Property Blog

Singapore luxury property: A dormant market worth exploring

By guest contributor Natasha Goh

With personal income tax capped at a modest 20% and no capital-gains tax, it’s unsurprising that Singapore has become a magnet for wealth around the region. In a recent survey of 1,000 mobile millionaires, Singapore was deemed the most desirable place to call home in Asia – billionaires Richard Chandler and Eduardo Saverin are amongst the notable individuals who have chosen Singapore as their home-away-from-home.

According to Boston Consulting Group’s 2012 Global Wealth Report, Singapore has the world’s highest density of millionaire households at 17.1% or 188,000 households. At the same time, its popularity as an offshore banking hub is also growing in leaps and bounds, with wealth under management set to overtake Switzerland by 2020. Switzerland currently manages some $2.8trillion in assets, whereas Singapore has seen assets under management grow from just $50billion in 2000, to $550billion by end-2011.

It is somewhat counter-intuitive then that Singapore’s luxury property market has performed dismally in recent years, particularly when the property market as a whole has had a spectacular run. One could blame it all on the whopping 15% additional buyer’s stamp duty payable by foreigners, but ABSD was initially introduced only in December 2011 and raised only recently in January 2013, whereas the luxury market has been slow since the financial crisis of 2008, never recovering its shine unlike the mass-market sector which experienced a rapid rebound beyond previous highs. Sales of non-landed homes above S$5M screeched to a halt between October 2008 to March 2009, and barely hit 400 transactions in the whole of 2012. In 2007, there were more than triple that number of transactions, at a time when there was a lot less money and a lot more exciting alternative investment options competing for a share of the pie.

It is perhaps necessary at this point to clarify on what I refer to as “luxury property”, since the word “luxury” has been used to describe even Executive Condominiums and mass-market private homes in recent times. For ease of discussion, I shall limit myself to non-landed luxury homes, since luxury landed homes are often custom-built to the home owner’s unique specifications and preferences.

With Executive Condos bearing $2.05M price tags, and average prices in suburban precincts exceeding $1,000 psf, it becomes more than just about million-dollar price tags. Luxury homes should conjure up a sense of prestige and privilege, from the address and surroundings, to the minute detailing of the interiors. The common grounds should feel anything but common, more an exclusive club for only the upper echelons of society. I think as a trendsetter in the luxury property market, Simon Cheong of SC Global captured the true essence of the luxury home when he became the first developer to introduce an in-house concierge service within a condominium development.

That is the key – luxury extends beyond pure bricks and mortar, beyond cutting-edge architecture and designer bathroom fittings. It is with the softer, human touches that true luxury is crafted. Any contractor-turned-developer these days can throw together some high-end European kitchen fittings, marble flooring and call it a “luxury condo”, but it takes a finer eye for detail, an intimate understanding of the lifestyles of the rich and powerful, and precise, skilled craftsmanship to ensure that the natural lines and colors of the marble slabs are seamlessly matched and aligned, that a kitchen’s fittings and layout are both aesthetically pleasing and able to perform up to the grueling expectations of the most exacting dinner party host.

So if I must, let me set the minimum criteria as such :-

1) Within Prime Districts 9 and 10;

2) No more than 150 units within the development, to maintain that “exclusive” factor

3) Concierge service;

4) All units within the development should have a minimum size of 200 square metres, since space equates to luxury in land-scarce Singapore.

Below are my top 3 picks in the Luxury Home segment:

The Marq on Paterson Hill was one of the most widely-discussed luxury developments in Singapore thanks to the record-breaking $6,840 psf achieved (The much-reported Hermes apartment is expected to fetch an even more eye-watering price, but has yet to be priced by the developer). The whole development certainly bears all the hallmarks of luxury: 66 exclusive homes set amidst a majestic 1.15 hectares of manicured grounds, the distinguished few who call the 8 Paterson Hill address home are thoroughly pampered by a concierge team trained by the Guild of Professional English Butlers. Each apartment is 3,000 to 6,200 square feet, and those found in the Signature Tower each feature a 15-metre infinity pool cantilevered off the main building.

The Ritz-Carlton Residences at 65 Cairnhill Road is another noteworthy development with a focus on high-end hospitality – a dedicated entourage delivering personalized service round-the-clock to 56 privileged households . Valet services, bellhop, housing keeping and even an in-house sommelier to serve you at the property’s bespoke wine cellar. Prices averaged $4,012 psf by end-2012.

Recently completed in December 2012, Bishopsgate Residences is nestled within the prestigious Chatsworth GCB precinct. Comprising 4 exclusive triplex homes and 27 apartment units, each home is oriented such as to enjoy a lush greenery view despite being just a stone’s throw from Orchard Road. The attention to detail is impeccable, from the metallic oxide-coated glass windows that serve to reduce interior temperatures by as much as 5 degrees Celsius, to the custom-sourced Canadian marble lining the powder rooms. First-class concierge service is a given, and the residences also feature chauffeurs’ waiting lounges. Pricing starts from around $3,300 psf.

A quick perusal of the projects due for completion in 2013 shows just 12 developments within the prime districts 9 and 10, none of which match the minimum criteria highlighted earlier in terms of unit-sizes, lack of concierge services or finishings.

The slowdown in luxury may have started with the global credit crunch of 2008, but the ABSD on foreigners has certainly done it no favours. Looking into ownership profiles at the 3 luxury developments highlighted, it is obvious that such projects attract a largely foreign clientele. The Marq has only 37.5% Singaporean/PR ownership, Ritz-Carlton is 40% Foreigners and 16.7% corporate ownership, while Bishopsgate Residences is currently 100% foreign-owned.

But it is undeniable that interest is still omnipresent, both from my own interactions with clients and prospective-buyers, and discussions with private wealth managers, developers and fellow colleagues serving the luxury sector, as well as general news out in the market. Some foreigners with a long-term view on the Singapore market have grown tired of watching and waiting on the sidelines, seeing the 15% ABSD as a necessary entrance fee more palatable than the possibility of Singapore completely halting foreign purchases of real estate if further cooling measures are introduced. Others realizing that prices may creep up by 15% anyway and further waiting may not be the right strategy. Given the pent up demand, growing money supply and limited high end units available, it is just a matter of time before money starts quietly flowing back into the luxury market.

Natasha Goh has a Bachelors in Law from the National University of Singapore. She regularly contributes to articles and research done by Ascendant Assets Pte Ltd. To find out on what Ascendant Assets does, please visit www.AscendantAssets.com. For those who wish to read more articles from Natasha, please visit http://natashagoh.com/.

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