[UPDATE] Prices of luxury homes in Sentosa Cove ‘at a tipping point’

/ EdgeProp Singapore |

December 23, 2022 10:30 AM SGT

SINGAPORE (EDGEPROP) - Home sales in Sentosa Cove slowed in 1Q2022 following the cooling measures in December 2021. Still, momentum edged up in 2Q2022 and 3Q2022 as Singapore reopened in April after the pandemic, bringing the number of bungalows sold to 18 with a total transaction value of $337.7 million, based on caveats lodged as of Dec 15, 2022.

For the whole of 2021, a total of 26 bungalows changed hands for $440.44 million. It was the highest number of transactions since 2012, when 25 bungalows were sold for $513.9 million ($2,150 psf).

While transaction volume in 2022 may be lower than that of 2021’s, the average price of bungalows transacted was 8.35% higher at $1,940 psf compared with $1,778 psf the previous year.

TOP BUNGALOW DEALS IN 2021 - EDGEPROP SINGAPORE

A seafront bungalow at Ocean Drive sitting on a 99-year leasehold site of 17,110 sq ft that changed hands for $34.5 million ($2,016 psf) in July 2022 was the highest transacted bungalow in 2022. But it was the bungalow at Cove Grove, sitting on a 9,182 sq ft, 99-year leasehold site, that scored the highest psf price of $2,396 psf when it was sold for $22 million in October.

This bungalow at Cove Drive changed hands for $32 million ($2,009 psf) in October (Photo: EdgeProp Singapore)

Steve Tay, senior associate vice president, List Sotheby’s International Realty, brokered the sale of the bungalow at Cove Grove that fetched the highest psf price. Other bungalow deals in Sentosa Cove that he brokered this year include another property at Cove Grove that changed hands for $21 million ($2,076 psf) in April and a seafront unit at Ocean Drive that went for $18.5 million ($1,961 psf) in August.

TOP SENTOSA COVE 2021 - EDGEPROP SINGAPORE

This bungalow at Cove Drive was sold for $22 million ($1,925 psf) in June this year (Photo: Samuel Isaac Chua/EdgeProp Singapore)

‘Foreign buyer support’

The number of transactions recorded based on caveats lodged for 2021 and 2022 does not reflect the actual picture on the ground, according to Tay. “In 2021, at least 15 bungalows were sold without caveats lodged,” he says. “And in 2022, there were 10 such deals.”

This applies not just to the waterfront bungalows in Sentosa Cove but Good Class Bungalows on the mainland too, says Bruce Lye, co-founder and managing partner, SRI. Many of these luxury bungalows have changed hands without caveats lodged, with agents involved in the deals bound by non-disclosure agreements.

This bungalow at Cove Grove was sold at the highest per sq ft this year when it changed hands for $22 million or $2,396 psf (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Despite the global uncertainties, rising inflation and interest rate hikes, List Sotheby’s Tay expects Sentosa Cove’s bungalow sales volume next year “to be similar to 2022’s, with support from foreign investors”. Since borders reopened and Covid policies eased, foreign demand for homes in Sentosa Cove has increased. Buyers include those who want to base their families and businesses in Singapore, he adds.

Permanent Residents (PRs) and Singaporeans who were living on the mainland and want bigger living spaces, as well as the unique waterfront lifestyle that Sentosa Cove offers, have also contributed to the pool of buyers, according to Tay.

In terms of absolute price, the two bungalows sold at the lowest price in 2022 were located on Sandy Island, two doors from each other - one was sold for $10.8 million ($1,434 psf) in May, and the other was sold for $10.8 million ($1,389 psf) in July (Photo: Samuel Isaac Chua/EdgeProp Singapore)

‘Two-tier market’

“A two-tier market has emerged in Sentosa Cove,” says SRI’s Lye. “Ultra-prime seafront bungalow plots are likely to hold their prices at $2,300 psf to $2,400 psf,” he says. “The non-prime bungalow plots are priced in the $1,700 psf to $1,800 psf range today.”

