There is now sluggish demand for luxury homes, following recent announcements by two developers – SC Global and Ho Bee that sales figures have dwindled.
With weak profits recorded for its ready for occupancy projects, SC Global has warned of a loss of S$10 million in the first quarter. The developer has sold less than half of the units at The Marq on Paterson Hill and Hilltops.
At the same time, Ho Bee’s first-quarter earnings plunged 71.6 percent to S$15.4 million, with the Turquoise and Seascape projects at Sentosa Cove recording 46 and 28 percent in sales respectively.
Consultants said the low interest in luxury properties could be attributed to the introduction of the additional buyer’s stamp duty (ABSD) on foreign buyers.
According to Alan Cheong, Director of Research and Consultancy at Savills, foreign buyers made up 40 percent of property transactions last year in prime district 10, covering the Tanglin and Ardmore areas.
“Once you remove foreigners from buying, it also means locals who sold (homes) to foreigners also cannot recycle their capital that easily,” said Cheong.
Donald Han, Special Adviser at HSR Property Group, noted that the percentage of luxury properties bought by foreigners had dwindled since the ABSD was implemented in December.
“If you look at October to November numbers last year… the percentage of new home sales which are more than S$2,000 psf hit as high as five percent. Then came the ABSD, and… (the number) went as little as one percent,” he said. For the month of January, only 17 to 18 high-end property transactions were recorded.
Ku Swee Yong, Chief Executive at International Property Advisor, added that ABSD “reduces immediately your return on investments because these are duties you pay upfront”.
Source: PropertyGuru May 3, 2012
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