Sentosa Cove bungalow prices up 15.8% even as total sales value plunges 48.2% in 2023

/ EdgeProp Singapore |

January 5, 2024 3:23 PM SGT

The latest bungalow transaction recorded at Sentosa Cove was for a bungalow on a 6,555 sq ft site on Pearl Island which was sold for $13.66 million ($2,084 psf), based on a caveat lodged last December (Photo: Samuel Isaac Chua/EdgeProp Singapore).

SINGAPORE (EDGEPROP) - In Sentosa Cove, the luxury waterfront homes, flashy cars in the driveways and private yachts at the marina have long been symbols of wealth and Singapore’s answer to Dubai and Monaco, the playgrounds of the super-rich.

The 117ha, man-made strip on the eastern edge of Sentosa Island has about 2,160 homes: 10 luxury condos with 1,766 units, 36 terraced houses and over 350 bungalows.

“The sea views and resort lifestyle offered by Sentosa Cove are unique to this luxury enclave, which cannot be replicated anywhere else in Singapore,” says Han Huan Mei, research director at List Sotheby’s International Realty. “Residents enjoy the security of a gated community with open spaces and manicured footpaths. It is especially attractive to foreigners.”

After all, Sentosa Cove is the only place in Singapore where foreigners can buy bungalows. Hence, it is also where the impact of the government property cooling measures is most keenly felt. In the latest round, unleashed on April 27, 2023, foreigners were hit by a 60% additional buyer’s stamp duty (ABSD), double the previous rate.

“I have billionaire foreign clients who refuse to pay the 60% ABSD even though they can afford it,” says Steve Tay, founder and director of the eponymous Steve Tay Real Estate (STRE), which specialises in marketing luxury homes in Sentosa Cove and Good Class Bungalows (GCBs) on the main island of Singapore. “It is hard to justify the transaction cost on top of the value of the property.”

After the cooling measures took effect, bungalow transactions in Sentosa Cove halved from 18 in 2022 to just nine, based on caveats lodged as at Dec 31, 2023. Of the nine bungalows transacted, two were purchased by foreign buyers (Chinese nationals), another two by Indian nationals who are Singapore permanent residents (PRs), and the remaining five by Singapore citizens, according to URA data.

In 2022, Singapore citizens made up nine (50%) of the 18 bungalow buyers in Sentosa Cove. Of the remaining nine, five were foreigners (28%), and four were PRs, based on URA data. “The primary difference is in the number of foreign buyers who were more open to committing to a purchase when the ABSD was 30%, before the hike to 60% in April 2023,” says List Sotheby’s Han.

While bungalow transaction volume halved, and total sales value plummeted 48.2% y-o-y to just $175.05 million as at Dec 31, 2023, the average psf-price of bungalows sold was up 15.8% y-o-y to $2,247 from $1,940 in 2022.

The most expensive bungalow sold in Sentosa Cove in 2023 — both in absolute and psf prices — was one on Coral Island sitting on a land-plot of 13,435 sq ft. It was sold for $36.5 million ($2,717 psf) in February, according to a caveat lodged.

The most expensive bungalow at Sentosa Cove in 2023 was the bungalow on Coral Island sitting on a 13,435 sq ft site that changed hands for $36.5 million ($2,717 psf) (Photo: Samuel Isaac Chua/EdgeProp Singapore).

Of the nine bungalows sold in 2023, only three were transacted post-cooling measures in April. The latest was a five-bedroom bungalow on a 6,555 sq ft site on Pearl Island, which changed hands for $13.66 million ($2,084 psf), based on a caveat lodged on Dec 7. Before that, a bungalow at Lakeshore View on an 8,401 sq ft site fetched $22 million ($2,619 psf) in early November. In July, STRE’s Tay brokered the sale of a bungalow along Cove Drive for over $20 million or close to $2,600 psf, although a caveat was not lodged for the deal.

The bungalow at Lakeshore View on an 8,401 sq ft site fetched $22 million ($2,619 psf) in early November last year (Photo: Samuel Isaac Chua/EdgeProp Singapore).

A few more deals could have been closed without caveats lodged, notes List Sotheby’s Han. However, there is no denying that sales activity at Sentosa Cove has slowed considerably compared to 2022.

“Generally, there has been a decline in the number of enquiries and viewings, both for the sale and rental of bungalows at Sentosa Cove since early 2023,” says Han. “The perception was that prices and rentals at Sentosa Cove had been over-inflated, and bridging the price and rental gap proved challenging.”

The money laundering blitz in August resulted in 105 properties seized, including seven bungalows in Sentosa Cove, further dampening the market. “Our sensing is that bungalow prices at Sentosa Cove are due for a correction,” adds Han. “It could translate to more deals being done in 2024 compared to the single-digit sales volume in 2023.”

STRE’s Tay agrees. “Singaporeans and PRs are on the alert for ‘good value’ buying opportunities if the seized properties re-enter the market.”

He expects increased buying interest from Singaporeans, PRs, and Chinese with US citizenship this year. US citizens, along with those from Iceland, Liechtenstein, Norway and Switzerland, have free trade agreements (FTAs) with Singapore, which accord their citizens similar tax treatment as Singaporeans when purchasing residential property. Hence, they are exempted from paying ABSD on their first residential property purchase in Singapore.

The bungalow on Cove Drive was sold for over $20 million or more than $2,600 psf last July, although a caveat was not lodged (Photo: Samuel Isaac Chua/EdgeProp Singapore).

Foreign buyers who are not US citizens or citizens from one of the other four countries with FTAs with Singapore will likely lease a home first, says STRE’s Tay. In the meantime, they will apply for PR or citizenship before buying a home. PRs buying their first home in Singapore pay just 5% ABSD. “This pool of potential buyers sees an opportunity to re-enter the market at attractive values in 2024/2025 as new PRs or Singapore citizens,” he adds.

Landlords have also adjusted the asking rents for the bungalows in Sentosa Cove, from over $80,000 per month in 1H2023 to an average of $40,000 to $50,000 a month. However, some of the well-designed bungalows have asking rents of around $60,000 a month, notes STRE’s Tay.

Only Singaporeans can own more than one bungalow at Sentosa Cove and lease them out. Foreigners can purchase only one bungalow at Sentosa Cove, which must be for their use. Hence, Tay points out that the supply of bungalows for lease is limited.

The bungalows at Sentosa Cove have a 99-year lease. Given the leasehold tenure, List Sotheby’s Han says the bungalows at Sentosa Cove are more attractively priced than detached houses and GCBs on the main island of Singapore. “At the same time, the luxury lifestyle can be enjoyed at both locations,” she adds.

There is also the scarcity factor, with just over 350 bungalows in Sentosa Cove, compared to a total stock of 10,715 detached houses in Singapore. This stock of detached houses includes the 2,700 to 2,800 GCBs in the 39 gazetted areas in the prime districts of Singapore, the most coveted bungalows among the rich.

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