CapitaLand Residential expects continued demand, price rises for private residential housing

by Jo-Ann Huang Limin

05:55 AM Jan 10, 2011

SINGAPORE - CapitaLand Residential will sell 1,700 private residential units this year out of its existing inventory of 2,500 ready-to-launch homes that it has yet to release for sale, chief executive officer Wong Heang Fine said in his first presentation to the media.

The units that will be sold this year will be from some of CapitaLand Residential's most high-profile developments, such as d'Leedon, The Interlace, Urban Resort and The Nassim, said Mr Wong, who joined the CapitaLand Group in 2006 and was named in July last year to succeed Ms Patricia Chia as CEO of CapitaLand Residential.

As many as 750 units of the 1,715-unit d'Leedon, the former Farrer Court, will be launched this year. MediaCorp understands that another 300 units will be launched next week, after 93 per cent of the initial 250 units launched last month were sold.

The residential unit of CapitaLand, South-east Asia's largest property developer, will also release the remaining 390 apartments at The Interlace for sale this year, Mr Wong, a UK-trained mechanical engineer who was formerly the CEO of SembCorp Engineers and Constructors, said in his briefing. The developer has sold 94 per cent of the initial 650 units that it launched last year.

The Urban Resort and The Nassim, which are luxury developments located in the core central region, will also be launched this year.

Homes at the new Bedok Town Centre site will also be up for grabs. The site will be developed into a mixed retail-and-residential property with 500 apartments, three levels of retail space and a bus interchange.

CapitaLand sold 15,025 units in total in the first 11 months last year, a marginal increase from the 14,688 units sold in 2009. But the developer reported better per-unit sales value than its rivals - its average sales value amounted to $2.3 million per unit, higher than the industry average of $1.52 million per unit. Overall, total residential sales rose 54 per cent to $1.85 billion last year, compared with $1.2 billion in 2009.

In the first 11 months of last year, buyers took possession of 629 CapitaLand homes, including 127 units at Latitude, 327 apartments at The Seafront on Meyer and 175 units at The Orchard Residences.

CapitaLand expects demand for private residential housing to sustain this year, buoyed by robust economic performance, land scarcity and increasing wealth in the region.

It will also be a year of land banking for the developer. The company said it would continue looking at sites in city-fringe areas and near MRT stations. It may tap both the government land sales programme and the collective sale market to acquire land, Mr Wong said.

"We will, of course, bid for the sites at a price we think is consistent with our margin," said Mr Liew Mun Leong, chief executive officer of CapitaLand, who was also present at the media briefing.

CapitaLand expects private home prices to increase by 5 to 10 per cent this year, with the high-end residential segment experiencing gains in the region of 10 to 15 per cent.

The developer also aims to market its iconic projects such as d'Leedon and The Interlace overseas, especially to buyers from China and India, which are emerging as CapitaLand's key new foreign markets.

Foreign buying may become a sizeable chunk of CapitaLand's sales. For example, wealthy Chinese investors have been looking for homes priced at $10 million and above, said Mr Liew.

However, market watchers have expressed concern over foreign ownership and its increasing influence on the private property market in Singapore.

Mr Liew believes that any further Government measures to cool the property market should not target foreign buyers.

"Singapore is an open economy and it will have to attract professionals and expatriates," he said. "I will consider it unprogressive to say that foreigners cannot buy housing here," he added.


Source: www.todayonline.com

Published January 4, 2011

Luxury home prices defy market lethargy

Overall price growth for private homes, HDB resale flats slowed in Q4 but high-end hit new high

By UMA SHANKARI

(SINGAPORE) A surge of interest in high-end and luxury homes pushed prices in the segment, which has underperformed the rest of the market over the last two years, to a fresh all-time high in Q4 2010.

But in the rest of the market, prices of private homes as well as HDB resale flats grew more slowly in the fourth quarter compared to the first three quarters of last year.

Flash estimates released by the Urban Redevelopment Authority (URA) yesterday show that overall private housing prices edged up 2.7 per cent in Q4 to a fresh record high.

Private home prices in Singapore first surpassed the former all-time peak achieved in 1996 in Q2 2010, and then continued to inch upwards in Q3 and Q4. For the whole of 2010, prices climbed 17.6 per cent.

But the gain in fourth-quarter prices was the smallest in six quarters, URA's data shows.


