Opportunistic buyers found value deals in high-end market

By Feily Sofian

/ The Edge Property |

July 13, 2015 9:00 AM SGT

High-end resale volume jumped 33%

Opportunistic buyers are out for some serious shopping. Purchases of high-end resale homes by Singaporeans and Permanent Residents (PRs) jumped 33% year-on-year (YoY) in 1H2015. A total of 483 resale caveats for high-end condo and apartments were lodged by Singaporeans and PRs in 1H2015, up from 364 caveats in 1H2014. Last week, we found that against household income, the affordability ratio for high-end homes is back to 2009 level.

Buyers’ return to the high-end segment is also putting brakes on falling prices. Prices for condo and apartments in the high-end segment slipped by a modest 0.5% quarter-on-quarter (QoQ) in 2Q2015, according to flash estimates by the URA. This was similar to the 0.4% decline in 1Q2015.

In contrast, prices of condos and apartments in the mass-market dipped by 1.2% QoQ in 2Q2015. For two consecutive quarters, high-end home prices have fallen by a smaller clip compared to city fringe and mass-market homes.

In the city fringe, resale volume by Singaporeans and PRs climbed by a smaller percentage of 18% YoY in 1H2015 while those in the mass-market rose by only 11%. The study defined high-end homes as those located in the Core Central Region. City fringe homes referred to projects in Rest of Central Region while mass-market homes were located in Outside Central Region.

Notwithstanding, purchases by foreign buyers both in the primary and secondary markets continued to dip to 13% in 1H2015, down from 17% in 1H2014. The analyses were based on URA caveats as at 7 July 2015.

42% of high-end resale transactions were below $2 million

What went into buyers’ shopping bags? A majority 42% of the high-end resale condos picked up by Singaporeans and PRs in 1H2015 were below $2 million. Of these, 23% were in the >$1.5 to $2 million price range and 17% were in the >$1 to $1.5 million price range. Another 2% were less than or equal to $1 million (See Chart 1).

Chart 1: High-end resale transactions by price range

Source: URA, The Edge Property

The most transacted projects in the $1.5 to $2 million price range (regardless of buyers’ residential status) were Aspen Height, Park Infinia at Wee Nam and Valley Park (see Table 1). The average area was 1,212 sq ft and more than 80% of the caveats involved freehold or 999-year leasehold properties.

What caught our eyes were high-end properties in the $1 to $1.5 million price range because $1 million is the median price of mass-market condos and apartments in 1H2015 (including new sale and subsale units). One might suspect the $1 to $1.5 million properties in the high-end segment to be small-format units.

There were 83 resale caveats for high-end condos and apartments priced between $1 million and $1.5 million in 1H2015. Of these, the 42% (35 caveats) were for large units bigger than 900 sq ft. Another 22 caveats were for 701 to 900 sq ft units.

Projects bigger than 700 sq ft with price tags below $1.5 million include 368 Thomson, 8 @ Mount Sophia, Amaryllis Ville, Birmingham Mansion, Holland Mews, The Tessarina and Viz at Holland (See Table 2). In fact, only two caveats involved shoebox units below 500 sq ft. In addition, 75% of the 83 caveats were for freehold or 999-year leasehold units.

Table 1: Most transacted resale projects from $1.5 million to $2 million

Source: URA, The Edge Property

Table 2: Most transacted resale projects from $1 million to $1.5 million, bigger than 700 sq ft

Source: URA, The Edge Property

The rebound in high-end resale volume came as no surprise. At a median price of $1,672 psf in 2Q2015, high-end resale homes stood favourably against city-fringe homes and some mass-market homes.

As at 2Q2015, the price premium of resale high-end homes versus resale mass-market homes was a hefty 81%. However, compared to new homes in the mass-market with a median price of $1,282 psf, the price premium narrowed to 30%. Meanwhile, there is no lack of mass-market homes which touched $1,600 psf.

Chart 2: Price premium of resale high-end homes versus new city fringe and mass-market homes

Source: URA, The Edge Property

Surge in transactions above $5 million

High net worth buyers were also back in the game, resulting in a surge of resale transactions above $5 million. A total of 77 caveats were lodged in 1H2015 for luxury properties above $5 million, more than double the 33 caveats seen in 1H2014. Singaporeans and PRs picked up 56 units while foreign buyers purchased 16 units. The remaining deals were inked by companies.

The most transacted luxury properties this year were Goodwood Residence, Urban Resort Condominium, Marina Bay Suites, Tomlinson Heights and Grange Residences. Prices were extremely compelling. For example, a 2,583 sq ft mid-floor unit at Grange Residences changed hands at $2,357 psf this year. Similar units went for $2,671 psf in 2011 and $2,667 psf in 2012.

This article appeared in The Edge Property Pullout of Issue 685 (July 13) of The Edge Singapore.

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