SINGAPORE (THE BUSINESS TIMES) - The increase in additional buyer's stamp duty (ABSD) rates for foreigners and property investors could cause Singapore's luxury residential market to lose some steam this year, following buoyant volumes and prices in 2021, CBRE analysts said.
The good class bungalow (GCB) segment enjoyed a banner year in 2021 as volumes and prices climbed to fresh highs. It posted a stellar performance in the first half of the year and held steady in the second half despite year-end festivities and diminished supply.
CBRE noted that 40 deals worth some $1.22 billion were recorded in H2 2021, bringing the full-year tally to 99 with a total transaction value of $3 billion. That surpassed the previous record of about $2.43 billion set in 2010 and is nearly triple the $1.09 billion in 2020.
There were 19 GCB transactions that crossed the $2,000 per square foot (psf) threshold last year. They drove the average GCB price up to $1,771 psf, crossing the previous peak of $1,617 psf in 2019.
However, the rate of price growth across GCB locations varied. The research team noted that coveted addresses near the Botanic Gardens witnessed the biggest increases, while the price gains of bungalows in other areas were moderate.
"In 2021, GCB activity was boosted by fresh demand from digital-economy entrepreneurs, key executives and continued demand from new citizens," CBRE wrote.
However, given the limited supply of GCBs available for sale, the firm expects the segment's sales momentum to ease in 2022.
The analysts also said that the higher ABSD rates, introduced as part of the December 2021 cooling measures, are unlikely to affect demand for GCBs, as ultra-high-net-worth buyers typically allocate such bungalows as their first residential property.
Meanwhile, Sentosa Cove properties saw higher transaction volumes last year owing to spillover demand from luxury homes on the mainland and amid increased foreigner demand for landed housing.
Last year, 26 bungalows in the waterfront enclave worth $440.4 million were sold, more than double the transaction value in 2020, according to the CBRE report. Average prices of Sentosa Cove bungalows tracked higher to $1,778 psf in 2021, compared with $1,727 psf in the previous year.
As for non-landed units in Sentosa Cove, 128 homes worth $516.9 million changed hands in 2021. This transaction value more than tripled from 2020, when 43 units amounting to $159.4 million were sold. Correspondingly, the average transacted non-landed unit price was $1,707 psf last year, up from $1,488 psf in 2020.
In the overall luxury apartment segment in Singapore, the number of transactions nearly doubled year on year.
CBRE said that 247 caveats were lodged for luxury apartments in the core central region in 2021, with a total transaction value of roughly $3 billion. In 2020, there were 130 caveats lodged for deals amounting to about $1.31 billion.
Notably, a penthouse at Les Maisons Nassim fetched $75 million or $6,210 psf in October.
A record 15 units passed the $5,000 psf threshold last year, with most of them at Park Nova in prime District 10. The average luxury apartment price, based on CBRE Research's basket of luxury freehold properties, thus rose to a new record of $3,137 psf.
While CBRE expects the higher ABSD rates imposed on foreigners and investors to moderate the overall sales momentum for luxury homes, it said that demand will nonetheless remain resilient due to rising rents and Singapore's safe-haven status amid geopolitical uncertainty.