The high-end market was a notable exception. Non-landed home prices in the Core Central Region (CCR) micro-market, which includes the prime districts Marina Bay and Sentosa Cove, rose 2.3 per cent in Q4, faster than the 1.6 per cent growth seen in Q3.

This pushed luxury home prices to a new all-time high, outstripping the previous peak in Q1 2008.

By contrast, the price index for Rest of Central Region (RCR) rose by 1.7 per cent in Q4, down from 2.3 per cent in Q3. And in the Outside Central Region or OCR (where suburban condos are located), prices climbed 1.6 per cent in Q4 after increasing 2.2 per cent in Q3.

Analysts attributed the slowdown in price growth in the RCR and OCR areas to resistance from buyers for increasingly expensive projects.

Price growth in the CCR region, by contrast, rose on the back of the prevailing strong economy and low interest rates, which once again enticed foreign investors to pick up luxury homes in Singapore.

'In 2010, much of the activity was focused on the mass and mid-market segments,' said Joseph Tan, CBRE's executive director for residential. 'Foreigners stayed away, thinking that the lack of transaction activity in the high-end segment would lead to a fall in prices and allow them to buy the properties for less.'

But since most high-end home owners proved to have 'holding power', the anticipated fall in luxury home prices did not occur and foreign buyers are slowly returning to the luxury market, Mr Tan said.

The number of foreign home buyers rose by 14 per cent in 2010 compared to 2009, said Knight Frank's head of consultancy & research Png Poh Soon.

'The tightened regulations in Hong Kong and aggressive anti-speculation rules in China caused some investors to shy away from those markets and directed them to Singapore,' Mr Png said. 'High net worth foreign buyers would definitely consider the Singapore property market to park their money.'

Analysts also noted that while the latest round of cooling measures introduced by the government on Aug 30 have not dampened transaction volumes, they appear to have at least moderated price growth. A record 15,500-16,500 new private homes are estimated to have been sold in 2010, despite demand-side and supply-side measures introduced periodically throughout the year.

CBRE's Mr Tan said that transaction volumes were still high in 2010 as many potential buyers are still out looking for units.

But the price growth has slowed as these buyers - especially those house-hunting in the mass-market segment - are sticking to a budget.

Over at the HDB market, prices of resale flats rose 2.4 per cent in Q4 2010 - a slower rate of growth than the 4 per cent increase in Q3 2010 - according to flash estimates from the Housing & Development Board.

But while the resale price index was pushed to yet another all-time record, the transaction volume fell.

The resale volume declined by about 21 per cent in Q4, HDB said. And the median cash-over-valuation (COV) amount is also estimated to have fallen by $7,000 or 23 per cent, from $30,000 in Q3 2010 to $23,000 in Q4 2010.

In fact, COV levels declined progressively over the last three months of 2010, according to data from PropNex.

The firm's chief executive, Mohamed Ismail, said that according to monthly transactions handled by his company in Q4 2010, the median COV fell from $26,000 in October to $23,000 in November and to $20,000 in December.

But overall resale prices are still climbing in spite of falling COV levels due to a time lag, he explained

'Valuations for resale flats that were transacted in Q4 2010 were based on prevailing caveats for flats in the vicinity,' Mr Ismail said.

'There is therefore a certain lag time of about two months and hence the (HDB) prices overall are still climbing.'

Looking ahead, growth in private home prices may slow to anywhere between 3 per cent and 10 per cent in 2011, analysts predicted.

But most are more bullish on luxury home prices, which some said could climb by up to 15 per cent this year.

In the mass-market segment, the ample supply of new homes coming onstream from the beefed-up 2010 Government Land Sales programme should help to keep price growth to less than 5 per cent, analysts said.

And in the HDB resale market, prices are expected to grow by 5-10 per cent in 2011. The overall median COV level should also fall to about $18,000 to $20,000 in Q1 2011, said Mr Ismail.

Source: www.businesstimes.com.sg

by Chris Howells
05:55 AM Dec 29, 2010

SINGAPORE - It has been a good year for agents selling luxury properties to foreigners in Singapore. Ms Jasmine Png, an associate director with real estate agency OrangeTee, says she has never before seen as many earnest buyers from China.

What's drawing them here are "the tightening measures in China and Hong Kong, which have actually made the Singapore residential market look appealing," said Ms Png. The "relative ease in obtaining financing for purchasing Singapore properties" is also helping, she added.

