Projects with foreign buyer appeal
Chinese nationals continue to hog the limelight in Singapore with purchases of luxury penthouses at eyepopping prices. Beyond the prime districts, these foreign buyers are making their presence felt at new launches in the city fringe and suburban condomin
Chinese nationals continue to hog the limelight in Singapore with purchases of luxury penthouses at eye-popping prices. Beyond the prime districts, these foreign buyers are making their presence felt at new launches in the city fringe and suburban condominiums too. Will this trend continue?
Athree-bedroom, triplex penthouse at South Beach Residences, designed as a show suite by celebrity designer Peter Tay, was rolled out on the market recently – and quickly snapped up by a Chinese buyer. He paid $16.9 million for the 3,897 sq ft, three-bedroom penthouse on the 42nd level, which comes with all the furnishings.
The purchase price translates to $4,337 psf, which makes it the first transaction at South Beach Residences to cross the $4,000 psf threshold. The penthouse is said to have panoramic views of the sea and Marina Bay. The sale was brokered by an agent from Huttons Asia.
The biggest penthouse at South Beach Residences, a 6,728 sq ft triplex located next door, fetched $26 million ($3,865 psf) in September last year. The buyer is also a Chinese national.
This means two out of six penthouses at the 190-unit South Beach Residences have already been spoken for. The luxury residences sit on top of the JW Marriott Singapore and span the 23rd to 45th floors of the tower. The project was jointly developed by City Developments Ltd and IOI Group, and completed in 2016.
THE ALLURE OF LUXURY UNITS
Many of the Chinese buyers have gravitated towards the larger units. “They only want big units,” notes Dominic Lee, head of luxury team at PropNex Realty. Three- and four-bedroom units at South Beach Residences, for example, have been sold at prices ranging from $6.4 million to $8.24 million in July and August, based on caveats lodged to date, with unit prices of $3,393 to $3,645 psf.
Meanwhile, in the prestigious Orchard Boulevard enclave, the bigger of just two penthouses at 3 Orchard By-the-Park was sold for $32 million ($4,630 psf) earlier this month. The buyer was a Chinese national too. The other penthouse, a five-bedroom duplex of 6,555 sq ft, fetched $31.5 million ($4,805 psf) in June this year – also purchased by a Chinese national. Both deals were said to be brokered by Savills Residential.
“Any increase in foreign buying thus far has mainly been concentrated in the super luxury segment,” observes Alan Cheong, executive director of research & consultancy at Savills Singa
pore. Cheong defines the super luxury segment as projects in the Core Central Region (CCR) that are priced above $3,000 psf. The CCR encompasses the traditional prime Orchard Road Districts 9, 10 and 11, as well as Marina Bay, the CBD and Sentosa Cove.
For 3Q2109 to date (based on caveats lodged with URA Realis from July to Sept 3), 37.4% of buyers of non-landed properties in the CCR were foreigners, points out Cheong.
In 2Q2019, the proportion of foreign buyers in the CCR was slightly lower at 35%, and in 1Q2019, it was even lower at 29.5%, based on URA Realis data.
WEALTHY CHINESE DOMINATE
Much of the increase came from Chinese nationals who purchased 51 units in 1Q2019; another 59 units in 2Q2019 and 46 units in 3Q2019 to date, notes Cheong. “We believe that their presence in the CCR is even greater because the numbers under the category ‘Foreign (Unspecified)’ have been rising – from 12 in 1Q2019, to 36 in 2Q2019, and 41 based on URA Realis data captured in 3Q2019 so far.”
Projects in the CCR that have seen the biggest proportion of foreign buyers in 2019 include Marina One Residences at Marina Way (42 units); Boulevard 88 on Orchard Boulevard (37 units); and Nouvel 18 on Anderson Road, where 11 of the 13 caveats lodged so far were by foreign buyers, notes Han Huan Mei, director of research at List Sotheby’s International Realty. Chinese nationals are the top foreign nationality in the CCR, followed by Indonesians and Malaysians, according to Han (see tables below).
