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Published June 22, 2006

S'pore luxury home prices up 7.7% in Q2
St Regis Residences drive price to highest in 9 years, says CBRE


(SINGAPORE) The launch of St Regis Residences helped set records in luxury home prices and sales volumes in the second quarter, according to CB Richard Ellis (CBRE).

The average price for its basket of freehold completed luxury properties posted a quarter-on-quarter increase of 7.7 per cent in Q2 to $1,670 per square foot (psf) - the highest figure in nine years. Such a level had not been seen since Q4 1997, when the average price was $1,987 psf.

And 62 private homes, mostly at St Regis Residences, have changed hands at above $2,000 psf so far this quarter - probably the highest quarterly figure ever, CBRE reckons.

Since the start of this year, about 70 private homes priced above $2,000 psf have changed hands, including 58 from St Regis Residences. Assuming the same level of sales is repeated in the second half, the year could end with about 140 private residential deals above the $2,000 psf mark.

This would surpass levels achieved during the market peak in 1996 and 1997, when 71 and 44 deals respectively were done above $2,000 psf, says CBRE.

The 7.7 per cent gain in the average luxury home price in Q2 followed a flat performance in Q1 and is in line with the firm's earlier forecast of an increase of 15-20 per cent for the whole of this year.

The increase for the whole of last year was 15.2 per cent, the bulk of which came in Q3 when CBRE's average price for luxury homes posted an 11.5 per cent quarter-on-quarter gain to $1,500 psf from $1,345 psf - a level it had stayed at for seven consecutive quarters.

Back in Q3 last year, The Sail @ Marina Bay was the catalyst for the price spike. And this quarter, the catalyst has been the launch of St Regis Residences. While these are uncompleted projects, the buoyant sentiment they created has had a spillover effect on prices of completed luxury freehold projects captured in CBRE's basket.

CBRE director (residential services) Joseph Tan notes that despite buoyant sentiment in the high-end residential segment, market conditions today are still markedly different from those in the heyday in 1996-1997.

'Back then, home prices were driven up by both local and foreign speculators, nudged by a relaxation of housing regulations and Housing & Development Board sale and resale conditions, as well as strong economic performance,' he says. 'Today, foreigners are the key drivers behind the demand for luxury properties. Until 2005, home prices here were still more than 30 per cent below peak levels in 1996-1997, so there is still potential for an upward movement in prices. We expect demand from foreigners to sustain, with Singapore developing as a financial centre.'

CBRE's report, released yesterday, also shows that developers launched about 2,200 private homes in Q2, similar to the figure of 2,111 in the preceding quarter. In the primary market, developers sold about 1,800-2,000 units in Q2, similar to the Q1 figure of 1,858. This took developers' first-half sales to 3,600-3,800 units, against 4,030 in first half of last year.

CBRE predicts primary market sales of 1,800-2,200 units in Q3 and reckons prices could continue to rise. Expected high-end launches include Hong Leong's Tate Residence, CapitaLand's Scotts High Park and Far East Organization's Orchard Scotts.

Demand for private homes in the secondary market remained strong in Q2, with 2,100-2,300 units changing hands.