Anecdotal evidence is that foreign investors, particularly from mainland China and Hong Kong are revisiting the luxury condo market in Singapore in recent months. “When their own market is hot, Hongkongers don’t really look beyond their own market,” says Phylicia Ang, executive director of Savills Residential.
However, in February, the Hong Kong government unleashed its latest round of property cooling measures, which included tightened mortgages for second home purchases after property prices soared to record levels in 2014. Luxury home transactions may have tumbled 33% last year, but Hong Kong prices are still among the highest, judging by Christie’s International Real Estate in its 2015 report released recently which ranked Hong Kong the third most expensive city in the world in terms of top sale prices, average prices psf and number of luxury sales. London and New York were the top two most expensive cities.
By comparison, Singapore luxury condo prices appear attractive at current levels, notes Savills’ Ang.”Investors are also looking at diversifying their portfolio outside of Hong Kong.”
For instance, at Scotts Square, a 624 sq ft one-bedroom unit on the 29th floor of the 43-storey residential tower was recently sold for $2.25 million ($3,605 psf), according to a caveat lodged on May 21.
Ang reckons that the latest transaction price of $3,605 psf is reasonable if one were to compare it to an earlier transaction of a similar sized unit on the same stack on the 42nd level that had fetched $2.78 million ($4,453 psf) in August 2013. “Of course, this is a lower floor, but even if you take that into consideration, it’s still an attractive price,” she notes.
Developed by listed property group Wheelock Properties, Scotts Square was completed in 2011. The 338-unit freehold condo sits on top of the Scotts Square shopping mall in prime Scotts Road. According to Wheelock’s 1Q2015 results announcement on May 2011, 268 units (79.2%) of the units in the project were sold as at end March at an average price of $4,004 psf. And of the 70 remaining unsold units, 35 had been leased at an average rental rate of $5,200 per month.
A 624 sq ft unit at Scotts Square was recently sold for $2.25 million ($3,605 psf)
Capital appreciation?
Word on the street is that the unit on the 29th floor of Scotts Square was one of the 35 units that are being offered by Wheelock for sale with existing tenancy. The buyer is said to be a Hongkonger who had flown down to view the property. The deal is said to be sealed by SQFT Global Properties. Based on the average rental rate, the yield is estimated to be about 2.5%.
According to Samuel Eyo, managing director of Singapore Christie’s Homes, investors can look forward to future capital appreciation. The latest price of $3,605 psf is about 10% below the average transacted price of $4,004 psf for Scotts Square. Hence, the project is expected to appeal to foreign investors looking to buy into a premium project in anticipation of a pick-up in the prime condo segment.
This latest deal at Scotts Square is notable as it’s the first transaction recorded in the 43-storey luxury condo tower since April last year when a larger 1,227 sq ft three-bedroom unit on the 16th floor was sold for $4.05 million ($3,300 psf), according to Eyo. He expects to see more transactions in the coming months.
“At the stretch along Orchard Road and Scotts Road, there’s hardly any other new freehold development offering such one-bedroom units at such absolute prices over $2 million,” he points out. “The closest comparable is The Orchard Residences, but the units are sizeable, and therefore absolute prices are higher.”
The Orchard Residences, which sits on top of the ION Orchard shopping mall and the Orchard MRT station, sits directly across the road from Scotts Square. The 175-unit luxury condo is also 99-year leasehold, and was completed in 2010. However, all the typical units in the project are three- and four-bedroom units with sizes starting from 1,808 sq ft.
The most recent transaction at The Orchard Residences was in January this year when a 1,808 sq ft unit changed hands for $5.5 million ($3,041 psf). That same unit had fetched $7.75 million ($4,287 psf) back in Nov 2007 when the project was first launched, which means the seller saw a loss of 29%.
Further up on Scotts Road, on the junction with Cairnhill Road is The Scotts Tower by developer Far East Organization. The 99-year leasehold development features a 31-storey tower with 231 SOHO concept apartments and is still under construction. The most recent transaction at The Scotts Tower was for a 657 sq ft unit on the 17th floor that was sold for $2.22 million ($3,384 psf), based on a caveat lodged last November.
Ardmore Park upside
Things, however, look brighter at Ardmore Park. At the 330-unit Ardmore Park condo, where all typical units are 2,885 sq ft four-bedroom apartments, a unit recently changed hands for $8.45 million ($2,929 psf), according to URA Realis. The buyer is believed to be a mainland Chinese national.
Based on an earlier caveat lodged in March 1999, the previous owner had purchased the unit in a sub-sale for $3.72 million ($1,290 psf). Hence, the seller saw the price of his unit appreciate 2.3 times over the past 16 years.
Even though Ardmore Park was completed 14 years ago, the freehold project by developer Wheelock Properties remains timeless and continues to be sought-after by high net worth investors, says Savills’ Ang.
Grange Residences, also developed by Wheelock Properties and completed in 2004, is in the same calibre as Ardmore Park. Typical units in the 164-unit, twin 18-storey luxury condo development at the corner of Grange Road and Tanglin Road have four bedrooms and are sized from 2,583 sq ft to 2,852 sq ft.
The most recent transaction at Grange Residences, which is also freehold, was for a 2,852 sq ft unit on the seventh floor that fetched $7.3 million ($2,559 psf), according to a caveat lodged on May 20. The unit last changed hands in March 2007 for $6.3 million ($2,209 psf), which translates to a gain of 15.8% over the past eight years.
“It’s one of the few projects in the Tanglin Road-Grange Road area if you want a prestigious development with sizeable units which offer good value,” notes Ang.
This article appeared in the City & Country of Issue 680 (June 8) of The Edge Singapore.