Singapore among top cities for ultra-prime residential sales: Knight Frank

/ EdgeProp Singapore |

March 10, 2023 8:30 AM SGT

In 2022, Singapore saw 18 private residences transacted for at least US$25 million, according to Knight Frank’s 2023 The Wealth Report (Picture: Samuel Isaac Chua/The Edge Singapore)

SINGAPORE (EDGEPROP) - In 2022, Singapore remained a “critical” city for the world’s wealthy, according to the latest edition of Knight Frank’s The Wealth Report — its annual publication that studies trends in prime property markets, global wealth distribution, and luxury spending.

Last year, Singapore saw 121 transactions of super-prime residential properties, which the consultancy defines as homes costing at least US$10 million ($13.45 million). The city-state also saw 18 ultra-prime deals, notably residences transacted for at least US$25 million. This places it among the top 10 cities for highend residential sales, ranking sixth for both super-prime and ultra-prime transactions.

New York topped the list for super-prime sales with 244 deals, followed by Los Angeles (225) and London (223). The three cities were also in the top three for ultra-prime deals, with New York and London both clocking up 43 transactions each, followed by Los Angeles with 39.

Hong Kong also made the list, ranking fifth for super-prime deals with 125 transactions and fourth for ultra-prime deals with 28 transactions. Sydney was another Asia Pacific (Apac) city on the list, with 99 super-prime and 16 ultra-prime deals.

Across the top 10 cities ranked by Knight Frank, a total of 1,392 super-prime sales worth $26.3 billion was recorded in 2022. While lower than the record-breaking 2,076 transactions recorded in 2021, the report highlights that this is still 49% above 2019 levels. Meanwhile, ultra-prime sales totalled US$9.8 billion across 241 transactions.

super-prime and ultra-prime transactions - EDGEPROP SINGAPORE

Measured price growth

The Wealth Report points out that prices of prime homes in Singapore have increased modestly in 2022 compared to other cities. Among the 100 global markets tracked by Knight Frank’s Prime International Residential Index (PIRI 100), Singapore ranked 58th, with prime home prices up 3.9% last year. “Prime prices in 2022 continued to lag behind the overall growth of 8.6% for all Singapore private residential properties and behind an average increase of 5.2% across residential cities in the PIRI 100,” the report states.

Leonard Tay, Knight Frank Singapore’s head of research, attributes the more measured increase in Singapore’s prime home prices to the government’s efforts to rein in prices through its cooling measures, as well as travel restrictions that were still in place for places like China and Hong Kong last year.

Dubai topped the PIRI 100 for a second year in a row, registering a formidable price growth of 44.2% for its prime properties, followed by Aspen (27.6%) and Riyadh (25%). Tokyo, in the fourth position, is the highest-ranking Asia Pacific city, registering 22.8% price growth.

Overall, 85 of the markets tracked recorded positive or flat price growth in 2022, which Knight Frank attributes to the continued bounceback in the property market following the pandemic. “Wealth preservation, safe-haven capital flight, and supply constraints played their part in driving prime price growth, but it was the post-pandemic surge that continued to push prices higher,” comments Victoria Garrett, head of residential at Knight Frank Asia-Pacific.

Growth in UHNWI wealth to support market

The majority of ultra-high-net-worth individuals (UHNWIs) saw their wealth decline last year, amid economic, energy and geopolitical shocks that impacted markets. The Wealth Report estimates that UHNWI wealth fell globally by 10% (in US dollar terms). Europe saw the largest decline in wealth at 17%, followed by Australasia (11%) and the Americas (10%). Africa and Asia saw the smallest declines at 5% and 7% respectively.

However, a more optimistic outlook is anticipated for 2023, based on findings from the report’s 2023 Attitudes Survey, which polled 500 private bankers, wealth advisers, family offices and other intermediaries that manage over US$2.5 trillion of wealth for UHNWI clients. Of the respondents, 69% expect their clients’ wealth to increase this year, up from the 40% who expected this in 2022.

For Apac, 45% of UHNWIs are expected to experience an increase in wealth in 2023 compared to 25% the previous year. “The optimism and confidence are driven by asset repricing, perceived value opportunities and an expected economic rebound in the Apac region,” observes Christine Li, head of research at Knight Frank Asia-Pacific.

The Wealth Report notes that capital growth is a pivotal goal among Apac’s wealthy, with many looking to real estate as a key opportunity. This bodes well for prime residential markets in the region, as UHNWIs continue to have a strong appetite to buy homes. “The return of Chinese buyers will likely boost transaction volumes for residential properties, particularly in the prime segments of the region’s gateway cities,” Li adds.

The Attitudes Survey indicates that 16% of Apac UHNWIs intend to buy a residence in 2023. In addition, homes remain the cornerstone of private wealth portfolios, with primary and secondary homes making up 35% of the total wealth of Apac UHNWIs.

Opportunities in commercial real estate

Besides the robust performance of the prime residential space, The Wealth Report also highlights that private wealth led global commercial real estate investments last year. Private investors — which include individuals, family offices, and privately held companies — accounted for 41% (US$455 billion) of the US$1.12 trillion commercial property investments made in 2022. This is the first time private investment volumes have surpassed institution investments, which were at US$440 million (39%) last year.

In Apac, private investors invested some US$1.53 billion in commercial real estate in 2022, representing a 30% y-o-y increase. This comes despite a broader decline in Apac investment volumes, which fell 21.3% amid interest rate hikes and recession concerns.

In any case, the wealthy are expected to continue underpinning activity in the global commercial space, amid an ongoing repricing of assets globally. The consultancy’s HNW Pulse Survey, which polls 500 high-net-worth individuals (HNWIs) across the globe, found that 19% of respondents intend to invest directly in commercial property this year, while 13% plan to invest indirectly, such as through REITs or debt funding.

Apac investors appear particularly optimistic, with 32% of Apac HNWIs planning to increase allocations to commercial property, compared to a global average of 28%. Within the region, Singapore remains an oasis for investments, says Nicholas Keong, Knight Frank Singapore’s head of private office. “[Singapore’s] highly regulated and transparent market will be attractive to UHNWIs with opportunities available for private wealth looking to invest for the purposes of capital preservation and appreciation over the mid to long term.”

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