Credit is getting costlier in China. The central bank raised the benchmark interest rate by 25 basis points to 5.81 per cent last Saturday, the second increase since October. Analysts expect another 100-basis-point increase in the first half of next year. They say that the People's Bank of China (PBOC) is still behind the curve in combating inflation and will likely employ a slew of measures next year to contain rising consumer prices and cool the overheated property market.

The authorities in Beijing have already banned mortgages for third-home purchases and restricted developers from pre-sales of properties. These steps, along with the threat of a property tax, have driven some buyers to overseas markets.

According to Singapore's Urban Redevelopment Authority, Chinese nationals have snapped up 1,474 private properties so far this year, surpassing the 1,448 purchases made by Indonesian buyers.

Chinese nationals have accounted for 5.3 per cent of the local private housing market this year. Among foreigners, they are second only to Malaysians, who make up 6 per cent.

In the third quarter, Chinese buyers accounted for 20 per cent of all foreign purchases in Singapore's housing market, the highest ever, according to property consultancy DTZ. Although Singapore, too, has taken steps to damp speculative fervour in the property market, the low borrowing costs here are attracting foreigners, especially the Chinese, who are expecting a significant increase in their home-country interest rates next year.

In the PBOC's previous tightening cycle from March 2006 to August 2008, the central bank raised the lending rate by 189 basis points to 7.47 per cent and increased the reserve requirement ratio for banks by 1,000 basis points, to 17.5 per cent.

After Saturday's increase, the lending rate is currently at 5.81 per cent, though at 18.5 per cent, reserve requirement ratios are already above pre-crisis highs.

Source: www.todayonline.com

Published December 21, 2010


KOP Properties upbeat on luxury home market
Prices in segment still 20% below pre-crisis peak: CEO

By UMA SHANKARI

KOP Properties is upbeat about the prospects of Singapore's luxury residential market, said the company's chief executive Leny Suparman yesterday.

'We are quite positive about the outlook for next year,' Ms Suparman said.

While prices of private homes in Singapore have climbed since the financial crisis ended, the gains have been seen mostly in the mass market and mid-tier segments, she said.

Prices in the high-end segment, by contrast, are still some 20 per cent below the pre-crisis peak. And while prices in that segment might not climb to the same high again, there is still a gap that could be closed next year, Ms Suparman added.

She was speaking at the 'topping out' ceremony of KOP's Cairnhill Road project The Ritz-Carlton Residences, Singapore.

Guests and staff gathered on the roof of the 36-storey development's penthouse to witness the pouring of the final bit of cement.

The 58-unit Ritz-Carlton Residences is about 40 per cent sold and units are now selling for about $3,300 per square foot (psf) each, Ms Suparman said.

According to official data from the Urban Redevelopment Authority (URA), 17 out of the 58 units in the project had been sold at end-November.

Ms Suparman said that sales will pick up as the project nears completion, which is targeted for June next year: 'We are quite confident that sales will be brisk from now on and that the project will achieve the price that it deserves.'

The developer's other project, the 56-unit The Hamilton Scotts, is also about 40 per cent sold, Ms Suparman said. URA's data put the number of units sold by end-November at 18. KOP Properties is part of KOP Group, an integrated real asset investment company. KOP Group is 51 per cent owned by Dubai Group, a unit of Dubai Holdings.


Source: www.businesstimes.com.sg

by Jo-Ann Huang Limin
05:55 AM Dec 17, 2010

SINGAPORE - More top-end condominiums in the core central region (CCR) have been changing hands - at higher prices - with each passing month. Yet, deals above $4,000 psf are still rare. Analysts say that this shows the luxury segment still has room for capital appreciation.

November saw only one such transaction - a Scotts Square unit which sold for $4,358 psf, according to the Urban Redevelopment Authority (URA). In October, a Boulevard Vue unit sold for $4,800 psf.

Back in 2007, a unit at Orchard Residences went for as high as $5,094 psf, while one at the Marque on Paterson Hill fetched $5,262 psf. In all, 13 units sold at higher than $4,000 psf in the second half of 2007. So far, in the second half of this year, there have been only five such sales.

Investors are still not paying top dollar for extra exclusivity - a sign that they have been cautious on luxury homes in the current property cycle. Prices of mass-market homes, meanwhile, have already surpassed their 2007 peaks.

