Singapore luxury residential sales fall but prices stay firm: CBRE

Singapore’s deluxe housing industry continued to soften in 1H2023 amid hostile price hikes by the US Federal Reserve and a souring macroeconomic backdrop, according to CBRE in a recent research report. Deal quantities for both Good Class Bungalows (GCBs) as well as high-end condos decreased in the very first half of the year, mirroring activities in the overall real estate industry.

In the luxury apartments market, 92 properties with a complete proceeding value of $964.7 million shifted hands in 1H2023, alleviating from the 106 units worth $1.085 billion offered in 2H2022. While luxury apartment sales rose in the first fourth months of the year right after the reopening of China’s boundaries in very early January, sales dropped in May as well as June taking after the increasing of additional buyer’s stamp duty (ABSD) levied on foreign shoppers to 60% which worked from April 27.

“Comparable to 2022, 1H2023 continued to see GCB interest from freshly naturalised citizens along with main execs of conventional services, while the active buying by digital market entrepreneurs last observed in 2021 remained missing amid the financial decline and even hard-hit tech market,” CBRE adds.

Looking ahead, transaction volumes in the deluxe non commercial marketplace will likely continue to be suppressed for the rest of the year, forecasts Tricia Song, CBRE’s head of research for Singapore and Southeast Asia. “This can be credited to a mix of factors to consider, consisting of the prevailing air conditioning measures, the unsure macroeconomic overview, and elevated interest rates, that may leave capitalists adopting a wait-and-see technique,” she claims.

The Fangiono family additionally bought an additional GCB on Nassim Road in March for $88 million ($3,916 psf), the sole best GCB deal in 1H2023.

Nonetheless, costs held firm despite the drop in purchases. Based on CBRE’s basket of property luxury plans, standard high-end condominium prices increased 1.1% to $3,463 psf in 1H2023 from $3,425 psf in 2H2022.

Kassia Condo Singapore

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

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

Tune adds that existing luxury homeowners are most likely to support prices, as healthy leasing returns as well as a minimal supply of brand-new deluxe houses incentivise them to hang on to their properties.

CBRE highlights that GCB rates stayed firm, increasing 31.1% contrasted to 2H2022 to get to $2,760 psf in 1H2023. The buildup was sustained by a landmark deal during the 1st half of the year when a trio of GCBs on Nassim Roadway operated by Cuscaden Peak Investments were acquired by members of the Fangiono family group behind Singapore-listed palm oil producer First Resources. The three residences were acquired in April for a total amount of $206.7 million, that turns out to $4,500 psf, establishing a brand-new record for GCB land rates.

Average rates across both bungalows and even apartments in Sentosa saw rises in 1H2023 compared to 2H2022, with the former rising 11.9% to $2,214 psf and also the latter increasing 1.7% to $2,063 psf throughout the initial half of the year.

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