Category Archives: Luxury Property

What defines luxury property?

Posted on 16 May 2015 | Comments Off on What defines luxury property?

What qualifies as “luxury” in the residential property sector differs significantly from market to market, in terms of both price and characteristics of a home.

In its latest Luxury Defined 2015 report, Christie’s International Real Estate has attempted to frame the global luxury real estate sector, not only by examining the world’s top 10 cities for prime property, but also by analysing more than 70 additional regional markets to determine the factors at play across the luxury residential spectrum.

The real estate firm also looked at the characteristics that define luxury property today and explore which emerging markets are setting the pace for luxury tomorrow.

The research captured the collective wisdom and insights 32,000 agents operating from 1,350 offices globally – as well as and specialists from the broader Christie’s luxury goods world.

So what defines luxury when it comes to residential property?

LUXURY IS… SO MUCH MORE THAN LOCATION, LOCATION, LOCATION

Traditionally prominent addresses and prised postcodes are no longer the defining baseline concept for luxury homes. High net-worth Individuals (HNWIs) are expanding the borders of traditional luxury locales, and are willing to pay a premium in emerging luxury areas if the amenities and lifestyle offerings are right. The evolution of high-end commercial real estate is also driving this phenomenon.

LUXURY IS… CONSCIOUS LIVING

Owning a home that does not negatively affect the community – and one that can even bring positive meaning – is attractive to wealthy buyers. The demand for more sustainable and healthy environments has placed greater emphasis on knowing where and how products are manufactured, and has fuelled a trend toward conscious living.

LUXURY IS… EXPERIENTIAL

Today’s new wealthy consumers are more informed, more globally exposed, and more sophisticated than previous generations. Baby boomers in particular are now “less materialistic and more experiential,” noted Cognizent in a luxury retail trend study, and HNWIs are being led into the luxury experience by prestige brands.

LUXURY IS… CONVENIENCE

The resurgence of urban down town cores in many major cities and changing age dynamics are having a significant impact on the home-buying preferences of the world’s most affluent. As millennials grow and baby boomers transition into life as empty nesters, many larger cities are witnessing a surge of affluent older buyers to urban areas. Residents of suburban areas are also increasingly seeing a preference for urban amenities.

LUXURY IS… AGE-AGNOSTIC

Multi generational travel (trips involving at least three generations) was dubbed the biggest trend for 2014 by a luxury travel industry report. As growth in this type of tourism increases, some prestige real estate markets, particularly those in resort destinations, are seeing increasing demand for luxury homes with spaces that have the flexibility to adapt to generational diversity and entertaining requirements.

LUXURY IS… COLLECTIBLE

“For today’s wealthy investor, acquiring and holding collectibles is akin to building a store of treasure,” noted a report from Barclays’ Wealth Insights. Trophy real estate is the ultimate collectible treasure. Like buying a prized sports team or high-value artwork, trophy residences can ignite the passions of UHNWIs. Many developers of ultra-luxury properties have baked collectible concepts right into their plans with limited-edition structures and one-off creations by highly regarded international architects and designers.

LUXURY IS… TURNKEY-READY

Many buyers are willing to pay a premium for the convenience of a “just bring your toothbrush” property, outfitted with top-of-the-line accoutrements that amplify a luxury lifestyle. Brokers reported an increased interest in brand-new residences, with buyers happily paying a premium for security, concierge, and other luxury amenities.

LUXURY IS… A BLANK CANVAS

At the other end of the spectrum, some enthusiastic buyers are pushing the desire for newness to new heights. Impeded by lack of quality inventory, more and more ultra-affluent buyers wish to build their own trophy homes from scratch.

LUXURY IS… UNDERSTATED

Luxury is no longer about brash displays of wealth, noted many experts in the report. Instead, scaled-back, quality-over-quantity luxury will continue to be one of the key tenets behind many prestige property acquisitions.

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Luxury homes face nearly $3m in losses in mortgagee sale

Posted on 3 Dec 2014 | Comments Off on Luxury homes face nearly $3m in losses in mortgagee sale

TWO luxury homes in Singapore are on the market at prices that would mean losses of nearly $3 million each as the local property market continues to weaken.

The mortgagee sale of the two units in Turquoise, a luxury Sentosa Cove condominium, at fire-sale prices comes amid signs that banks are forcing more cash-strapped owners to offload property to meet loan shortfalls.

The units, understood to belong to one owner, are on sale for about $1,600 per sq ft (psf) – an asking price of $4.5 million to $4.6 million apiece, which would mean losses of about $2.7 million each for the 2,777 sq ft units.

Caveats lodged with the Urban Redevelopment Authority showed that both apartments were bought in November 2007 at about $2,600 psf. Current market prices are $2,000 psf to $2,200 psf.

But the losses are still less than those suffered from the sale of two other 2,777 sq ft apartments in the project earlier.

These two apartments in the 91-unit project went under the hammer as distressed sales in July, and were sold for about $1,400 psf. At least one of the units was sold by DBS Bank, sources said.

The units had been bought in 2009 for about $2,550 psf but ended up suffering losses of up to $3.2 million.

Homes are put up for mortgagee sales when financial institutions try to recover their losses after a borrower defaults on a loan.

Experts say luxury homes are more likely to face forced sales, given the large sums involved and the fact that speculators may be involved.

Fewer suburban units are facing mortgagee sales, Colliers deputy managing director Grace Ng said last week.

The lower total price means the owners can pay their mortgage more easily and find buyers if they default, she added.

Mr Tan Tee Khoon, executive director of residential services at Knight Frank Singapore, said defaulting borrowers could have had difficulties selling their properties in the tepid secondary market, while an increased supply of new units in the prime districts means that it is harder to find a tenant.

“Sentosa’s exclusive location makes it less accessible than homes on the main island and harder to lease now,” he said.

“Also, borrowers who default are more likely to have been speculators.”

The property market has been buckling under the weight of cooling measures, with the luxury segment bearing the brunt of the slowdown on the back of dwindling demand and borrowing restrictions.

A total of 98 homes were put up for auction by mortgagees in the first 10 months of the year – far more than the 14 homes in the same period last year.

Housing loans for the third quarter came under close scrutiny as the three local banks released their financial scorecards last month.

DBS chief executive Piyush Gupta said the bank was not seeing any stress in its mortgage loan book. But United Overseas Bank and OCBC Bank posted higher non-performing loans from bad mortgages, attributing the rise to borrowers who bought luxury homes.

UOB disclosed only that the rise in bad home loans was mostly the result of mortgages at one luxury condominium, but Maybank Kim Eng analysts Ng Wee Siang and Ng Li Hiang noted in a report that it was “largely from one key project in Sentosa”.

Meanwhile, two units were put up for mortgagee sale at a Colliers auction last Friday. The three-bedders at The Laurels in Cairnhill had opening prices of $4.1 million and $3.6 million but were not sold.

The Straits Times understands that the units were put up for sale by UOB.

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