Prime district buys for $2,500 psf and below

A 2,379 sq ft four-bedroom apartment on the 17th floor of Marina Bay Residences was sold for $9.04 million, or $3,800 psf

THE EDGE SINGAPORE | JUNE 24, 2013

|BY Amy Tan |

Over the week of May 30 to June 6, it seemed that discerning buyers had turned their attention to the prime districts, snapping up units in Marina Bay Residences, Paterson Residence, Leonie Hill Residences, Leonie Studio, and Belle Vue Residences.

Paterson ResidenceLeonie Hill ResidencesLeonie Studio
Belle Vue Residences

At the 99-year leasehold Marina Bay Residences, jointly developed by Cheung Kong Holdings, Hongkong Land and Keppel Land, two units were transacted over the seven-day period. One was a 710 sq ft studio apartment on the 25th floor, which sold for $1.74 million, or $2,449 psf. The other was a 2,379 sq ft four-bedroom apartment on the 17th floor, which changed hands at $9.04 million, or $3,800 psf. This is the second highest psf price achieved at the development. The highest psf price achieved was in April 2011 when a 2,368 sq ft four-bedroom apartment on the 46th floor was sold for $10.34 million, or $4,368 psf. The project was completed in 2010 and comprises 428 studios and two-to four-bedroom units.

“The market for ultra-high-end properties priced at $3,000 psf and above is stirring after almost half a year of quiescence,” says Alan Cheong, head of research at Savills Singapore. He believes that properties in this segment will start benchmarking their prices according to the recent transaction at Marina Bay Residences. Elsewhere, investors are zooming in on District 9. At the freehold Paterson Residence, the most recent transaction was for a 1,313 sqft three-bedroom apartment on the 20th floor, which transacted at $3.28 million, or $2,500 psf. Developed by GuocoLand, the project was completed in 2008 and consists of 110 three and four-bedroom units.

At Leonie Hill Residences, a 1,141 sq ft two-bedroom apartment on the third floor changed hands at $2.29 million, or $2,007psf. The 29-storey freehold project was developed by Sino Holdings and completed in 2005. It comprises 80 two- and three-bedroom units and penthouses. At the nearby Leonie Studio, a 689 sq ft studio was sold for $1.38 million, or $2,003 psf. The 99-year lease-hold project was developed by GuocoLand and consists of 92 studios, two-bedroom apartments and penthouses.

At Belle Vue Residences, a 3,681 sq ft four-bedroom unit on the fifth floor was sold for $5.89 million, or $1,600 psf. Developed by Wing Tai, the 176-unit project was designed by internationally acclaimed Japanese architect Toyo Ito. The freehold project was completed in 2010 and contains nine five-storey blocks, with a mix of two-bedroom units of 1,378 sq ft to five-bedroom penthouses of more than 5,000 sq ft. Located on Oxley Walk, Belle Vue Residences is a redevelopment of a project of the same name. Wing Tai was also the developer of the former Belle Vue.

According to Savills’ Cheong’s “Exploiting the Pricing Abnormalities” report released on June 17, since the first round implementation of the Additional Buyers Stamp Duty on Dec 8, 2011, foreign demand for non-landed properties has fallen significantly. For the prime districts of 1 and 2 (CBD core and Marina Bay), 4 (Sentosa Cove), as well as 9, 10 and 11 (traditional Orchard Road area), collectively known as the Core Central Region or CCR, the share of foreign buyers who are either permanent residents or non-permanent residents fell from 57% in 4Q2011 to 33% in 1Q2013. “As foreign demand had constituted the majority of transactions in the prime districts, the decline in demand could have explained why prices for these locations fell,” he says.

Cheong also points out that when it comes to relative pricing, there is a narrowing price gap between non-landed projects in prime districts and mid-market properties. According to him, the mid-tier sector was revived with the successful launch of the 99-year leasehold 508-unit Echelon at Alexandra Road at the end of last year. Based on URA’s new home sales figures, the median price of units sold at Echelon in May was $2,006 psf. In districts 1 and 2, the average price for new non-landed projects in 1Q2013 was $2,213 psf, while similarly sized units of about 770 sq ft in the Alexandra area was $1,872 psf.

In 4Q2011, average price, regardless of size, in districts 9,10, and 11 was $2,520 psf. This fell 33% to $1,689 psf in 1Q2013. During the same period, prices went up in the Alexandra district and districts 1 and 2. “This is a significant development because suddenly, we realise that prices in the Alexandra area had closed up tremendously with the CBD and the prime districts of 9, 10 and 11, possibly due to the market’s loss of focus in the latter area,” says Cheong.

As for rentals, apartments in the prime districts range from a low of $3.80 to $8.80 psf per month, with the higher end found at the freehold Scotts Square developed by Wheelock Properties. Meanwhile, most new prime luxury apartments can fetch rents of between $6.50 and $7.70 psf per month, according to Cheong.

He believes that buyers are taking advantage of the pricing anomaly to purchase units in the prime districts. According to him, in the Alexandra Road area, about 40% of those who bought had HDB addresses. “This shows there is a large enough potential market for these to switch over to buying CBD and districts 9,10 and 11 residential properties,” he says.

As Cheong sees it, prices in the prime districts will continue to ease till end-3Q2013 and stabilise before rising in 2014. “If midtier prices start to increase, it will be a matter of time before projects in the CCR also move up, [and] that could be why buyers are beginning to take the plunge into the high-end segment of the residential market,” he says. He adds that local high-net-worth buyers are choosing to invest in properties that offer developer discounts as these developments are perceived to have good value.