Singapore luxury residential sales fall but prices stay firm: CBRE

Singapore’s luxury residential industry remained to soften in 1H2023 in the middle of hostile price hikes by the US Federal Reserve and also a souring macroeconomic backdrop, according to CBRE in a current research study credit report. Transaction volumes for both Good Class Bungalows (GCBs) and also deluxe condos decreased in the first part of the year, matching activities in the general real estate market.

“Comparable to 2022, 1H2023 remained to view GCB interest from recently naturalised residents along with primary executives of classic companies, while the active buying by digital economy entrepreneurs last seen in 2021 stayed absent amid the economic slump plus hard-hit technology market,” CBRE includes.

Within the Sentosa Cove territory, real estate sales also lightened compared to 2H2022. 7 Sentosa Cove bungalows cost $139.4 million were sold in 1H2023, 32.8% lower than the 10 bungalows worth $207.5 million negotiated in 2H2022. For Sentosa Cove condos, 50 units amounting to $251.1 million switched hands in 1H2023, 29.8% lower than the 74 units worth $357.6 million sold in 2H2022.

Looking ahead, transaction volumes in the deluxe residential industry will likely remain suppressed for the rest of the year, forecasts Tricia Song, CBRE’s head of research study for Singapore and Southeast Asia. “This can be attributed to a combination of factors to consider, including the prevailing air conditioning actions, the unsure macroeconomic overview, and raised rates of interest, that could leave capitalists adopting a wait-and-see method,” she states.

Average costs across both bungalows and also condominiums in Sentosa found rises in 1H2023 compared to 2H2022, with the former rising 11.9% to $2,214 psf and also the latter climbing 1.7% to $2,063 psf throughout the very first fifty percent of the year.

CBRE highlights that GCB prices continued to be firm, increasing 31.1% compared to 2H2022 to reach $2,760 psf in 1H2023. The buildup was supported by a landmark transaction throughout the initial part of the year when a trio of GCBs on Nassim Roadway owned and operate by Cuscaden Peak Investments were purchased by associates of the Fangiono family group behind Singapore-listed palm oil supplier First Resources. The 3 houses were acquired in April for an overall of $206.7 million, which turns out to $4,500 psf, setting a new record for GCB land rates.

The Fangiono family group in addition bought one more GCB on Nassim Road in March for $88 million ($3,916 psf), the lone biggest GCB sell 1H2023.

In the GCB market, 13 properties worth a shared $525.3 million were transacted in 1H2023, which is a 14.4% decline from 2H2022 (18 GCBs worth $613.5 million), and a 30.1% autumn y-o-y from 1H2022 (29 GCBs worth $751.42 million).

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In the deluxe apartments market, 92 real estates with an overall transaction worth of $964.7 million switched possessions in 1H2023, alleviating from the 106 units worth $1.085 billion marketed in 2H2022. While luxury apartment sales rose in the early 4th months of the year after the reopening of China’s borders in early January, sales fell in May and June following the increasing of additional buyer’s stamp duty (ABSD) levied on foreign customers to 60% which took effect from April 27.

Nonetheless, rates held firm despite the drop in purchases. Based on CBRE’s basket of freehold luxury plans, average luxury apartment prices increased 1.1% to $3,463 psf in 1H2023 from $3,425 psf in 2H2022.

Track adds that existing deluxe home owners are likely to support rates, as healthy rental yields as well as a limited supply of brand-new deluxe residences incentivise them to hang on to their assets.

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