Sales volume drops, but prices remain the same for luxury apartments in Singapore and GCBs
The report added that if the interest rate starts to fall and the economy is expected to rebound strongly in the second half of 2024 the gap between the prices paid by buyers and sellers may narrow, and GCB markets could see a rise in activity.
After the Additional Buyer Stamp Duty was doubled from 40% to 60%, there were fewer transactions in the luxury apartment sector during H2 2023.
CBRE defines luxury as an apartment in the Core Central Region larger than 2,000 sq. ft. and sold at S$2,500 or more per sq. ft.
The H2 of 2023 saw 63 luxury flats with a transaction value of S$579.65million change hands, down from 92 apartments in the half-year prior with a transaction value of S$964.67million.
CBRE reported that in the year 2023, there were only 155 transactions totaling S$1.54 Billion. This is down from the 223 transactions worth S$2.18 Billion in 2022 and the lowest amount since 2020.
Sales experienced a quarterly increase in Q4 of 2023. This was largely due to a healthy demand during the launch of Watten House’s new project, which saw 102 units sold for an average price S$3,230/sqft.
While transaction volumes of luxury apartments and Good Class Bungalows were lower in 2023’s second half, the prices for these segments remained constant.
In H2 of 2023, there were nine GCB transaction worth S$202.05million. This was down 64.9% from the S$575.27million in 14 GCB transaction in the preceding six-month period. The latest sales figure also represents a third the S$613.45million transacted during H2 2022.
The number of GCBs sold in 2023 was the lowest since 1996. CBRE stated that the value of all transactions for the year was S$777.32. This is less than half the S$1.37 million achieved in 2022 with 47 GCBs and the lowest value since 2015 when 33 GCBs totaled S$714.78 millions.
The increase in interest rates and global economic uncertainty are responsible for the sales slowdown. Since August 2023, money laundering has been a major concern.
The property consultancy firm stated that prices continued to grow despite the lower transaction volume. The average GCB pricing fell 25.4% between H1 2023 and H2 2024 from S$2,631 psf to S$1,963 psf. However, for the entire year prices grew 23.8% from S$1,952 psf to S$2,417 psf.
CBRE stated that the asking rents of GCBs are also more “realistic”, mirroring Urban Redevelopment Authority’s landed rentals index. This index fell 4.1 percent quarter on quarter in Q4 2020, ending a 78-percent rise since Q3 2019.
CBRE stated that GCB rents soared in 2022 due to a higher demand by ultra-high-net worth foreigners, who were willing pay a premium rent for a spacious residence in order to accommodate their lifestyles. This trend has slowed significantly since the money-laundering crackdown and general slowing of the market.
CBRE says that the recent revision in annual values of high-value properties may result in owners paying higher property taxes, and some could even decide to sell their GCBs.
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CBRE Research’s basket luxury projects in freehold rose by 2.2% to S$3,417 per sq. ft. in 2023. The increase was largely due to the limited supply of premium apartments.
Singapore’s solid foundation as a business center should continue to attract investors seeking a safe place to park their wealth.
Sentosa Cove’s properties also recorded a smaller transaction volume in the past year. This was due to economic weakening, higher interest rate and cooling measures.
In H2 2020, Sentosa Cove bungalows were sold for S$35.66 millions, a decrease of 74.4 per cent compared to H1, when seven bungalows were traded.
CBRE data indicates that nine bungalows were sold for S$175.05m in 2023. That’s a decrease of 48.2% from the S$337.7m in 18 bungalows sold in 2022 and the lowest sales level since 2019.
The average price of S$2,47/sf will increase 15.8 percent annually in 2023, despite the lower sales volume.
