Singapore luxury residential sales fall but prices stay firm: CBRE

One of the three Good Class Bungalows on Nassim Road that was sold to the Fangiono family for a combined $206.7 million in April (Picture: Samuel Isaac Chua/The Edge SIngapore)

SINGAPORE (EDGEPROP) - Singapore’s luxury residential market continued to soften in 1H2023 amid aggressive rate hikes by the US Federal Reserve and a souring macroeconomic backdrop, according to CBRE in a recent research report. Transaction volumes for both Good Class Bungalows (GCBs) and luxury apartments declined in the first half of the year, mirroring movements in the general property market.

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

Luxury residential sales volume (2018 to 1H2023)

CBRE highlights that GCB prices stayed firm, rising 31.1% compared to 2H2022 to reach $2,760 psf in 1H2023. The growth was supported by a landmark deal during the first half of the year when a trio of GCBs on Nassim Road owned by Cuscaden Peak Investments were purchased by members of the Fangiono family behind Singapore-listed palm oil producer First Resources. The three houses were purchased in April for a total of $206.7 million, which works out to $4,500 psf, setting a new record for GCB land rates.

The Fangiono family also bought another GCB on Nassim Road in March for $88 million ($3,916 psf), the single largest GCB deal in 1H2023.

“Similar to 2022, 1H2023 continued to see GCB demand from newly naturalised citizens and key executives of traditional businesses, while the active buying by digital economy entrepreneurs last seen in 2021 remained absent amid the economic downturn and hard-hit tech sector,” CBRE adds.

Selected luxury residential deals in 1H2023

In the luxury apartments market, 92 properties with a total transaction value of $964.7 million changed hands in 1H2023, easing from the 106 units worth $1.085 billion sold in 2H2022. While luxury apartment sales rose in the first fourth months of the year after the reopening of China’s borders in early January, sales fell in May and June following the doubling of additional buyer’s stamp duty (ABSD) levied on foreign buyers to 60% which took effect from April 27.

However, prices held firm despite the drop in transactions. Based on CBRE’s basket of freehold luxury projects, average luxury apartment prices rose 1.1% to $3,463 psf in 1H2023 from $3,425 psf in 2H2022.

Within the Sentosa Cove enclave, property sales also softened compared to 2H2022. Seven Sentosa Cove bungalows worth $139.4 million were sold in 1H2023, 32.8% lower than the 10 bungalows worth $207.5 million transacted in 2H2022. For Sentosa Cove condos, 50 units amounting to $251.1 million changed hands in 1H2023, 29.8% lower than the 74 units worth $357.6 million sold in 2H2022.

Average prices across both bungalows and condos in Sentosa saw increases in 1H2023 compared to 2H2022, with the former rising 11.9% to $2,214 psf and the latter rising 1.7% to $2,063 psf during the first half of the year.

Looking ahead, transaction volumes in the luxury residential market will likely remain subdued for the rest of the year, predicts Tricia Song, CBRE’s head of research for Singapore and Southeast Asia. “This can be attributed to a combination of considerations, including the prevailing cooling measures, the uncertain macroeconomic outlook, and elevated interest rates, that might leave investors adopting a wait-and-see approach,” she says.

Song adds that existing luxury homeowners are likely to support prices, as healthy rental yields and a limited supply of new luxury homes incentivise them to hold on to their assets.