The prices of luxury apartments and Singapore GCBs remain stable despite a decline in sales volumes

Prices for these segments were stable, despite lower transaction volumes in the second half 2023 for Good Class Bungalows and luxury apartments.

Nine GCB deals worth S$202.05 millions were made in H2 2023. This is a decrease of 64.9% compared to the S$575.27 Million from 14 GCB deals in the six-month previous period. This latest figure is also about a quarter of the S$613.45 millions transacted in H2 2020.

In 2023, 23 GCBs will be sold, which is the lowest number since 1996. CBRE reported that the total transaction value was S$777.32million for 2023. CBRE said that the total transaction value for the year was S$777.32 million. This is about half the S$1.37billion achieved in 2022 when 47 GCBs sold and the lowest level since 2015, which saw S$714.78m across 33 GCBs.

The slowdown in sales is due to the rising interest rates, the global economic uncertainty, and the ongoing crackdown on money laundering since August 2023.

The consultancy noted that prices grew despite a lower volume of transactions. While average GCB price fell by 25.4% from S$2,631 psf (per square foot) in H1 to S$1,963 psf (per square foot) in H2, overall prices grew by 23.8% year-on-year from S$1,952 psf (2022) to S$2,417 psf.

CBRE said that asking rents for GCBs had also become “realistic”. This is in line with the Urban Redevelopment Authority landed rental index which dropped 4.1 percent quarter-on-quarter in Q4 of 2023. The index was up 78 percent since Q3 of 2020.

CBRE reported that GCB rentals surged in 2022, largely due to the demand of ultra-high net-worth foreigners who were willing to pay a premium for a large residence to fit their lifestyles. However, this has slowed down since the crackdown on money laundering and the general slowing in the market.

CBRE said that the recent revision of annual values for high value properties could result in higher property tax bills, which may lead some owners to sell their GCBs.

It added that if interest rates begin to ease and the economy begins to recover strongly in H2 of 2024, then the gap between buyers’ and sellers’ prices could close and GCB activity could increase.

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The number of luxury apartment transactions dropped in H2 after the additional buyer’s stamp duty levied against foreigners was increased to 60%.

CBRE defines luxury apartments as those apartments that are more than 2,000 square foot and sell for S$2,500 per square foot or above.

In H2 2023, 63 luxury apartment units with a total transacted amount of S$579.65 millions changed hands. This is down from 92 units in the previous half-year which had a value of S$964.67million.

CBRE noted that for the entire year 2023 there were 155 units worth S$1.54billion, down from 2022 when 223 units were worth S$2.18billion, the lowest level since 2020.

The sales of Watten House increased by a quarter in Q4 2023. This was due to the healthy demand for the project’s launch, when 102 units were sold at an average of S$3,230 per square foot.

According to CBRE Research, the basket of luxury freehold projects, luxury apartment prices are expected to rise by 2.2 percent in 2023, from S$3,343 per square foot in 2022. This is due to limited premium stock.

Singapore’s reputation as a global business hub will continue to attract investors who are looking for a secure place to store their wealth.

Sentosa Cove property sales were down last year due to the economic slowdown, rising interest rates, and cooling measures.

Two Sentosa Cove Bungalows valued at S$35.66 Million were sold in H2 2023. This is a 74.4 percent decrease from the H1 transaction value of S$139.39 Million, which saw seven bungalows change hands.

CBRE data shows that nine bungalows valued at S$175.05m were sold in the year 2023. This represents a 48.2% decline from S$337.7m across 18 bungalows, in 2022. It is also the lowest since 2019.

Prices remained stable despite the lower volume of sales, with an average price increase of 15.8% year-on-year to S$2,47 per square foot in 2023.

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