Published November 12, 2012

Sales down for flats worth $10m and more

Only 33 big ticket units sold compared to 57 last year

By Kalpana Rashiwala

[SINGAPORE] Sales of luxury condos and apartments priced $10 million and above have taken a hit this year, with 33 such properties changing hands in the first 10 months, down from 57 units in the same period last year.

The 33 units transacted (in both primary and secondary markets) during January to October 2012 fetched a total $449.6 million - 44 per cent less than the $797.5 million in the same year-ago period, according to CBRE's analysis, based on data in URA Realis caveats database. The data was downloaded on Nov 7, with the most recent transaction dated Oct 24, 2012. More caveats for October could be lodged in the next few weeks.

Market watchers attribute the sharp drop in big-ticket non-landed private housing deals this year chiefly to the introduction of the Additional Buyer's Stamp Duty (ABSD) last December aimed at cooling investment fervour in Singapore's private residential property market, especially by non-PR foreigners and corporations. These two categories of buyers have to pay the highest ABSD rate of 10 per cent on any residential property purchase in Singapore.

For the whole of last year, 63 units costing at least $10 million changed hands at a total value of $881.3 million, down slightly from 2010's showing of 74 units at $966.4 million.

During the Singapore luxury residential property market's peak-year in 2007, 164 units were sold for $2.2 billion.

The most expensive deal done so far this year in absolute dollar terms is $30.4 million, involving the sale in July in the subsale market of a 6,308 sq ft unit on the 18th floor of The Marq on Paterson Hill for $30.4 million or $4,820 per square foot.

A more recent big-ticket transaction took place last month, when a 64th-storey single-level penthouse at Marina Bay Suites was sold by its developer for $19.3 million, which works out to $3,409 psf based on the strata area of 5,662 sq ft.

The unit is understood to include five en-suite bedrooms, spacious living and dining areas and comes with its own swimming pool and pool deck. This is one of three penthouses in the 99-year leasehold development, which is slated for completion next year. The other two penthouses - both duplex units - are understood to be still available. One is a 4,715 sq ft unit on levels 63 and 64 while the largest unit in the whole project, at 8,181 sq ft, occupies the top two levels of the 66-storey condo.

Both the Marina Bay Suites penthouse as well as The Marq unit are said to have been bought by Singaporeans.

URA Realis also enables a profile analysis of buyers - whether they are Singaporeans, permanent residents, non-PR foreigners or companies - for non-landed private homes transacted at above $5 million.

This revealed an interesting re-shuffling in the mix of the buying pie since the start of this year - which analysts attribute to the effect of the much higher ABSD rate (10 per cent) payable by non-PR foreigners and companies on any residential property purchases here.

Last year, non-PR foreigners accounted for the lion's share or 38.8 per cent of the 448 units sold at over $5 million each. In Jan-Oct this year, their share contracted to 26.6 per cent of the 282 units sold in this price band. Companies' share too dived, from 15.8 per cent last year to 4.3 per cent in Jan-Oct 2012.

Conversely, Singaporeans' share rose from 23 per cent last year to 36.9 per cent in the first 10 months of this year. Likewise, PRs' share climbed from 22.3 per cent to 32.3 per cent.

PRs pay 3 per cent ABSD when buying their second and subsequent residential property here. Singapore citizens also foot 3 per cent ABSD, but only on their third and subsequent residential property.

(Realis does not list buyer profile for units transacted at $10 million or above.)

CBRE executive director (residential) Joseph Tan is optimistic that foreign participation in luxury condo purchases may rise next year. "Foreigners will probably come to see ABSD to a certain extent as part of life, as a form of acquisition cost. In addition, the high-end segment has shown to be more resilient actually. Volumes have dropped, but prices have generally remained stable.

"At the end of the day, the stock of big-ticket apartments and penthouses is limited. If you look at the profile of owners, they have deep pockets," he added.

Knight Frank chairman Tan Tiong Cheng reckons that foreign buying in Singapore's luxury condo sector may well recover in the near future "but buyers will probably not return in droves" because of uncertainty on whether there will be more cooling measures.

"We are still a safe haven and other safe havens such as Hong Kong and UK have also introduced measures to deter foreign buying. Things are still in a state of flux and it doesn't mean Singapore will not introduce more measures."

Mrs Ong Choon Fah, DTZ's South-east Asia chief operating officer, observed: "The general mood is better today than two to three months ago, but people are still cautious because of global economic uncertainty."