However, among foreign nationals in the CCR, the Chinese have been in pole position for the past six years, according to Ong Teck Hui, JLL senior director of research & consultancy. In 2008, Chinese buyers contributed to 12% of transactions by foreigners in the CCR. A decade later in 2018, the proportion has risen to 33%.
“More Chinese are buying in the prime districts and higher-value properties – above $5 million – so it is not surprising that more of them are buying luxury units,” adds Ong.
With the number of Chinese high-net-worth individuals (HNWIs) having trebled over the last 10 years, “there would be many more wealthy Chinese trying to invest overseas today”, continues Ong. “The prospect of a weakening yuan would be another factor for them to invest abroad.”
In fact, Singapore’s biggest attractions are “good governance and stability of its currency”, says Desmond Sim, CBRE head of research for Southeast Asia.
MORE NEW LAUNCHES
Foreigners have traditionally preferred to invest in the prime districts, says Ong. “But certain high-end projects were in greater demand,” he notes. One example is the 124-unit, freehold New Futura on Leonie Hill Road, where 54% of the sales came from wealthy foreign buyers. Another example is the 154-unit, freehold Boulevard 88 on the prestigious Orchard Boulevard (a redevelopment of the former Boulevard Hotel): Launched in March, 51% of the buyers were foreigners.
The increase in proportion of foreign buyers in the prime districts could partly be attributed to more new launches, adds Ong. In 2019, 799 new units were placed on the market, up by 22.4% from the 653 units launched in 2018.
The increase in purchases by foreign buyers is evident not just in the CCR, but in the city fringe or Rest of Central Region (RCR) and the suburbs or Outside Central Region (OCR) as well. In the overall market, transactions by foreign buyers have picked up, rising from 174 (representing 4.7% of total transactions) in 1Q2019; to 247 (5.4%) in 2Q2019; and 310 (7.3%) in 3Q2019 to date, according to JLL’s Ong. “The quarterly increase in proportion of transactions due to foreigners appears to be market-wide,” he adds.
While foreigners account for relatively fewer transactions in the OCR, the recent launch of the 1,468-unit Parc Clematis saw foreign buyers picking up 68 out of the 364 units, representing 18.7% of the units sold, says Ong. Foreign buyers are likely to have been attracted by its more affordable pricing at an average of $1,580 psf compared to projects in the prime districts. “It remains to be seen whether there will be a trend of more foreigners buying in suburban locations,” he adds.
Besides Parc Clematis, other mega projects (of more than 1,000 units) in the OCR that registered foreign buying interest include the 2,203unit Treasure at Tampines (16 units) and the 1,472-unit Riverfront Residences in Hougang (7 units), says List Sotheby’s Han.
Meanwhile in the RCR, the proportion of foreign buyers increased q-o-q from 2Q2019 to 3Q2019 to date. Sizeable projects located within the vicinity of MRT stations and launched in
INCREASED PROBABILITY OF DEALS
Besides HNWIs, global private equity and institutional real estate investors continue to show strong interest in Singapore and have been more active in the last 24 months, notes Regina Lim, JLL head of capital markets research for Southeast Asia.
“In the last three months, we have received more queries from institutional investors about the trade tensions between the US and China, the vulnerability of Hong Kong amid that, and the outlook for the Hong Kong dollar,” observes Lim. “There have also been more enquiries from Asian HNWIs seeking to invest in mid-sized commercial properties in Singapore, including shophouses, strata commercial units or whole strata commercial floors.”
In Asia, Singapore remains one of the favoured real estate investment markets, notes JLL’s Ong. This explains “the sustained purchases” of residential properties by foreigners despite the hike in additional buyer’s stamp duty (ABSD) in July 2018. Admittedly, transaction volume by foreign buyers today is “only a fraction” of what it was before the hike in ABSD last year, he adds.
Since the protests in Hong Kong began in June, while the number of enquiries has remained constant, “the probability of closing a sale has increased significantly,” says Savills’ Cheong. “This applies to both institutions looking at commercial real estate and highnet-worth families looking to buy both commercial and/or residential apartments. Hong Kong-based buyers who were previously dithering on the sidelines here have decided to put pen to paper.”