Singapore luxury bungalow sales tumble after money laundering bust

One of the accused in the money laundering case, Su Baolin, stayed in a good class bungalow in Nassim Road. PHOTO: ST FILE

SINGAPORE – Singapore’s luxury housing deals are drying up as one of the nation’s largest-ever money laundering scandals weighs on the market.

High-end bungalow sales are set for their worst year in nearly a decade, with just eight sold as at the end of September, according to data compiled by Knight Frank. Realstar Premier Group – an agency specialising in landed homes – says that in September, it sold fewer than half of the 10 properties it usually brokers a month.

The transaction drought follows money laundering investigations into a group of people originating from China, significant tax hikes on foreign buyers and rising interest rates. Rental demand for mansions that once hit $150,000 a month has also cooled as the wealthy think twice about flashy homes in Singapore.

“The recent anti-money laundering blitz by the Singapore Police Force has tainted the luxury property market,” said Mr Lewis Cha, executive director for List Sotheby’s International Realty. “It will take a while for the dust to settle and for the market to forget this negative image of luxury real estate.”

Knight Frank’s figures do not include undisclosed deals, but the eight mansions sold compare with 20 in 2022. That is a fraction of the 60 units transacted in 2021, representing an 80 per cent drop from that year’s $2.1 billion in sales. Figures that low have not been seen since 2014, when $431 million worth of such assets were purchased.

Sellers, landlords and agents are turning cautious and employing more rigorous background checks – and in some cases have actively turned down deals from prospective clients.

The owner of a so-called good class bungalow (GCB) rejected a potential tenant from China’s Fujian province despite the person’s offer to pay five years of rent upfront on the $100,000-a-month home, said a person familiar with the matter, asking not to be named discussing private information. The authorities have revealed that most of the suspects arrested in the money laundering case hail from Fujian.

While Singapore’s Council for Estate Agencies (CEA) advises against placing advertisements that are discriminatory or stereotyped in nature against any race or group and warns of disciplinary action against property agents who flout the guidelines, there are no laws specifically penalising landlords for refusing rental on such grounds. The CEA did not respond to a request for comments.

Potential buyers are also “taking a wait-and-see attitude on how the market goes in terms of pricing and the full extent of the investigations and punishment to be meted out”, said Ms Jennifer Chia, a partner at TSMP Law, who heads the firm’s corporate real estate, banking and finance practices.

A reserve for the uber-rich, GCBs refer to bungalows that have plot sizes of at least 1,400 sq m, and are often situated in the most exclusive neighbourhoods. At least half of the 10 arrested took up such dwellings. Among them, Su Baolin stayed in a mansion in Nassim Road, an ultra-exclusive area home to several embassies.

Movers seen with pallets of sealed items after they were removed from accused Vang Shuiming’s GCB in Bishopsgate on Oct 18. PHOTO: ST FILE

Another accused, Vang Shuiming, lived in a villa with a large rooftop pool and gym, located in a leafy enclave called Bishopsgate near Singapore’s premier shopping belt. Rental data released by the Government shows he paid at least $150,000 a month in November 2020 to live in the property, a record at the time.

After the laundering case, “it’s not easy to find anyone to spend over $100,000 a month”, said Mr Julian Yip, managing director at Realstar.

Interest rates, rising costs and tax hikes have also curbed buyer interest. GCBs are generally restricted to local buyers – unless the Government provides special approval – meaning foreigners often pay exorbitant rents for such property.

“With increased interest rates and uncertainty, buyers have become more circumspect,” said Mr Leonard Tay, head of research at Knight Frank Singapore. “Overall price increases from 2020 have also made it more costly to acquire these luxury landed properties.” BLOOMBERG

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