Even then, analysts say it's only a matter of time before prices of luxury properties catch up with - and exceed - their 2007 peak.

"There's room to grow a further 5 to 8 per cent to reach 2007 price levels," said Dr Chua Yang Liang, head of research, South-east Asia at Jones Lang LaSalle.

Sales of new luxury homes have also been volatile, according to the URA's data. Sales in the CCR in November fell to 213 from 335 units in October. In September, following the government's Aug 30 measures to cool the property market, CCR sales were as low as 84 units.

But investors need not worry about the erratic sales volumes, analysts say.

"Luxury property sales tend to see some volatility because there are fewer luxury property developments compared with mass market ones," said Dr Chua. "High-end property developers launch their projects more sporadically."

With China clamping down hard on the property market in its tier-one cities, ultra-rich investors are likely to move capital to Singapore, analysts say.

"High-end residential properties in Singapore, which traditionally enjoy significant foreign home buying interest, may benefit as a number of investors from across the world are looking at diversifying their investments geographically," said Mr Ong Kah Seng, senior manager of research at Cushman & Wakefield.

Credit Suisse says investors should exit the residential real-estate market in China and move their money to the residential and commercial property markets in Singapore, Hong Kong and Japan.

The bank expects residential property prices in Singapore to increase 5 per cent in each of the next two years, on top of an estimated 15 per cent gain this year.

Still, analysts warn that the policy risk going into next year remains high for all types of properties, including luxury units that are typically unscathed by measures that seek to curb leveraged home-buying.

They said harsher cooling measures may be introduced - such as a tax on profits from property sales after URA data this week showed that 1,909 private residential units were sold last month,a surprising 80 per cent jump from October's 1,058 units.

Source: www.todayonline.com

Tips for investing in high-end homes

by Jacqueline Wong
05:55 AM Dec 03, 2010

Despite the numerous Government policies to cool the property market in Singapore, the high-end residential segment has not been adversely affected.

To begin with, the Government measures implemented thus far are targeted at the mass market, which has seen property values rising ahead of economic recovery.

Based on Jones Lang LaSalle estimates, the average resale capital value for areas outside the prime residential districts in 3Q2010 is 10.1 per cent above its last peak in 1Q2008; in contrast, the high-end properties are still trading at some 8.4 per cent below, on average.

In addition, the anti-speculative measures that have ranged from the earlier measures of raising investment costs through additional purchase outlays (higher loan-to-value ratios, seller's stamp duty) to the most recent restriction on buyers from speculating in both the public and private housing markets (particularly during the minimum five-year occupation period) have not affected the high-end buyers.

These buyers are usually long-term investors, if not owners, with strong financial standing. Furthermore, many are foreigners who mostly do not have a stake in the local public housing market.

While the high-end has not picked up as much as the rest of the market, latent demand remains in the former.

Besides the Indonesians, who form our traditional base of foreign buyers, an increasing number of buyers from China, India, Russia and the Middle East are now looking into the Singapore market.

Meanwhile, local investors have been looking beyond Singapore properties to overseas markets as well. The key motivation for many local investors is distinctively practical - acting on parental instincts to provide a roof over their children's heads while they pursue an overseas education, saving on rental expenses and enjoying a potential capital upside when the children finally finish school.

Additionally, further upside of these offshore investments could come from an anticipated recovery in the values of this asset class and the strengthening of the host countries' currencies. Australia, particularly Sydney and Melbourne, as well as the United Kingdom, are the traditional markets in which Singaporean investors are active.



INVESTMENT OPPORTUNITIES abroad

Within the Asia-Pacific region, excluding Hong Kong and Japan, there are many buying opportunities as home prices are generally more affordable than those in Singapore. However, foreign ownership usually comes with restrictive conditions which investors should spend time understanding before diving into these overseas markets.

Take Australia, for instance, where prices are comparable to Singapore's. Foreigners are prohibited from buying a property to be let out or used as a holiday home, although temporary residents may own a home during their residency in the country, subject to approval.

The UK and the Maldives remain the most open to foreign home ownership. Foreigners who own residential homes in the UK are allowed to lease out their properties and this offers an added income yield on top of potential capital appreciation. The Maldives is also very attractive - investors need only pay a transfer fee of US$3,000 ($3,900) to US$5,000 when buying residential properties in the country.

