The hottest deals in luxury residential market in 2019
This year saw a number of big-ticket deals in the luxury residential market. Han Huan Mei, director of research at List Sotheby’s International Realty, attributes the phenomenon to “the desire of ultra-high-net-worth (UHNW) investors for big units”. This is evidenced by the transactions in both penthouses and luxury apartments as well as Good Class Bungalows (See tables).
Sales of large penthouses were driven by foreign buyers who were not eligible to purchase landed properties, especially GCBs, which are the most coveted among bungalows in Singapore. “The next best alternative for them is to buy penthouses, which are equivalent to bungalows in terms of size,” adds Han.
This year, there were fewer number of luxury apartment deals for units above 3,000 sq ft compared – 127 units in 2019 compared with 153 the year before. List Sotheby’s Han attributes the lower figure to the scarcity of such unit sizes in newer developments, rather than a lack of interest.
JUMP IN TRANSACTIONS OF LUXURY APARTMENTS ABOVE $4,000 PSF
On the other hand, deals of luxury apartments above $4,000 psf jumped to 20 in 2019 from just eight units last year. Meanwhile, luxury apartment deals above $20 million trebled to 15 this year from five last year, according to List Sotheby’s research.
“Such purchases are made mainly by foreigners,” notes Dominic Lee, head of luxury team at PropNex. “Compared to other major cities, Singapore is considered relatively affordable even after factoring in the additional buyer’s stamp duty [ABSD].”
According to Lee, foreign buying interest was mainly due to Singapore’s good governance and stable currency. “Buying real estate is a way for them to protect their capital,” he adds.
In the GCB segment, the deals that stood out this year in terms of transacted price were the one on Nassim Road that fetched $230 million ($2,720 psf) in July. The GCB which sits on an elevated, freehold site of 84,544 sq ft is the biggest single GCB transaction to date. The buyer is believed to be billionaire and former Facebook co-founder Eduardo Saverin who’s now a Singapore citizen. The property was purchased in a trust.
Meanwhile Britain’s richest, James Dyson, famous as the inventor of the bagless and cordless vacuum cleaners as well as bladeless and purifier fans, has set up a family office in Singapore and also purchased two luxury properties at record prices this year. The first was the biggest penthouse in Singapore, a 21,108 sq ft triplex on the 64th floor of Wallich Residence at the top of Tanjong Pagar Centre. The purchase price was reportedly $73.8 million ($3,496 psf). He followed that up with the purchase of a newly completed GCB on Cluny Road for a reported $41 million ($2,715 psf) in July.
‘EYE-POPPING DEALS’
“The most eye-popping deals this year are definitely the GCB on Nassim Road and the super penthouse at Wallich Residence,” says Bruce
Lye, managing partner of SRI. “In the past, such transactions were unheard of in Singapore; It used to happen mainly in cities like New York, London or Hong Kong,” he adds.
Besides the GCBs at Nassim Road and Cluny Road, one deal that stood out this year was the purchase of the GCB at Tanglin Hill by Koh Tuck Lye, former director of Xiaomi Corp and now co-founder of Shunwei Capital, a US$3 billion ($4.1 billion), China-based tech fund. He paid $31.5 million ($1,915 psf) for the GCB in October. The deal stood out in terms of the price psf for an old GCB that is going to be redeveloped, says William Wong, managing director of RealStar Premier Group.
Another deal that was significant this year was a mortgagee sale, adds Wong. The GCB on Belmont Road had been put up for auction multiple times over the past two years. It was finally sold for $18.6 million ($1,139 psf). The buyer is reportedly Carol Cheng, the daughter of Wing Tai Holdings chairman Cheng Wai Keung.
For “very prime” GCBs and bungalows, prices have appreciated about 5% to 7% this year, estimates RealStar’s Wong. On the other hand, those that are “non-prime” are likely to have seen prices soften between 7% and 10% for the full year. “Compared to a year ago, overall average prices of bungalows have dropped by about 5% in 2019,” he says. Wong expects prices to stabilise and appreciate slightly next year.
About 37 GCBs were sold this year, as at end Dec 20, 2019, and the expectation is that next year, the figure could be similar or up to 40 units. “We expect the properties with large land areas and unique, well-built bungalows to continue to be sought-after,” says List Sotheby’s Han. “Coupled with the coveted addresses close to Orchard Road and the CBD, some of these GCBs could be sold at record prices.”
PICK UP IN TRANSACTIONS BY PRs AND FOREIGNERS
In the first 11 months of 2019 based on caveat data, the Core Central Region (CCR) – the CBD, Marina Bay, Sentosa Cove and the traditional Orchard Road prime districts of 9, 10 and 11 – saw 383 purchases by Singapore permanent residents and 442 were by foreigners (non-PRs or NPRs). This represents 15% and 18% of transactions in the CCR respectively, says List Sotheby’s Research (See chart below).
Home purchases by PRs outnumbered those by foreigners in 2019. This is not surprising because the ABSD rates for PRs — at 5% for the first purchase — are much lower than the 20% that foreigners have to fork out, says Han.
Under their respective Free Trade Agreements, PRs from Iceland, Liechtenstein, Norway, Switzerland and US citizens who buy residential properties will be accorded the same stamp duty treatment as Singapore citizens. Hence, Americans — both PRs and NPRs — emerged as the fourth largest group of homebuyers in the CCR, based on caveats lodged, notes Han.
Some of the purchases in the CCR were made under trusts for children who are PRs or Singapore citizens. “As the ABSD payable depends on the beneficiary, these NPR home buyers will be able to avoid paying the ABSD if their children are Singapore PRs or citizens,” explains Han.
The number of luxury apartments of $5 million and above in the CCR sold for the first 11 months ended November 2019 was 340, down from 371 units last year. The figure next year is expected to be “marginally lower”, says Han, “given the global economic outlook mired in geopolitical and protectionist issues”.