Demand for Luxury Condo pick up pace

Irwell Hill Residences Living Room

In real estate, the word "luxury" is sometimes used interchangeably. In Singapore, industry players commonly believe that a luxury apartment must be situated in the core central region (CCR), be at least 1,800 square feet (sq ft) in area, and be priced between S$2,500 per square foot (psf) and S$5 million.

"Luxury" would involve the exclusivity of the address, original architecture, designer finishes and fittings, stunning landscaping and, in certain cases, a private pool that complete one search for luxury living.

Developers are steadily constructing smaller units to broaden the pool of buyers of ultra-high-net-worth singles and investors in recent years, as the Singapore property sector has been battered by global economic instability, property calming policies, and rising land prices. 

List Sotheby's International Realty (List SIR) used a three-tier classification to analyze the luxury sector from 2016 to February 2021, in light of evolving market conditions:

  • Compact luxury - starting at S$2,800 per square foot and ranging from S$2 million to S$4 million
  • Prime luxury - priced from S$2,500 psf upwards and from S$5 million and beyond, up to 5,000 sq ft in scale
  • Premium luxury - starting at S$2,500 psf and with sizes exceeding 5,000 sq ft

According to this concept, the compact luxury category will include one-, two-, and compact three-bedroom units with square footage varying from 600 to 1,200 square feet.

Premium luxury residences will be four-bedroom and larger styles, like penthouses, with sizes ranging from 1,400 sq ft to 5,000 sq ft. Prime luxury apartments will be three- to four-bedroom types with sizes ranging from 1,400 sq ft to 5,000 sq ft.

Boost from New Launches

Irwell Hill Residences Roof Terrace
Luxury sales volume has steadily increased, from 160 units in 2016 to 416 units in 2018 and 423 units in 2019. According to transaction statistics from the Urban Redevelopment Authority (URA), luxury sales volume has increased from 160 units in 2016 to 416 units in 2018 and 423 units in 2019.

Following the property market's bottoming out in mid-2017, the luxury segment had a strong year in 2018 and 2019, as market optimism grew thanks to a robust economy, high liquidity, low interest rates, and the return of international investors to the Singapore market.

It also helped that there were more innovative projects available during this period. Gramercy Park (174 units) was one of the first luxurious developments, opening in 2016.

According to caveat data, 45 units were sold in 2016, and 91 units were sold in 2017, with median prices of S$2,680 psf and S$2,780 psf, respectively.

In 2020, the pandemic kick in and viewings of property was stopped completely for nearly three months. The number of luxury units sold dropped to 254 units.

Some projects, though, managed to sell well during the recession because developers intuitively reacted to the situation by selling "star buys" and redesign packages.

One of this was 8 Saint Thomas, of which 66 units were sold in 2020 - slightly smaller than the 69 units sold in 2019. The median price per square foot for units sold in 2020 is S$2,780 psf, which is 12% lower than the price of S$3,163 psf in 2019.

2019 saw the biggest revenue rate in the premium luxury market, with 19 units sold. Ten of these were penthouses, with prices ranging from S$17.9 million to S$52 million.

This figure does not include the S$73.8 million mega penthouse at Wallich Residence, which was sold without a disclaimer. The 11,098 sq ft mega penthouse at Boulevard Vue clinched the S$52 million price tag.

Fresh supply from new developments may be to blame for the large number of penthouses sold.

The four penthouses in Boulevard 88 were sold for between S$28 million and S$31 million, along with the other two penthouses in 3 Orchard-By-The-Park at S$31.5 million and S$32 million.

Four residences at The Marq On Paterson Hill were sold in addition to the penthouses. Priced between S$23 million and S$29.5 million, these were the luxury units with about 6,232 sq ft to 6,308 sq ft at the Signature Tower.

Foreigners Remain Top Player in CCR

Despite the rise in the Additional Buyer's Stamp Duty (ABSD) from July 6, 2018, statistics presented by the Urban Redevelopment Authority (URA) showed that Foreigners, Singapore permanent residents (PRs) or non-permanent residents (NPRs) remained dominant players in the luxury homes sector.

The ABSD for international buyers was increased from 15% to 20%, while the ABSD for Singaporeans and PRs purchasing their second and subsequent homes was increased by five percentage points.

Foreigners purchased more than half of the units sold at Gramercy Park, New Futura, 3 Orchard-By-The-Park, and Boulevard 88 between 2016 and February 2021, according to caveat results. Including permanent residents, the proportion grew to over 70 per cent, except for 3 Orchard-By-Park which recorded 68 per cent.

Singaporeans make up 50-60% of the buyers at 8 Hullet, 8 Saint Thomas, and 3 Cuscaden, which have more lightweight luxury units.

The Singapore luxury apartment industry is dominated by foreign ultra-high-net-worth individuals (UHNWIs). Because only Singapore citizens are permitted to purchase Good Class Bungalows (GCBs), UHNWIs seeking a large luxury residence with a desirable address would purchase premium luxury homes.

Yu Yongfu from Alibaba paid S$26 million for a duplex penthouse (6,372 sq ft) in Hilltops condominium; Indonesian-born tycoon and US citizen Leo Koguan paid S$62 million for the super penthouse (21,108 sq ft) at Wallich Residence; and Huang Youlong, the businessman husband of Chinese actress Vicki Zhao, paid S$62 million for a duplex penthouse (8,740 sq)

Outook for 2021

Aside from the three-tiered luxury segment mentioned above, there is a fourth category of luxury homes known as the "opulent set." This set includes EDEN at Draycott Park, which was completed a year ago, and Les Maisons Nassim which is currently under renovation. The award-winning Heatherwick Studio in London built EDEN, which consists of 20 unique apartments with garden balconies, each with four ensuite bedrooms and taking up an entire tower. Both 20 units in EDEN were recently sold for S$293 million, or S$4,827 per square foot, a 20% reduction from the selling price of S$6,000 per square foot for this bulk sale.

Les Maisons Nassim, located on Nassim Road, is expected to be a luxury sanctuary with 14 limited-edition units that promise an unrivaled premier lifestyle. The project is now available for preview.

While the economy remains far from recovery, investor confidence has strengthened as some sectors, such as pharmaceuticals, e-commerce, technology, and telecommunications, have performed well, and the equity market has regained some lost ground. The Singapore government's handling of the Covid-19 pandemic has reassured foreign investors. In 2021 and beyond, we can expect more of them to come here to establish both their businesses and residences.