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Thread: Runaway prices crank up supply of luxury apartments

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    Default Runaway prices crank up supply of luxury apartments

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    Published January 24, 2007

    Runaway prices crank up supply of luxury apartments

    4,000 units forecast for this year, big jump from last year's 1,600

    By UMA SHANKARI


    (SINGAPORE) The number of luxury apartments offered to buyers this year could hit 4,000 as Singapore's high-end residential market continues its bull run, property firm Colliers International said yesterday.

    Colliers director of research and consultancy Tay Huey Ying said that the number is a sharp increase from the 1,600 units offered last year. Colliers loosely classifies a luxury apartment as one that costs more than $1,800 per square foot (psf).

    The proportion of luxury apartments as a percentage of all units launched is also set to climb this year, Ms Tay said. Luxury units made up 15 per cent of all launches in 2006 but are expected to account for 29 per cent of launches this year.

    Colliers' presentation, at an industry seminar yesterday, comes as two high-profile luxury developments gear up for their official launch this weekend.

    Allgreen Properties' Cairnhill Residences at Cairnhill Circle and Frasers Centrepoint's St Thomas Suites in St Thomas Walk will make their official debut.

    At the 97-unit Cairnhill Residences, close to half of the apartments have been sold at an average of about $1,800 psf since the soft launch about a month ago, sources said.

    The project contains apartments ranging from 904 sq ft to 1,431 sq ft, as well as five penthouses of various sizes.

    St Thomas Suites, on the other hand, started previewing this week. Interest in the 176-unit project has been strong, and BT understands that units are going for $1,700-2,000 psf.

    More high-end projects are expected to be launched in the next few months as developers try to capitalise on the current upbeat mood in the luxury market. Upcoming developments include the Orchard Turn site and SC Global's the marQ on Paterson Hill.

    'I think this buying frenzy will probably last for another six months or so. This will be supported by a strong line-up of potential launches,' Colliers' Ms Tay said. 'But in the second half (of 2007), unless there are more high-profile launches, and unless the government announces some economy-boosting initiatives, the excitement may wear off a little.'

    She expects price growth to slow in the second half of this year, but predicts that the high-end market will rally strongly from the second half of 2009 when the integrated resorts and the Marina Bay Financial Centre come up. 'It will generate another round of excitement,' she said.

    She believes the luxury residential segment is not in danger of oversupply. Despite the prices, the luxury segment had the highest take-up rate of 81 per cent last year, Ms Tay said. This compared with a 57 per cent take-up rate for the mass market and 75 per cent for mid-tier homes.

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    Default Re: Runaway prices crank up supply of luxury apartments

    4000 units of luxury apartments on offer this year!!!
    Assuming each unit is 1200 sq ft, it would cost 1200X1800 = $2.16 mil per unit.
    If it is for investment, each unit has to be rented out at $8000 per month to break even.
    Not too many people can afford this type of rental. Has to very close to CEO level to afford this type of housing.
    R we going to have 4000 new CEOs every year in Singapore?

  3. #3
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    Default Re: Runaway prices crank up supply of luxury apartments

    Quote Originally Posted by Madeira
    4000 units of luxury apartments on offer this year!!!
    Assuming each unit is 1200 sq ft, it would cost 1200X1800 = $2.16 mil per unit.
    If it is for investment, each unit has to be rented out at $8000 per month to break even.
    Not too many people can afford this type of rental. Has to very close to CEO level to afford this type of housing.
    R we going to have 4000 new CEOs every year in Singapore?
    Not really that expensive. You don't need to be CEOs to earn that kind of salary. Many senior level expat executives have close to this amount of rental allowance. There will certainly be more than 4,000 new senior-level expat executives coming to Singapore in the next few years.

    If your talking about regional or country CEOs of MNCs, they'd be given rental allowances of $15,000 to $20,000 / month. Those are the people who rent Ardmore Park, Cuscaden, Claymore, Lady Hill, and Setia Residences (one unit takes up the entire floor). Do your research and you'll find that this is true.

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    Default Re: Runaway prices crank up supply of luxury apartments

    But 4000 is not a small number. We are talking about one year 4000 of these high level executives.
    BTW, average price of a Ardmore Park unit is $6.0 m. To have a reasonable yield, monthly rental must be at least $24 K. Many small time CEO would not be able to rent these places.
    I suspect some of these high end units are not rented out. They are used as holiday chalet or storage spaces for the super rich.

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    dude
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    Default Re: Runaway prices crank up supply of luxury apartments

    Quote Originally Posted by Madeira
    But 4000 is not a small number. We are talking about one year 4000 of these high level executives.
    BTW, average price of a Ardmore Park unit is $6.0 m. To have a reasonable yield, monthly rental must be at least $24 K. Many small time CEO would not be able to rent these places.
    I suspect some of these high end units are not rented out. They are used as holiday chalet or storage spaces for the super rich.
    Yes to have a reasonable yield, monthly rental must be at least $xxk / month. However units in many high end condos, Ardmore Park included, rarely generate 'reasonable yields'. If you were ever trying to rent a place, you would know the going rates for these high end units. Rental yields are besides the point for many owners of high end apartments, they are merely parking their spare cash in these properties. If there is capital appreciation, so much the better. Rental yield is almost an afterthought for some of these owners.

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