Singapore is the new ‘must have’ for the world’s rich

    Record sales of $ 4,200 per square foot for a unit in Midtown Modern have set the market on fire.

    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 a new apartment like the Midtown Modern Penthouse 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, completed between 1998 and 2013. These sold for between $ 5.4m to $ 18.0m, topping the list with 7,266 square feet in St. Regis Residence Singapore.

    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. Last year grew by 10.2%.

    “Coupled with Singapore’s attractiveness among family offices, it was also seen that both foreign and local domestic buyers were looking at all the larger units in excess of 3,000 square feet in larger units. Penthouse was in high demand in the resale market, giving more priority to quality and living spaces, ”said Knight Frank Singapore Head of Research Leonard Tae in an interview with Real Estate Asia.

    TI primarily observed that most homebuyers look in average-size units. However, the last three months saw a change not only in the higher net worth groups, but also in large-sized units with foreign buyers.

    “Many 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”.

    He said, “It is unlikely that developers support new penthouse units on the block and new launches as well as existing stock for the resale market, we will see a lot more interesting transactions of these larger sized units. “

    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.

    He said the private residential market saw an increase in activity, driven mostly by the middle market and the mass market rather than the main and luxury homes.

    These non-land private residential units have a floor area of ​​more than or equal to 2,500 square feet. Traditionally, they fall under the core areas of Districts 9, 10 and 11, CBD areas of District 1 and 4 and 4 areas of Sentosa District.

    “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.

    The TA said that there are two main reasons for this: first that the long-running travel measures in Singapore have restricted potential foreign investors from buying homes, and the second is the lack of new launches in the top tier homes in the market was.

    “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 time to wait until the trip The ban will not relax prices in this class of property. In fact there is 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 still persists due to current restrictions.

    “Still, based on the inquiry, foreign homebuyers are waiting to cross the border and simply wait for the purchase of luxury properties in various parts of Singapore, to do so is safe,” he said. said.

    Pick-up in en-block market

    Tay said that by 2021, more projects would be started by 2021. Developers opted to abstain from purchasing development sites last year, which led to a lower decline in available real estate than common stock.

    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 a year has gone by without accumulating the raw materials needed to put up new residential projects.

    “In 2021, and perhaps next year, they will see some pick-up in the en-bloc market, where developers will have to pick up 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 around the land price of SG $ 200m, where you can put around 200 new units on that kind of land, ”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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