Category Archives: Luxury Property

High-end market on a downward spiral?

Posted on 9 May 2012 | Comments Off on High-end market on a downward spiral?

Sluggish demand for high-end homes has lowered developers’ profits of late. If this trend continues, the luxury market could eventually hit rock-bottom in the days to come.

With prices of luxury homes expected to fall by 15 percent this year, foreign demand is expected to dry up due to tightening measures and economic uncertainties.

Early on, property developers are feeling the pinch over this weakening outlook.

Recently, SC Global warned of a S$10 million loss for Q1 2012, following weak profits recorded from its ready-for-occupancy projects. In fact, not even half the units released at The Marq on Paterson Hill and Hilltops were sold.

Ho Bee’s official figures revealed a shocking 71.6 percent plunge in Q1 2012 earnings to S$15.4 million. Its luxury projects, Turquoise and Seascape at Sentosa Cove, have recorded sales at 46 and 28 percent respectively.

The weakening interest in the high-end market may be attributed to the implementation of a 10 percent Additional Buyers’ Stamp Duty (ABSD) in December last year, which deterred foreign buyers.

Foreign buyers contribute significantly to the market, accounting for 40 percent of property transactions last year in prime district 10, which covers the Tanglin and Ardmore areas. Driving foreign buyers from the market will affect locals who have sold their homes to foreigners, as they cannot recycle their capital easily.

Savills Research has predicted that foreign buyers will account for a mere 15 percent of luxury homes sales this year. The ABSD immediately reduces return on investments (ROI) because these fees have to be paid upfront.

Singapore is considered the most expensive market for high-end properties in Asia, with buyers from China, Indonesia, Malaysia and India significantly contributing to the luxury home market.

However, a number of foreign buyers have put off their plans to buy multi-million dollar properties to avoid the ABSD. At the same time, the luxury market will likely see a surge in the supply of new units, putting further pressure on prices.

Even rentals are coming down as a number of expats no longer receive their usual housing allowances.

Moving forward, the luxury segment will likely suffer as the price gap between the mid-tier and luxury segment narrows.

source : PropertyGuru -9 May 2012

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More S’poreans looking offshore for investment homes

Posted on 7 May 2012 | Comments Off on More S’poreans looking offshore for investment homes

More S’poreans buying holiday homes in neighbouring islands.

With tighter curbs on local property, more Singaporeans are looking offshore to buy investment homes.

And some are opting for affordable luxury, closer to home.

Only 30 minutes by boat from Singapore, one of Indonesia Batam’s key selling points is proximity.

Savills’ director of International Residential Sales Julian Sedgwick said: “Over the last two years, we’ve seen an increase of Singaporeans looking for holiday homes, and buying in close proximity to Singapore. It’s about the buyer looking for ease and access, and that’s what Bintan, Batam, Bali offer.

“Historically, buyers have always bought for investment in London, Sydney, New York, but we’re also seeing people wanting a bit of luxury where they can invest, get a good return on their investment, but also to benefit from that investment.”

Savills said Singaporeans now form up to 30 per cent of its company’s overseas second home buyers, up from just six to eight per cent in 2007.

In a 2012 report by global property firm Knight Frank, Singaporeans rank ninth on the list of top 10 buyers of prime holiday homes, alongside nationals of larger advanced economies like the US and Germany.

One project that’s seeing brisk sales is the five-star Montigo Resorts in Nongsa, known as the golf and resort side of Batam.

Half the lease-hold units that have been sold so far are going to Singaporeans.

The luxury villa costs less than one-tenth of what one will pay for a similar property in Singapore.

But can affordability overcome Batam’s less than glowing reputation as the place for cheap seafood and naughty nightlife?

An interviewee Channel NewsAsia spoke to said: “The sleazy side of Batam has always been known better than anything else, so it’s hard to run away from that impression.”

Montigo’s developers said their presence in Batam will help change perceptions.

Ong Chih Ching, CEO, KOP Group, Montigo Resorts, said: “As a result of that bad reputation no one has really come here and done something new and something different. That is a baggage that unfortunately now, as the pioneer for Batam, we have to carry. But every time we bring someone here they change their perception.”

But facing stiff competition from destinations like Bali and Phuket, Batam’s pitch as a prime property market still has some way to go.

Source : CNA – 7 May 2012

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