Luxury properties prove a tough sell
By Jo-ann Huang | Posted: 07 June 2011 2143 hrs
SINGAPORE: Sales of luxury properties in Singapore seems to be losing its shine and has slowed down in recent weeks. That is according to industry players who say that the segment has underperformed despite the overall property boom last year.
Analysts said most buyers of luxury properties here, mainly foreign investors, are turning cautious about buying their next multi-million dollar home due to the uncertain global economy.
Hamilton Scotts is one of the most anticipated super luxury properties to be launched in the last three years. The project costs more than S$100 million and it features a S$20 million en suite car porch.
Each unit is selling between S$8 million and S$10 million each, or an average of S$3,800 per square foot. But sales at the Hamilton Scotts have been slow. Out of the 56 units in the property, only 19 have been sold at between S$3,000 and S$3,700 per square foot.
The freehold property was launched in mid-2008, in the heat of the Lehman Brothers crisis.
Sales of similar luxury properties have also been slow, with the upmarket development 8 Napier selling 27 out of the total 46 units. Its latest transaction was in April at S$3,000 per square foot.
Hamilton Scotts developer KOP properties said luxury property buyers have been cautious with their cash.
Leny Suparman, CEO of KOP Properties, said: "I have not shown people, the buyers and consumers, what this project really looks like. I think people are unsure about the car porch mechanism so I think we really need to show them the entire thing and to be able to fully showcase all the wonders of this project.
"For the past three years, despite the fact that we didn't have a show flat, we have been selling very well off the floor plans and the sales gallery in our office, I think we have done very well."
Liang Thow Ming, head of residential services at Credo Real Estate, said sales of luxury properties tend to be slower when compared with mass market home sales.
"If you look at properties of a price tag somewhere in the region of S$8 million to S$10 million, you don't expect these units to fly off the shelf anyway. So I think the pace of sales at Hamilton Scotts is comparable to the general luxury market," said Mr Liang.
But analysts said the luxury property segment will cool off further, this is after recovering slightly last year from the property downturn during the global financial crisis.
Mr Liang said: "Where foreign buying is concerned, and where the luxury end of the market is concerned, the global geopolitical situation have slowed the pace of foreigners wanting to buy properties, be it in Singapore or anywhere else. So generally, I think right now a lot of foreign buyers, they would probably not take the plunge so easily. Therefore, resulting in the luxury end market not being as vibrant as the rest of the market."
In the last three quarters, prices of uncompleted non-landed core central region homes, which include most luxury properties, grew by three per cent. Prices have already surpassed their peaks in 2008.
This is a much slower growth compared with the 26 per cent increase in prices in the whole of 2007, during the last property boom.
Luxury properties in Asia did well the first quarter of this year, recording a 5.5 per cent price growth, well over the 0.9 per cent from the previous quarter.
But key cities in Southeast Asia, including Singapore as well as major cities in China, recorded negative price growth to just over one per cent. CBRE Richard Ellis attributes this to a slew of property cooling measures introduced in those territories.
Hong Kong and Guangzhou were the only cities that recorded a price growth surge at 4.3 per cent and 7.2 per cent for the quarter.
Despite the uncertain global economic outlook, Ms Suparman is positive that sales at the Hamilton Scotts will improve, once it is completed by December this year.
"I think it's a little bit challenging for them but if you have a completed product, it's much easier for them to feel the space and to imagine the kind of lifestyle. So I believe this could be picked up once all these luxury projects are completed," said Ms Suparman
Analysts expect prices of central region luxury properties to climb slowly, by about five per cent this year.
-CNA/ac
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