Luxury homes untouched by latest property cooling measures for now

Jan 19, 2022



WHILE market activity in the property sector is said to have slowed after the cooling measures, demand for luxury homes has yet to dry up as some local first-time home buyers and others exempt from the Additional Buyer's Stamp Duty (ABSD) continue to transact.

Still, analysts expect to get a clearer picture of how the luxury segment of the property market will be impacted by the latest curbs after the Chinese New Year period.

Data extracted by real estate agency OrangeTee & Tie from the Urban Redevelopment Authority's Realis shows that 5 non-landed homes priced S$10 million and above were sold in the Core Central Region (CCR) in the 2 weeks after the December 2021 cooling measures. This is up from 3 units transacted between Dec 1 and Dec 15, 2021, before the cooling measures. Another 2 homes priced over S$10 million were sold between Jan 1 and Jan 9, 2022.

Meanwhile, 18 non-landed homes priced at S$5-10 million were transacted in the CCR in the first 2 weeks of December prior to the cooling measures. Post-cooling measures, there were 12 such units sold between Dec 16 and Dec 31, 2021, while the tally for the first 9 days of January 2022 stood at 8 units.

OrangeTee's senior vice-president of research & analytics Christine Sun reckons that some ultra-high net worth individuals may not be deterred by the cooling measures as they view Singapore as a favourable destination.

"The advantages of parking their monies here, including our safe-haven status and strong economic fundamentals, may outweigh the additional costs to these well-heeled buyers," she said.

Citing recent deals closed by OrangeTee, she went on to highlight that some affluent buyers scooping up luxury properties may not be fully impacted by the hike in ABSD as they could be newly minted citizens, permanent residents, or have Singaporean spouses. Nationals of specific countries, such as the United States and Switzerland, are also eligible for ABSD remission under the respective free trade agreements.

Among the transactions for luxury homes sealed this month by OrangeTee include a penthouse for which the foreign buyer is due to pay an ABSD amounting to S$2.25 million. The 5-bedroom, 2,960 sq ft unit at 99-year-leasehold Kopar at Newton transacted for almost S$7.52 million, or S$2,540 per square foot (psf). Under the new rules, foreign buyers now pay a revised ABSD rate of 30 per cent, up sharply from 20 per cent.

Ismail Gafoor, chief executive officer of PropNex Realty, pointed out that while the number of caveats lodged suggest "still fairly decent sales" in the high end of the CCR non-landed homes segment after the cooling measures, the figure may also include buyers exercising their Option to Purchase (OTP) that was issued before the curbs were rolled out. In such cases, they are not subject to the new rules.

"Market activity is indeed more muted - fewer viewings and transactions in the high-end CCR segment - since the new measures," said Gafoor, adding however that it may be tough to ascertain at this point whether the slowdown is a result of the property measures or the festive season. "The numbers from March onwards may tell a fuller story."

Two other transactions for pricey homes sold by OrangeTee this month are for a 5,802 sq ft, 5-bedroom penthouse at Reflections at Keppel Bay for S$11 million (S$1,896 psf) and a 2,756 sq ft, 3-bedroom unit at Hamilton Scotts which went for S$9 million (S$3,265 psf). In those cases, however, there is no ABSD payable. The buyer of the penthouse at Reflections at Keppel Bay is understood to be an American citizen, while the latter is said to be a Singaporean buying their first home.

Nicholas Mak, head of research & consultancy at ERA, expects the number of transactions to taper slightly in a knee-jerk reaction to the latest property curbs. "We can expect this to play into February as well. After mid-February, we may have a clearer picture of how the market will react to the cooling measures," he said, adding that there is currently a mismatch between bargain-hunting buyers and sellers unwilling to slash prices.

This year, Mak sees the overall price index for private residential property edging up 1-3 per cent, while the CCR could see price movements ranging from -2 per cent to 1 per cent.