Singapore swings into luxury
After years of slow progress in the real-estate arena, luxury property in the Lion’s City is revelling in an upward momentum. Matt Wang reports
Singapore’s efforts to be the number one wealth centre in Southeast Asia are well and truly paying off, and its success is being felt in the booming property market. The city-state’s strong and stable economy has paved the way for increased consumer confidence across most fields, and the outlook for property owners (particularly at the luxury end) has never been better.
With a population of 4.5 million, Singapore has one of the highest population densities in the world, and boasts one of the highest standards of living in Asia. Successful financial, IT and electronics sectors, as well as an increasingly active tourist industry, have helped to bring the economy up to speed after the lows of 2004.
The recent recovery in the housing market is largely reliant on strong economic growth, boosted by gains in the manufacturing sector. Singapore’s gross domestic product has grown steadily over recent years, with increases of 8.7 percent in 2004, 6.4 percent in 2005, and 7.9 percent in 2006.
Analysts estimate that investors in the city-state are now reaping gains of 60 percent to 80 percent on high-end properties. CB Richard Ellis has recorded a 64.3 percent rise in average luxury rental rates since 2004. This compares to an estimated 30 percent for the general property market.
Providing a low-risk environment, thanks to its stable legal and tax environment and positive future economic prospects, Singapore is now attracting unprecedented interest from overseas property investors.
Overseas buyers have found a sweet spot in Singapore’s property market, due to its low property taxes and transparent ownership rules. Low transaction costs as well as a pro-landlord rental market have created a healthy comfort zone for homeowners.
While the majority of non-Singaporean buyers previously came from nearby Asian countries, notably Indonesia, Malaysia, India, China and South Korea, it is expats from further afield who are now driving up prices.
With so many major multinationals now operating or headquartered in Singapore for the Asia region, more and more senior and executive-level employees are relocating to the city. What they are bringing with them is big spending power and a desire for top-of-the-market housing in some of Singapore’s prime locations.
While demand for high-end rental accommodation is on the rise, many of these international companies are choosing to enter the market as buyers for investment purposes.
This is reflected in the fact that foreign ownership rates for prime residences in the Orchard Road area are as high as 90 percent, and foreign purchases of new units on the resort island of Sentosa are almost 70 percent.
Singapore realtors have, for some time, marked the boundaries for top-tier properties as starting at roughly S$2,000 (HK$11,187) per square foot, but with the landscape changing so rapidly, it’s becoming harder and harder to keep track of the luxury market, and record sales are an almost daily event.
In the highly desirable Orchard Road district, Parkview Eclat – nestled within Singapore’s District 10 “Good Class Bungalow” enclave - a deluxe condominium recently sold for around $S16 million, making it one of the first properties in Singapore to transcend to the new, S$4,000-per-square-foot super-luxury category.
What’s on the horizon
The future looks bright for investment opportunities, over the next few years, not least because a number of new luxury residential properties are coming on stream.
All eyes are on Singapore’s flourishing resort districts, Marina Bay and Sentosa, where two new mega complexes – featuringretail, entertainment and convention facilities, as well as casinos – are in the pipeline. While there are plans for a high-end Marina Collection of 124 units on Sentosa, One Shenton’s 341 lavish apartments and “Sky Villa” penthouses, located on Marina Bay’s edge, have already sold out, with ten units worth HK$125 million in total going to Hong Kong buyers.
Back in the city, Wheelock Properties’ Scotts Square development, will boast 300 units in two residential towers and looks set to enter the super-luxury class.
At City Development’s Cliveden@Grange, also near Orchard Road, 90 percent of the units have already been bought by foreign investors. Set to open in 2011, this haute-living landmark in prime District 10 will feature manicured gardens, an outdoor entertainment area and a vast range of recreational facilities. Unit types range from 2,153-square-foot three-bed apartments to 6,028 five-bedroom penthouses.
While some unit sales have surpassed the coveted S$4,000 mark, the average square-foot selling price is S$3,600. Watch this space though, because when it comes to any luxury purchase there is one thing you can rely on – prices will go higher.
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