Developers have launched 2,200-unit luxury projects between 2006 and 2008, but 55 percent of these units were not purchased in November 2008, said property consultancy firm CB Richard Ellis (CBRE).
CBRE expects that luxury apartments/condos’ price will drop about 10 to 15 percent in the current year. Existing luxury projects, including Four Seasons Park, Grange Residences and Ardmore Park, have slid to around $2,000 – $2,400 per square foot (psf) of strata area in the final quarter in 2008 from the $2,000 – 3,300 psf in 2007.
Average launch price for recently launched luxury condos/apartments dropped from $2,000 – $4,000 psf in the fourth quarter in 2007 to 2,000 to $2,600 psf in the fourth quarter in 2008, CBRE says.
Based on filings on 7 January 2009, caveats for 1,096 luxury apartments/condos positioned in district 10 and 9 were occupied in 2008. This represents a mere 32 percent and 19 percent of sales for 2006 and 2007, respectively.
Flats sold for over $10 million plunged from 143 in 2007 to 82 in 2008. Yet, figures in 2008 were significantly higher than the 22 sold units in 2006.
Majority of the luxury projects that were opened in early 2007 and 2006 were fully sold, including Tate Residences and Ardmore II. On the other hand, a number of projects, especially those launched during or after the last two quarters of 2007 stay on the market. CBRE stated, “By then, news of the sub-prime crisis had caused the market to pull the brakes”.
CBRE estimates that Good Class Bungalows’ (GCBs) price may fall to around 10 percent in the current year. GCBs’ price in the previous year increased 20.7 percent to a land area of $822 psf.
“GCB prices recorded very strong growth in 2006-7”. Douglas Wong, CBRE director for luxury homes, said. “This upswing in prices spilled over into the first half of last year. Right up to July 2008, average GCB prices continued to raise the benchmark. Also, the capacity of owners to hold prices added to the resilience in this segment in the second half of 2008”.
Last year, the record in psf price was $1,303, which was attributed to a property in Leedon Road, comprising a land area of 21,097 sq ft. It garnered about $27.5 million, in absolute price terms. The $1,899 psf remains the unprecedented record price for GBC transaction here, for the marketing of 32H Nassim Road for $25.5 million in October 2007.
Although the previous year saw an increase in GCBs prices, the value and number of transactions plunged.
In 2008, forty-nine GCBs have changed owners for a sum totalling to $785 million, 87 GCBs in 2007 amounted $1.15 billion, and 119 in 2006 for $1.23 billion.
“Going forward, we expect the activity in the luxury residential market to be lukewarm, similar to the pace in H2 2008. Hence, the number of GCBs and luxury apartments transacted will be small”, said CBRE.