High-end market has room for growth

Singapore has long been regarded as a safe investment haven, which is why foreigners are snapping up property throughout the island.

Foreigners have bought around 23,000 non-landed private homes since 2007, 35 percent of which are high-end homes in Districts 1, 2, 4, 9, 10 and 11, according to the URA’s record of caveats lodged.

However, the high-end apartments sector still has chances for growth if trends in other cities are anything to go by.

According to data from Savills, the average price of high-end apartments stood at $2,154 psf in Q2 and $3,055 psf for super luxury private homes – a subset of high-end homes that reached an average of $2,500 psf in Q4 2006.





Prices for high-end residences in Hong Kong in Q2 were 20 percent higher than those in Singapore, reaching HK$14,520 (S$2,570) psf. The actual price disparity could even be bigger as common spaces such as corridors are considered in computing unit prices in Hong Kong.

Apartment prices in Sydney are approximately 28 percent higher compared to Singapore’s, while prices in London are 41 percent higher.

While prices in two of China's major cities are lower, there is still a 15 percent increase in Beijing and a 32 percent rise in Shanghai last year, which are both at record levels, marginalising any possible short-term capital gains.

Singapore’s high-end market is the only sector where prices remain below earlier peaks. High-end apartment prices are 11 percent below record levels achieved in Q4 2007, while prices of super luxury units are 17 percent cheaper.

Prices of mass market homes in May were 15 percent higher over the earlier peaks, while mid-tier apartments were five percent up. As positive economic prospects for Singapore are expected to continue into H2 2010, high-end apartment prices are likely to reach earlier peak levels by early 2011.

Many East Asian investors may also shift their funds to Singapore due to the increasing anxiety over bubble risks and fears of additional tightening measures that threaten to derail prices.

China’s central government implemented 11 cooling measures earlier this year, which helped new homes sales to drop 60 percent to 70 percent in Shenzhen, Shanghai and Beijing in May.

Consequently, more foreign buyers, particularly mainland Chinese, have flocked to Singapore, sometimes buying in full cash, with the Chinese replacing Malaysians as the No. 2 buyers of super luxury homes priced from $5 million and above.

The increasing number of millionaire Singaporeans and high net worth individuals could also see a growing demand for luxury homes.