Increasingly, well-heeled investors have been buying holiday homes instead of conventional residential ones. A holiday home has an edge over a conventional residential one as it is managed by a hotel operator, which frees the owner from maintenance hassles. The investor also gets to enjoy the holiday home, along with the facilities, for typically six to eight weeks a year, in addition to the income generated from letting the asset out for the remaining months of the year. The owner typically splits 50-50 with the hotel operator, subject to a bed tax.

Jones Lang LaSalle has successfully marketed projects such as The Bulgari Residences at Bulgari Hotels and Resorts in Bali, yooPhuket in Thailand, The Tower in Central London and 12 Blues Resort & Spa in the Maldives.



INVESTING IN A PROPERTY

There are several basic but important factors that one needs to consider when investing in property.



Do your sums

Besides having sufficient funds for the downpayment of a property, you need to ensure that you have a sound cashflow once you exercise the option to purchase. Increasingly, governments are abolishing the "no payment till physical completion" or what is commonly known in Singapore as the deferred payment scheme, to reduce the default risk.



Know your market

Understanding the market you are putting your money in is essential as property values may be influenced by many factors - from economics to politics. Even the construction site that sits right across the road can affect your investment positively or negatively; validating the mantra of "location, location, location" in property investment. Given the uniqueness of each property, market research is all the more important. Jones Lang LaSalle provides a wide range of advisory services such as feasibility studies, market advisory and portfolio analysis for financial institutions, government agencies and high net worth individuals.



What unsettles you?

Knowing your risk appetite helps you determine a market that is most suitable for you. You would not want to engage in panic selling during price corrections. An individual's risk appetite is largely influenced by the holding power fuelled by his or her financial background. When investing abroad, there are the additional risks to consider:

- Distance - this means that you are unable to keep a close watch on your property and are thus less sensitive to developments that affect property values

- Exchange rate volatility - adverse currency movements will result in a lower return

- Ill-informed/unreliable agents - they cause you to miss out on opportunities simply by giving poor advice




INVESTMENT STRATEGIES

The conventional wisdom in investment is to buy low and sell high. If you had bought a typical prime property in Singapore during the last cycle, you would have earned a good 40 per cent capital gain when you sell your property today. Buying based on cycles would guarantee a profit regardless of the property you buy. However, this is often difficult in practice.

The residential market is very sentiment driven. Many investors act on a herd instinct - they buy into the market when everyone else is already in there. This usually means the gains are typically less as the market is quite heated. In addition, many buyers tend to be emotional in their purchases and this will affect their judgement and handicap their decision-making skills.

Speaking to seasoned investors and advisers will allow you to leverage on their insights into the market and help you avoid herd-driven behaviour.

As you look for your ideal property, bear in mind the importance of value investing. While mass market projects tend to be cheaper on a total quantum basis, high-end properties remain timeless given the quality finishes, comprehensive facilities and higher leasing demand.

For example, based on an analysis of the caveats lodged, the median price of a unit in Seasons Park located along Yio Chu Kang Road today has grown by about 9 per cent since it was first launched in 1Q1996; in comparison, the Regency Park along Nathan Road commands a median price that is 59-per-cent above its initial launch despite it being a much older project.

A new property mantra then should be: "Location, location, quality."



The writer is head of residential, Jones Lang LaSalle Singapore. She is supported by Tan Yali, senior analyst, research and consultancy.


Source: www.todayonline.com

The luxury enclave saw the return of buying interest on the back of an improving global economy, report STEVEN MING and ZENG ZHEN

Published September 23, 2010
STEVEN MING and ZENG ZHEN

SENTOSA Cove, Singapore's first gated waterfront residential enclave located on the eastern shores of Sentosa island, is taking shape with the completion of some 920 upscale condominium units and 200 waterfront and hillside bungalows since its inception in 2004. In tandem with the buoyant home sales on the mainland and coupled with the opening of the integrated resorts (IRs), the luxury enclave of Sentosa Cove saw the return of buying interest on the back of an improving global economy.

There are now nine condominium and seven landed housing developments for sale. The most recent launches include City Developments' 228-unit The Residences at W Singapore Sentosa Cove, and Ho Bee & IOI's 151-unit Seascape, both of which saw good take-up.

Non-landed

Amid favourable market conditions, sales remain strong for non-landed residential homes in Sentosa Cove. There were 104 sales transactions registered from January to July 2010.