In terms of absolute price, the two bungalows sold at the lowest price in 2022 were located on Sandy Island, two doors from each other. The first property on Sandy Island to be sold for $10.8 million ($1,434 psf) was the bungalow sitting on a land area of 7,533 sq ft. It changed hands in May. The previous owner paid $15 million ($1,991 psf) for the property in August 2013.

The other bungalow on Sandy Island that was sold for just $8 higher than the other -- at $10,800,008 – sits on a slightly larger land site of 7,774 sq ft. It went for $1,389 psf in July, making it the lowest transacted price this year on a psf basis. The previous owner purchased the property for $17.8 million ($2,290 psf) in June 2013. The property was a mortgagee sale.

Sentosa Cove luxury condo - EDGEPROP SINGAPORE

Sentosa Cove luxury condo transaction prices have also moved in tandem with the prices of luxury bungalows (Photo: Samuel Isaac Chua/EdgeProp Singapore)

‘New floor price’

Bungalows priced in the $10 million to $12 million range or $1,300 to $1,400 psf have largely been snapped up in 2021 and 2022, says Lye. “There were many ready buyers at those price levels,” he adds. “These transactions have established a new floor price for bungalows in Sentosa Cove.”

Asking prices of Sentosa Cove bungalows today are upwards of $13.5 million or $1,700 psf to $1,800 psf, according to Lye. “Owners who are more opportunistic will still seek record prices,” he says. “But most motivated sellers are more realistic in their asking prices and willing to negotiate.”

The high financing costs due to the incessant rounds of interest rate hikes could trigger some distressed sales next year. “We are at a tipping point,” says Lye. “The outlook was rosy a year ago. And people were rushing to buy a home. With higher financing costs, and the higher property tax for investment properties next year, those who own multiple properties will start to feel the heat.”

The launch of the 302-unit Cape Royale in June contributed to the higher average condominium prices achieved in Sentosa Cove for the whole of 2022 (Photo: Ho Bee Land)

Condo prices moving in tandem with bungalow prices

Sentosa Cove luxury condo transaction prices have also moved in tandem with the prices of luxury bungalows. In 2021, 124 condominium units were sold for under $459 million or $1,614 psf. Transaction value in 2021 was the highest since the last peak in 2010 when 140 condo units were sold for $695 million ($2,300 psf).

In 2022, 107 condo units changed hands for $485.63 million or an average of $1,945 psf. In terms of average price, it’s 17% higher than the $1,614 psf achieved last year. The average price achieved this year is also the highest in a decade: In 2012, the average price was $2,014 psf across 49 condominium units sold that year for $196.6 million (See table).

NO OF CONDOS 2004 TO 2022 - EDGEPROP SINGAPORE

The launch of the 302-unit Cape Royale in June contributed to the higher average condominium prices achieved in Sentosa Cove for the whole of 2022. Joint developers Ho Bee Land and IOI Properties released 75 units at Cape Royale for sale, with more than 73% sold as of the end of November. The average price of units sold was $2,206 psf.

show unit at Cape Royale - EDGEPROP SINGAPORE

A show unit at Cape Royale, where 73% of 75 units released have been sold as of end November (Photo: Ho Bee Land)

Prices still 60-70% below

the 2010 peak

Chinese buyers have been more active in the luxury segment this year, notes SRI’s Lye. “With rents having shot through the roof or even doubled in some cases, many of the PRs who were renting before see buying a home as a better option.”

While Good Class Bungalow prices have reached a new threshold, “there are still good value deals to be found in Sentosa Cove”, says List Sotheby’s Tay. “Prices of bungalows are still at 60-70% of the peak in 2010 before the government introduced the 11 rounds of cooling measures.”

Indeed, foreign buyers still find value in Sentosa Cove bungalows, adds Tay. Today, Sentosa Cove is the only place in Singapore where foreigners can buy landed homes. “These foreigners are drawn to the waterfront lifestyle, the large living spaces and tranquil environment compared with luxury apartment lifestyle on the mainland.”