Homing in on luxury condominiums

What’s the draw of these high-end homes?

Feb 23, 2023

CHIA SIEW CHUIN
Sara Ong

A POSITIVE story is forming in Singapore’s luxury condominium market. More are buying these upmarket non-landed properties costing at least S$5 million from the Core Central Region (CCR), which encompasses postal districts 9, 10, 11, the Marina Bay and Central Business District, as well as Sentosa Cove.

In 2022, 453 units worth S$3.65 billion changed hands, surpassing the levels in pre-pandemic 2017 to 2019, when the average was 370 units a year worth S$3 billion.

The count in 2022 was below the 10-year high of 545 units transacted in 2021. Then again, in 2021, the market rallied on Singapore’s strong economic rebound, increased confidence following the gradual lifting of Covid-19-related restrictions and a low-interest-rate environment flush with liquidity. That buyers remained keen on luxury homes here in 2022 amid stronger headwinds, market cooling measures and limited new luxury project launches attests to the appeal of such properties here. There could be better times yet this year.

The buyers

Local buyers form a resilient demand base for Singapore’s luxury condominium market, but the segment also appeals to affluent foreigners.

For luxury condominiums costing S$5 million to S$10 million, Singaporeans constituted about a third of all purchasers during the pre-pandemic years of 2018 and 2019. Their share grew to around 45 per cent from 2020 to 2022. In absolute numbers, Singaporeans bought more units in 2021 (196 units) and 2022 (170 units) than between 2018 and 2020 (82 to 109 units annually).

Purchases of such units by foreigners correspondingly made up about two-thirds of the total transactions in 2018 and 2019, and moderated to 55 per cent from 2020 to 2022. Notwithstanding, foreigners also bought more units in 2021 (231 units) and 2022 (212 units) than in each of the years from 2018 to 2020 (105 to 208 units).

This trend reflects the increasing share of local buyers and the return of foreign buyers to Singapore’s luxury condominium market since 2021, despite travel restrictions, property market curbs and headwinds.

Notably, from 2018 to 2022, Chinese buyers led all foreign buyers of luxury condominiums in this price bracket. They accounted for 33 per cent of transactions by foreigners in 2022; buyers from the United States were second with 14 per cent, and Indonesians were third with 11 per cent.



For pricier luxury condominiums costing at least S$10 million, foreign buyers dominated with a significant share of 73 per cent to 83 per cent of all transactions from 2018 to 2020. In 2021 and 2022, their participation increased to 85 per cent. Remarkably, Chinese buyers surpassed all buyer groups including Singaporeans, purchasing the largest number of units in this segment from 2018 to 2022.

During this period, the top foreign buyers typically hailed from China, the US, Indonesia and Malaysia. However, luxury condominiums in Singapore have also drawn buyers from Taiwan, Australia, India, the United Kingdom, France, Hong Kong and even Vanuatu and St Kitts-Nevis. This reflects the far-reaching lure of luxury homes in safe-haven Singapore.



On the radar

Buyers of luxury condominiums are steadfast fans of Singapore’s traditional prime Districts 9, 10 and 11. Of late, however, new prime Downtown areas in the CCR such as Marina Bay (District 1), Tanjong Pagar (District 2) and Ophir-Rochor Beach Road (District 7) have found favour with buyers.

From 2018 to 2022, non-landed properties in District 10 were the most popular with Singaporeans, as with top foreign buyers from China, Indonesia, Malaysia, the US, India and the UK. District 9 also remained on the radar of local buyers and those from China, Indonesia, the US, Malaysia, the UK, Korea and France.

Non-landed properties in Districts 1 and 7 were the most well-received by Singaporean and Chinese buyers. Data for 2018 to 2022 shows that the Chinese generally preferred Districts 1 and 7 over District 11, buying up more units in the new prime areas in both the primary and resale markets.

Larger-scale integrated developments, such as Marina One Residences in District 1 as well as The M, Midtown Modern, Midtown Bay and South Beach Residences in District 7, drew strong interest from Singaporean buyers and the Chinese. These well-conceived integrated projects were sold on convenience, stature and lifestyle – downtown living, working, networking, shopping, entertainment and dining.

In 2022, the five best-selling new projects with units costing at least S$5 million were The Avenir, 15 Holland Hill, Park Nova, Boulevard 88 and Les Maisons Nassim. The top five most popular resale developments with units sold from S$5 million in 2022 were Cape Royale, Nouvel 18, Wallich Residence, Hilltops and 3 Orchard By-The-Park.

Transaction data shows that the optimal price range or “sweet spot” for most foreign buyers of luxury condominiums costing at least S$5 million falls between S$5 million and S$10 million per unit.

In 2022, most buyers of luxury condominiums from the US and Malaysia bought units priced from S$5 million to S$7 million. Local buyers mostly purchased units between S$5 million and S$8 million. The bulk of Indonesian buyers bought condominiums within the range of S$5 million to S$10 million. The Chinese mostly purchased units at between S$5 million and S$11 million, although their threshold for more costly units at S$11 million and above was also higher than other groups of buyers. Chinese buyers picked up 22 units costing at least S$11 million in 2022, exceeding the 14 units bought by Singaporeans and 10 units by Indonesians.

The line-up for 2023

New launches potentially offering more than 2,000 non-landed residential units in the CCR in 2023 will provide homebuyers with a spread of choices. A few major integrated projects yielding some 1,500 top-end residential units will debut in Districts 1 and 2. Some of these projects may offer high-value penthouses that befit the status of foreign ultra-high-net-worth individuals (UHNWIs), who are otherwise generally ineligible for landed home purchases.

Considering the fanfare attracted by the new integrated projects in Districts 1 and 7 previously, the new residences in these upcoming projects in 2023 are anticipated to capture public imagination and interest, including that of Singaporean and Chinese buyers.

Additionally, 2,249 unsold units from previously launched condominium projects in the CCR as of Q4 2022 remain available to buyers. Those from the top buyer sources of Singapore, China, the US, Indonesia, Malaysia, India and the UK, and who favour luxury condominiums in Districts 9 and 10, will have a selection to pick from.



Poised for further traction

Despite the steeper Additional Buyer’s Stamp Duty, Singapore’s luxury homes market has not been severely impacted. Luxury homes here are prized as stable assets for wealth preservation by foreigners and UHNWIs looking to be shielded from risks, uncertainties and headwinds. Luxury homes in Singapore have also been comparatively fairly valued among established cities.

Growing wealth in the region and Singapore will remain the key driver of luxury real estate here. Singapore stands as a major port of call for cross-border investments given its political stability, rule of law, favourable tax rates, strong currency and status as a haven to park wealth.

China’s reopening is set to drive more of Asia’s wealthy to our shores, and pent-up demand from them should further propel the market. Sales of luxury condominiums are also poised to increase on account of more CCR project launches in 2023.

Price escalation of non-landed homes in the CCR has lagged the lower-tier segments, with prices just 3 per cent above the 2013 peak as of Q4 2022, compared with 31.7 per cent and 27.7 per cent for mid-tier and mass-market non-landed homes, respectively.

Following multiple rounds of market cooling measures, a demand shift to the more affordable lower-tier segments led to faster price escalations, thereby narrowing their price gap relative to non-landed homes in the CCR.

The more measured capital appreciation for luxury condominiums has opened a window of opportunity for capital gain and an opportune time for astute investors waiting on the sidelines to enter the market. The Singapore dollar, which is expected to strengthen further, also affords investors prospects for currency gain, further sweetening the deal.

Chia Siew Chuin is head of residential research, research and consultancy; Sara Ong is research analyst, research and consultancy at JLL Singapore