Despite falling short of the 130 sales transactions recorded for 2009, the sales value for the first seven months of 2010 has outperformed that of last year, with $541 million recorded thus far compared with $497.9 million in 2009.

With the release of new projects, the primary market enjoyed a 430 per cent increase in volume, albeit from a relatively low base in the previous year. In the secondary market, because only The Oceanfront@Sentosa Cove received Temporary Occupation Permit (TOP) in March this year, the sub-sale activity has turned relatively quiet with only 21 caveats, down from 101 in 2009, whilst resale activity has firmed up by 57.9 per cent from 19 in 2009 to 30 transactions.

The first seven months of this year have seen rising prices across the board. Fuelled by higher prices of new launches in the vicinity, the prices of projects that were launched before 2010 have shown an increase ranging from 2.2 per cent to 30.8 per cent, with some surpassing their previous peaks in 2007.

As a result, the average price of non-landed residential in Sentosa Cove has soared from $1,691 per sq ft in 2009 to $2,344 per sq ft in 2010, representing a 38.6 per cent increase.

Appreciation in capital values of non-landed homes has lent support to the investment activities in Sentosa Cove, especially the sub-sale transactions in those projects approaching TOP dates.

Caveat matches of 19 sub-sales from January to July show that 94.7 per cent, or 18 sub-sales, yielded a profit between $179,400 and $3.06 million, significantly higher than the 71.7 per cent for the whole of 2009.

In addition, the average gain per unit almost doubled from $600,025 in 2009 to $1.16 million in the first seven months of 2010. This was a result of increased percentage of sub-sales that yielded gains exceeding $1 million.

So far this year, the sub-sales of nine units in The Oceanfront@Sentosa Cove have earned profits from $1,005,970 to $3,056,700, accounting for 47.4 per cent of the total profitable sub-sales.

On the other hand, there were only seven out of the 67 profitable sub-sales that reaped a profit of more than $1 million in the preceding year.

Landed

Unlike Good Class Bungalows (GCBs) on the mainland, the landed housing segment in Sentosa Cove is unique as it offers an exclusive waterfront.

More importantly, the landed houses in Sentosa Cove appeal to a wider market as foreigners who do not have permanent residence status are allowed to purchase them.

According to the caveats lodged between January and July 2010, 39 landed houses in Sentosa Cove have been sold, only one less than the total recorded for the whole of 2009. The transaction value has surged by 20.5 per cent from $507.3 million in 2009 to $611.3 million in the first seven months of 2010, attributed to the 19 houses costing more than $15 million each that were transacted during this period. In stark contrast, there were only nine transactions above $15 million in the preceding years from 2005 to 2009.

Of these 39 sales, foreign buyers chalked up 19 transactions or 48.7 per cent, with Chinese investors being the most dominant, inking 12 transactions, or 63.2 per cent, of all foreign purchases in the reviewed period. The Chinese buyers have ranked top among the foreigners since 2009; overtaking the Indonesians.

The average unit price based on land area climbed from $1,568 per sq ft in 2009 to $1,892 per sq ft in 2010, up by 20.7 per cent. In terms of unit price, the most expensive home sold this year was a terrace house in The Villas@Sentosa Cove which was transacted at $8 million or $2,929 per sq ft in May.

Interestingly, this house was first bought in June 2007 from the developer for $4.6 million or $1,682 per sq ft, yielding the vendor a profit of $3.4 million.

Outlook

On the economic front, Singapore has probably not seen better days. The government has revised the GDP growth forecast for 2010 up to 15 per cent from its previous forecast of 7 to 9 per cent.

Despite this, the market is not absolutely immune from external downside factors. Market sentiment has been affected by the rising concerns over the uncertainty of US economic recovery and the eurozone debt crisis. Meanwhile, the government's latest tightening measures, coupled with the ample supply from the government land sales programme, has cast a cloud over the property market.

Nevertheless, we expect that these cooling measures would have limited impact on the luxury developments in Sentosa Cove. The government's measures are designed to curb speculation, especially in the mass-market and public housing re-sale segments.

Still, the sales activity in Sentosa Cove may soften in the near term as buyers adopt a wait-and-see approach to the new measures.

However, the broader fundamentals for the private residential market are still good, and driven by the low interest environment, and abundant liquidity from Asia's booming wealth, Sentosa Cove would continue to attract both local and foreign buyers who take a mid to longer term view of the market.

