Singapore luxury residential sales fall but prices stay firm: CBRE

Singapore’s luxury non commercial industry continued to lighten in 1H2023 in the middle of hostile rate hikes by the United States Federal Reserve and a souring macroeconomic backdrop, according to CBRE in a latest research credit report. Deal volumes for both Good Class Bungalows (GCBs) and also high-end flats decreased in the first part of the year, matching movements in the general real estate industry.

The Fangiono family in addition purchased one more GCB on Nassim Road in March for $88 million ($3,916 psf), the single biggest GCB deal in 1H2023.

Nonetheless, costs held firm despite the drop in purchases. Based on CBRE’s basket of property luxury properties, standard luxury residence rates increased 1.1% to $3,463 psf in 1H2023 from $3,425 psf in 2H2022.

Hill House floor plan

CBRE highlights that GCB rates remained firm, increasing 31.1% compared to 2H2022 to reach $2,760 psf in 1H2023. The buildup was supported by a spots transaction throughout the initial part of the year when a trio of GCBs on Nassim Road owned by Cuscaden Peak Investments were bought by members of the Fangiono family behind Singapore-listed palm oil manufacturer First Resources. The three homes were acquired in April for a total amount of $206.7 million, that works out to $4,500 psf, establishing a brand-new report for GCB land rates.

Within the Sentosa Cove territory, real property sales additionally relaxed contrasted to 2H2022. Seven Sentosa Cove bungalows worth $139.4 million were marketed in 1H2023, 32.8% less than the 10 bungalows worth $207.5 million negotiated in 2H2022. For Sentosa Cove condos, 50 units amounting to $251.1 million switched hands in 1H2023, 29.8% less than the 74 units worth $357.6 million marketed in 2H2022.

In the GCB market, 13 properties valued at a combined $525.3 million were transacted in 1H2023, which in turn is a 14.4% downturn from 2H2022 (18 GCBs worth $613.5 million), and a 30.1% autumn y-o-y from 1H2022 (29 GCBs worth $751.42 million).

Standard costs across both bungalows and also condos in Sentosa found boosts in 1H2023 contrasted to 2H2022, with the past rising 11.9% to $2,214 psf and the latter increasing 1.7% to $2,063 psf throughout the first half of the year.

In the high-end apartments market, 92 properties with an overall proceeding value of $964.7 million switched hands in 1H2023, relieving from the 106 units worth $1.085 billion sold in 2H2022. While luxury flat sales increased in the first fourth months of the year after the resuming of China’s borders in early January, sales dropped in May and also June following the doubling of additional buyer’s stamp duty (ABSD) imposed on international shoppers to 60% that took effect from April 27.

Track adds that existing luxury property owners are most likely to support rates, as healthy rental returns and a limited supply of new luxury houses incentivise them to hold on to their assets.

Looking ahead, transaction volumes in the luxury non commercial industry will likely stay suppressed for the remainder of the year, predicts Tricia Song, CBRE’s head of research for Singapore and also Southeast Asia. “This can be credited to a combination of factors to consider, including the prevailing cooling actions, the unsure macroeconomic outlook, as well as raised rates of interest, that might leave capitalists embracing a wait-and-see technique,” she claims.

“Comparable to 2022, 1H2023 remained to see GCB interest from freshly naturalised people and even main executives of traditional organizations, while the current purchasing by digital market business owners last seen in 2021 stayed lacking in the middle of the economic downturn plus hard-hit tech sector,” CBRE adds.

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