Sentosa Cove will continue to underperform without a game changer
Should a primary-school be located in Sentosa?
Sentosa is an island resort off the southern coast of Singapore. It’s a popular tourist destination. Resorts World Sentosa is a popular tourist destination, with a number of attractions including a casino, Universal Studios Singapore, Adventure Cove Waterpark, and Sea Aquarium.
Sentosa is home to a number of hotels, restaurants, shops, convention centers, beaches, golf courses, historical sites, and more.
Families looking to splurge can stay at Shangri-La Rasa Sentosa. Capella Singapore, located on Sentosa Island, hosted the 2018 summit between former US President Donald Trump (then) and North Korean leader Kim Jong Un. It is a popular hotel with celebrities.
Want to live on a resort island? The prices of the apartments in Sentosa Cove on Sentosa’s eastern coast, in the Core Central Region, may not be appealing to locals.
A unit of the property group City Developments Ltd: C09 0.0% recently sold 65 homes in The Residences at W Singapore Sentosa Cove for an average price S$1,780 a square foot (psf). This low-rise condo development along Ocean Way was completed in 2011. It sits on land that has a 99-year leasehold and about 81-years remaining.
Underperformance
New condos in Lentor may sell for more than S$2,100 per sq. ft.
The average price per square foot of the units sold at The Hill @ One North, located at Slim Barracks Rise in the newly launched development, was approximately S$2,595
According to caveats, the average price per square foot achieved by The Residences at W for recent transactions is approximately 36 percent below the S$2,793 per sq. foot for 20 transactions during Q2 2010, around the time the project was launched.
Shortly, the buyers who buy at the launch may be facing a massive mark-to-market.
The Residences at W may not have the most modern design, and the building itself might be a little worn out.
The value of a leasehold property also decreases as the remaining years of the land lease are reduced.
According to the table that shows leasehold values as percentages of freehold values, which the Singapore Land Authority uses in computing differential premiums, a parcel of land with 81 remaining years of land tenure is worth approximately 4.8 percent less than one with 99 outstanding years.
Even so, the initial buyers of the Residences at W are not doing as well compared to many other people who purchased private homes at the same time.
According to the Urban Redevelopment Authority, between Q2 2010 and the first quarter of 2024, the prices of private non-landed homes in the CCR rose by 19%.
The CCR region has underperformed partly because the increase in Additional Buyers Stamp Duty (ABSD), which is imposed on foreigners and investors who are not permanent resident (PRs), hit housing demand particularly hard.
A non-PR foreigner who buys a home today pays 60% ABSD. Singapore citizens pay ABSD of 20% for a second and third home, and 30% for a fourth and subsequent home.
Game changer
However, in CCR, the non-landed properties along Bukit Timah road continue to be popular with Singaporeans who buy homes to live in.
Singaporeans and PRs pay ABSDs of 0% and 5% respectively when purchasing their first home.
Developers UOL Group and Singapore Land Group saw strong sales at the private preview of Watten House, a freehold property in Bukit Timah, in November 2023. The average price was S$3,230 per square foot.
Could increasing the appeal of non-landed properties in Sentosa Cove to locals who buy for owner occupancy be the key to improving their fortunes?
Sentosa is a place that some delivery people hate to go. Sentosa is not the only place in Singapore with better transport connections. Sentosa, however, is not isolated. The island is connected to the mainland of Singapore by road, monorail, cable car and pedestrian boardwalk.
Sentosa Cove may need an MRT station in order to attract more locals, given that locals are fond of homes located near MRT stations. Sentosa may be able to house a primary school or other educational institutions, subject to feasibility studies. Sentosa’s tranquil corners may be a good alternative to mainland Singapore for primary and secondary schools. A popular school on Sentosa would be a major game changer for Sentosa Cove.
Bukit Timah Road is popular with homebuyers because of its many reputable primary schools and educational institutions.
Many locals are either single or married with no children. Locals who are single or married without children may prefer to buy homes in popular areas with local families.
Sentosa will become more attractive as a tourist location if it continues to invest, as in the case of RWS expansion
Sentosa Cove condos may not benefit from the success of the island resort in attracting tourists, including those with high spending habits.
As more housing is completed and launched, both buyers and tenants are spoilt for choices. Could Sentosa Cove’s relative underperformance against other locations get worse?
Even landed properties in Sentosa Cove are not getting the warmest of welcomes from buyers. While recent high-profile deals were struck for bungalows located in District 10, the auction of 69 Ocean Drive last week, which was owned by one of the 10 people arrested in the S$3 Billion money laundering case failed to find a buyer. One bid of S$20,000,000 was made, which is well below the S$27.1,000,000 guide price.
Sentosa Cove condominiums could need to be a game changer if ABSD is not changed to encourage more local owners to move in. The appeal of living at an oceanfront residential marina community is not enough for many Singaporeans.
