SINGAPORE –Values of the 10 most expensive condominiums bought during the last residential property peak of 2013 have all fallen over the past decade, with one unit sold at nearly half of what it first went for.
That prices per square foot (psf) for these units have all tumbled from 2013’s high, despite rising prices for new properties in recent years, is a clear warning about the dangers of buying into markets that are spiking, said experts.
Based on caveats lodged with the Urban Redevelopment Authority (URA), a 2,755 sq ft unit at Reignwood Hamilton Scotts, the only unit among the 10 that has changed hands in the past decade, was sold in December 2020 for $7.2 million.
The apartment was purchased in 2013 for $13.78 million or $5,001 psf.
Said property veteran Nicholas Mak: “The property prices move in cycles. Some property owners who had bought at the previous price peak may find it difficult to recover the previous peak prices, partly because new buyers’ attention is diverted to the new launches. Also, these individual retail property sellers would be competing with developers who would have more marketing or advertising power.”
Mr Mak noted that out of the 10 record-price properties sold in 2013, seven were new sales by developers. And in the past 15 months, of the top 20 priciest condo units sold, 11 were new sales.
“It seems that the high prices of new sales are still a dominant factor that pushes up the property price index,” added Mr Mak, who was until very recently head of research at ERA Realty.
Setting the pricing record by square footage in 2013 was a 7,718 sq ft unit at Twentyone Angullia Park, whose $42.9 million price tag worked out to $5,560 psf. Another 2,260 sq ft unit in the same development that sold for $11.5 million was the next priciest by square footage, at $5,099 psf.
However, the latest sale there – a 2,260 sq ft unit at $7.45 million, or $3,297 psf, in April 2022 – marked a 41 per cent climbdown from 2013’s peak. Previous transactions had seen psf prices fluctuate, with a floor of $2,995 psf in 2016.
The latest Reignwood Hamilton Scotts sale in February 2023 fared worse at $3,085 psf – equivalent to a 38 per cent climbdown from the development’s peak levels 10 years back.
None of the six most expensive condo developments of 2013 – which include Scotts Square, The Orchard Residences, Sage and The Scotts Tower – has returned to their 2013 peak square footage values.
The closest has been a 1,248 sq ft Scotts Square unit that changed hands for $4.5 million or $4,405 psf in February 2022, still shy of the development’s 2013 record of $4,453 psf for a $2.8 million, 624 sq ft unit.
But market watchers say the depreciation of 2013’s heavyweights is no indication of a lack of demand for luxury residences.
URA caveats showed that 16 condo units were sold at prices above the $5,560 psf record level in 2013, and most of these transactions took place in 2021 and 2022, noted Ms Christine Sun, OrangeTee & Tie’s senior vice-president of research and analytics.
In February, a 6,286 sq ft condo unit at Les Maisons Nassim was transacted at $5,727 psf, which shows that there are still buyers willing to pay top dollar for luxury properties now, she added.
Ultra-high-net-worth individuals have bought pricier luxury homes in recent years, even if the per footage prices worked out to be lower than previous condo peaks.
To date, the condo unit with the highest transacted price is a 12,077 sq ft one at Les Maisons Nassim, sold for $75 million or $6,210 psf in October 2021, according to URA data.
In 2019, billionaire inventor James Dyson reportedly paid $73.8 million – or about $3,496 psf – for a 21,108 sq ft super penthouse at Wallich Residence at the top of Guoco Tower. He sold the unit at a loss of more than $11 million a year later.
There may also be other units bought at higher prices that were not reflected in URA’s caveats, said Ms Sun.
“The market is illiquid, and buyers of the luxury condos will be more inclined towards new sales, which, as a result, saw weaker responses to luxury condos in the resale market,” said Provost’s Chair Professor Sing Tien Foo of the Department of Real Estate at the National University of Singapore.
“The new launches of selected luxury projects after the pandemic, such as Park Nova, Les Maisons Nassim and Canninghill Piers, have received overwhelming responses,” he noted, adding that there is always demand for luxury properties, and foreign investors see Singapore as a safe haven for investments.
Mr Pow Ying Khuan, head of research at real estate portal 99.co, said ultra-prime residences have historically been sought after by local and global high-net-worth and ultra-high-net-worth individuals due to their exclusivity, amenities and locations.
“While some ultra-luxury residential properties in Singapore may not have surpassed their previous peak prices, it is important to consider that the market can be highly segmented, with a much smaller buyer pool compared with the mass market condos or even ordinary luxury market,” said Mr Pow.
Prof Sing said the property cycle is nearing its peak and “price correction pressure is looming”.
“Buyers of these properties will need to have strong holding power and keep a long investment horizon in sight… Buyers of luxury properties are also less loss-averse and are more ready to sell their properties at a loss.”
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