Steven Ming is executive director, Savills Singapore and Zeng Zhen, senior manager, Savills Research & Consultancy

Source: http://www.businesstimes.com.sg

Despite the ever-evolving definition of luxury residences, two characteristics continue to stand out: location and space, says HAN HUAN MEI

Published September 23, 2010

WHAT constitutes luxury homes today, especially when the entire price structure of residential homes has changed so drastically in the past five years?

Prior to 2003, one could safely define prime residential areas as postal districts 9, 10, and 11 which comprise the Cairnhill, Orchard, Grange, Tanglin, Holland, Bukit Timah, Dunearn, Newton, and Novena areas. The districts immediately surrounding these three would comprise the next price range of housing.

Anywhere beyond, going into the HDB estates and new towns would be homes of the lower price range, catering to the masses. In dollar terms, prime residential had a price tag of $1,500 per square foot (psf) and above at that time. The mid-tier price range was $900-$1,400 psf and mass market homes were priced below $900 psf.

The prime residential market saw a watershed year in 2007 because there was a clear split between prime and luxury homes when the latter attained headline prices way above $3,000 psf. When some new projects hit $4,000 psf and above, they formed a new class called 'super-luxury' homes.

Unfortunately, a misnomer was created when small-format homes began to sprout in the prime districts to counter the high quantum. These units fetched prices ranging from $2,500 psf to $3,500 psf but their product attributes could not offer a luxurious lifestyle.

Luxury living in Singapore has evolved over time, from quality finishes to designer fittings to branded residences with butler services and lifestyle features like carpark lofts and private berths for waterfront homes.

The rich and well-heeled are attracted to them because owning a trophy residence beats owning a standard home any time. Two characteristics of luxury residences continue to stand out: location and space.

They are located at exclusive addresses and come with generous living areas for the enjoyment of space. URA has demarcated the Core Central Region (CCR) as the location where high-end homes are found.

This comprises the traditional prime districts 9, 10, and 11 as well as the waterfront locations of Marina Bay, Sentosa Cove, and Keppel Bay.

In recognition of the various types of residences and in consideration of the current higher price levels, the general consensus is that prime properties fall within the $2.5 million to $5 million price band, luxury homes within the $5 million to $8 million band, and super-luxury homes are those priced $8 million and above.

As a guide, luxury and super- luxury homes are taken to be 2,500 sq ft and above, befitting a lavish lifestyle.

In 2007, sales volume was at a record high and home prices peaked.

URA data for the selected districts where luxury homes are found showed that 230 homes in the primary market (Table 1) were sold at prices $5 million and above from Jan to Aug 2010. Within this basket, 144 new homes (Table 2) were of sizes 2,500 sq ft and above.

At the peak of the market in 2007, 701 new homes were sold at $5 million and above (Table 1) and of these, 402 were 2,500 sq ft and above. On the whole, luxury prices in 2010 are still lower than those in 2007.

In the secondary market, the first eight months of 2010 saw the sale of 182 luxury homes above $5 million sold in 2007, of which 166 were over 2,500 sq ft. This compared with 489 homes in the same price range sold in 2007 but a higher number of 532 homes were over 2,500 sq ft. The higher number of large units sold could be attributed to the more affordable price levels of older properties.

Back in 2007, the focus of the market was on new projects setting new benchmarks, causing the rift between luxury prices in the secondary and primary markets to widen.

It is foreseeable that the luxury transaction volume in 2010 will not measure up to that in 2007. Price-wise, the prices of secondary luxury homes have more or less caught up with the levels in 2007 but those in the primary market are still lagging behind by 10 per cent on the average.

The implication is that there is a potential for current prices of new luxury homes to rise as the economy strengthens and sentiment improves. Some 1,000 units in luxury projects like Ardmore II, 8 Napier, and Paterson Suites were completed this year, with another 1,400 units due for completion between September 2010 and December 2011.

Among them, around 900 units remain unsold. It was reported that property funds have been involved in the bulk deals of high-end apartments.

One of these was Arch Capital, who bought all 34 units of Royal Oak - a refurbished project in Anderson Road - at around $200 million or $2,337 psf. The likely route that developers will take is to source for such bulk purchasers. Alternatively, they may keep them for rental income until higher prices are achieved later.

The writer is associate director, CBRE Research, Singapore

Source: http://www.businesstimes.com.sg