Prices of completed private apartments up slightly in February

St Regis Residences at Tanglin Road.
St Regis Residences at Tanglin Road. PHOTO: THE BUSINESS TIMES FILE

Prices of completed private apartments rose marginally for a second straight month in February, thanks to higher values in the central region, but experts are not reading too much into the numbers.

Overall prices added 0.4 per cent last month after increasing 0.2 per cent in January, according to flash estimates from the NUS Singapore Residential Price Index (SRPI).

But sales volumes are so low that the odd transaction could skew index readings, industry watchers warned.

One such outlier in the high-end market could have been the sale of a St Regis Residences penthouse late last month for $15 million, or at $2,706 per sq ft (psf).

The sale to an Indonesian buyer netted the owner from the United States a gain of $3.3 million despite a slew of loss-making transactions at the project in recent years.

Overall prices added 0.4 per cent last month after increasing 0.2 per cent in January, according to flash estimates from the NUS Singapore Residential Price Index. But sales volumes are so low that the odd transaction could skew index readings, industry watchers warned.

According to the SRPI, prices of completed private apartments in the core central region rose 0.5 per cent last month.

"High-end residential prices have turned a corner since the fourth quarter of last year," said Mr Alan Cheong, Savills Singapore research head.

Savills' basket of luxury non-landed private home prices rose in the fourth quarter over the third, and should be positive in the first quarter of this year as well.

But volumes are thin. Just 281 resales and subsales of private apartments took place in the core central region in the fourth quarter and only 217 have been recorded this quarter so far.

So the slight uptick in high-end prices could be due to statistics, with low transaction volumes causing less than robust readings, noted Mr Cheong.

But there are overseas buyers still keen on Singapore prime property as its value is much lower than that in London and Hong Kong, even with the Additional Buyer's Stamp Duty.

Foreigners accounted for 92 resales and subsales of private apartments in the core central region in the fourth quarter, and have made 57 such sales this quarter.

At the same time, however, some of these transactions may not be as clear cut as they look.

While two four-bedroom apartments at The Ritz-Carlton Residences were sold for $10.6 million and $11.6 million last month, or at $3,467 psf and $3,795 psf each, the developer is said to have given some rebate, making the effective sale price about $3,200 psf.

The developer is believed to be maintaining prices in the event of a bulk sale at the project, which has about 30 unsold units.

Prices of completed private apartments in the non-central region rose 0.3 per cent last month, while those of units up to 506 sq ft fell 1.1 per cent, according to the SRPI.

The overall SRPI is down 2 per cent from this point last year, with similar drops in central and non-central indices. The SRPI for small units fell 5.6 per cent over the same period.

Investors who bought small units may find it tough to find tenants, said Mr Eugene Lim, ERA Realty key executive officer.

Rents of units sized 400 to 600 sq ft in the Redhill and Queenstown areas averaged 3,500 a month in 2014 but are now $2,900, he noted.

Small-unit owners with weaker holding power may have been forced to sell. The same could occur towards the middle of this year, with some high-value homes recording losses if business owners affected by falling oil prices are forced to sell, said Mr Cheong.

"They may have mortgaged their homes for working capital, and are now caught up in the crises of their sectors, be it oil and gas or marine. There could be some volatility especially for landed homes," he said.

Overall prices added 0.4 per cent last month after increasing 0.2 per cent in January, according to flash estimates from the NUS Singapore Residential Price Index.

But sales volumes are so low that the odd transaction could skew index readings, industry watchers warned.

A version of this article appeared in the print edition of The Straits Times on March 29, 2016, with the headline 'Prices of completed private apartments up slightly in February'. Print Edition | Subscribe