There are still opportunities in a market that has seen lacklustre sales. And JLL sees the biggest opportunity in the prime residential segment where there are currently about 5,000 unsold high-end homes. This represents about 1% of the total private residential stock.

Listed and foreign developers of high-end homes on private land sites purchased in past en bloc deals are also under pressure to offload unsold stock within a certain time frame, owing to the conditions of the Qualifying Certificate, which requires them to sell all the units within two years of completion. Failing to do so will incur extension charges of 8%, 16% and 24% for the first to third years, respectively. The charges are pro-rated based on the proportion of unsold units.

The high-end segment has been the hardest hit by the hike in the additional buyer’s stamp duty. Prices of prime properties have fallen 20% over the past five years, says Chris Fossick, JLL’s managing director for Singapore and Southeast Asia. “In contrast, home prices in other global cities such as New York, London, Hong Kong and Tokyo have continued to increase 20% to 30%,” he adds.

In 2010, prime home prices in New York and London were 10% to 30% more expensive than those in Singapore. However, they are now 80% to 90% more expensive, according to Fossick. “For international buyers who are contemplating an investment property, Singapore now looks very compelling,” he says.

JLL and PropNex have teamed up to launch a new joint initiative with a team of 202 agents who will specialise in marketing luxury homes. They were handpicked from a pool of 5,500 agents at PropNex.

Fossick says the luxury real estate sales team will serve two purposes: to help developers with unsold high-end residential homes in their sales and marketing efforts, and assist high-net-worth clients who are in the market for a luxury home. The focus will be on the traditional prime districts of 9, 10 and 11, as well as Marina Bay and Sentosa Cove.

This marks the latest collaboration between JLL and PropNex following the former’s acquisition of a 20% stake in PropNex International in August 2014. PropNex International focuses on new project launches.

“We will be getting in touch with developers as part of our outreach programme to see how the team can assist them in their relaunch or any of their activities,” says Ismail Gafoor, CEO of PropNex.

PropNex agents had brokered some of the most significant deals last year, including the sale of a super penthouse at Le Nouvel Ardmore for $51 million, a penthouse at St Regis Residences for $12.2 million and a penthouse at Marina Bay Suites for $19 million.

The property cooling measures have been widely blamed for the fall in transaction volume, with new home sales shrinking to about 7,300 units in 2014 and 7,529 units in 2015. The annual transaction volumes for 2014 and 2015 were half of that for 2013.

Based on URA’s private property price index, overall house prices were down 3.7% in 2015 compared with 4% in 2014. Private home prices have tumbled 8.4% since the peak in 3Q2013. If the current cooling measures were to remain in place, the likelihood is that property prices will weaken further, warns Ismail.

PropNex’s Ismail (left) and JLL’s Fossick ink a new joint initiative with the formation of
a luxury real estate sales team

“Once the government is convinced the housing market is under control, it may take steps to normalise the cooling measures and we could then see transaction volumes pick up again,” says JLL’s Fossick.

It is the lingering uncertainty of when the cooling measures would be rolled back that is holding buyers back from making a purchase. “If the government were to make the current cooling measures permanent, that certainty would bring buyers back into the market,” he adds.

The issue now is that no one wants to be the last man standing in such a scenario: “Paying the 18% stamp duty on a Friday afternoon only to see another person paying just 3% on Monday morning,” Fossick says.

Interested in luxury condos/apartments at Sentosa Cove? Click here

This article appeared in the City & Country of Issue 713 (Feb 1, 2016) of The Edge Singapore.