2009, 133 caveats were lodged for homes in Sentosa Cove. Of these, 57 were bought by foreign buyers, with Malaysians having the largest share of 25 per cent or 14 caveats, followed by Indonesians, UK citizens, mainland Chinese and Hongkongers.

DTZ's Mrs Ong said: 'What Sentosa Cove offers is very unique. It's as close to waterfront housing as you'll get in Singapore, plus it's a gated community, with limited car access to outsiders. Sentosa Cove used to be like a construction yard. Now, however, most of the homes have been developed, and foreigners may be even more inclined to buy.'

The additional draw to Sentosa Cove among foreign buyers is that it is the only location in Singapore where foreigners who are not Singapore permanent residents are allowed to purchase landed property.

However, they must still seek permission from the Land Dealings (Approval) Unit under the Singapore Land Authority.

The approval time for Sentosa Cove has been specially fast-tracked to 48 hours - compared with about four weeks for applications by PRs seeking approval to buy landed homes on mainland Singapore.

Mrs Ong reckons that there is scope for the share of foreign buying to increase further next year, with the opening of the two IRs.

Also, the completion of Phase One of Marina Bay Financial Centre will strengthen Singapore's positioning as a global business centre.

'When high networths buy, they talk about their investments to their clique of people. That can generate further interest in Sentosa Cove,' she says.

Steven Ming, Savills director of investment sales & prestige homes, says that foreign buyers' presence is a critical factor for prices of luxury homes in Singapore, including at Sentosa Cove.

He says: 'If we look back, in 2006-2007 when foreigners were buying in Singapore, luxury prices ran up quite a bit.

'At the start of this year, there was very little foreign interest in the Singapore property market and it was mostly the mass and mid-segments that were doing well.

'In the past few months, however, foreign interest has returned and we're seeing a pick-up in prices on Sentosa Cove.'

Wonder what Sentosa Cove looks like? Take a look at our Special Photo Review: Sentosa Property Guide.



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