Asia’s prosperity was enriched by Singapore’s punch.

    $ 4,200 per square foot for a penthouse in Midtown Modern has brought life back to the luxury market.

    A clear and noticeable trend has emerged in the last few months for the end of the status symbol – the top floor penthouse apartment. It was not just new apartments, such as the Midtown Modern Penthouse that sold for $ 14.8m in March 2021, which attracted buyer interest. Many old apartments also saw their panthouses broken, with mainly foreign buyers seeking the best of Singapore.

    In a penthouse with lots of life, size also matters. Buyers were also drawn to older-growth penthouse units with larger floor areas. The penthouse above 3,000 square feet had at least 15 transactions. Which were completed between 1991 and 2016. These were sold at a 7,266-square-foot penthouse in St. Regis Residence Singapore for between $ 4.3m to $ 18.0m.

    One of the reasons for buying a penthouse recently, in the midst of the worst recession in decades in the world, is defined as the wealth of the wealthiest, Ultra High Net Worth Individuals (UHNWI), to invest US $ 30m. Or more. Singapore grew by 10.2% last year.

    “Coupled with Singapore’s fascination among family offices, it also saw that both foreign and local domestic buyers were looking at larger-sized penthouse units or units of more than 3,000 square feet. So the newly launched penthouse With limited availability. The penthouse in the resale market was sought out for giving more priority to quality and living spaces, ”said Leonard Ti, head research at Knight Frank Singapore, in an interview with Real Estate Asia.

    TI primarily observed that most homebuyers look in average-size units. However, the last three months have seen a shift not only in high net worth groups but also among some foreign buyers in large-sized units.

    “Most homebuyers still buy average-sized units, but we have seen in the last three months that large-scale units are looking, especially based on the foreign buyers we are getting”.

    “We will likely see more interesting transactions of such large-sized units in 2021,” he said.

    Mid-market segment fuel growth

    TA said Singapore reported that prime non-landed residential segment sales in H2 2020 are $ 919.5m. It reported half-yearly growth of 34.2% from $ 685.1m in H1 2020.

    Nevertheless, he said the private residential market saw an increase in activity, driven mostly by mid-market and mass-market rather than prime and luxury homes.

    Prime non-landed private residential units are those with a floor area greater than or equal to 2,500 sq ft. Traditionally, they fall in the major areas of Districts 9, 10 and 11, CBD areas and Sentosa area.

    “During the epidemic there was a healthy demand for private homes. The overall private residential market saw a 2.2% increase in overall prices in 2020, but most of the activity was in the mid-market, as well as the mass market, and was not so prominent. Therefore, private homes do not have such a luxury class, ”he said.

    Tay said there are two main reasons for this: first that long-running travel measures in Singapore have deterred potential foreign investors from buying homes, and second that top-tier homes were lacking in new launches in 2020 .

    “When taken together, buyers only had a secondary market to find luxury homes and many sat on dharna thinking that with the ongoing epidemic, they have the luxury of time as long as travel restrictions ease The prices in this class of property were not imposed. In fact there was no increase, “he said.

    Recent reports state that foreign home buyers have shown interest in Singapore properties in 2020. Tai confirmed this and said that foreign buyers have been seeking luxury properties in the past months.

    “The proportion of foreign homebuyers actually fell to 17.4% in 2020. This was a decline of 4.2% compared to 2019 when the proportion of foreign homebuyers was 21.6%. The shortage of foreign homebuyers is still due to existing travel restrictions, ”he said.

    He added, “Nevertheless, on the basis of inquiries, foreign homebuyers are waiting to cross the border and purchase luxury properties in various parts of Singapore.

    Pick-up in en-block market

    Tay said that by 2022, by 2021 more projects would be started. Developers opted to abstain from purchasing development sites last year, which would be less than the common stock in the available real estate space in the medium term.

    With the economy recovering and the possibility of a large number of the workforce returning to office, Knight Frank saw new projects begin in the en-bloc market.

    “Last year, developers did not actually take new land sites for development of condominiums and so on. Okay, everyone was restrained because there was this whole cloud of pessimism all around. No one wanted to spend millions on development sites, but left a year without much accumulation of raw materials needed to put up new residential projects, ”he said.

    “In 2021, and probably next year, the en-bloc market will see some pick-up, where developers will have to choose some more material as unsold stock or salable stock is dwindling. To be honest, there is a certain range of appetites that developers have at the moment. I think the sweet spot right now is probably a site with a land value of SG $ 200m, where you can put something like about 200 new units, ”he said.

    With strong government support and comparisons to its neighboring countries in the region, Singapore is also set to have long-term occupants.

    “The data center and logistics space would be a good long-term investment with steady returns, especially as Singapore is expecting all these tech companies to come into the country with attracting such growth drivers,” he said.

    Photo courtesy of Knight Frank Singapore.

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