Singapore’s high-end and luxury home prices started to climb up this year, but developers and analysts are confident that further growth is possible.
The smooth year began last week as CapitaLand sold 60 apartments in the 165-unit Urban Suites condominium in the Cairnhill area, with prices ranging from $2,400 to $2,700 psf.
Developers in Singapore unanimously agree that mid to high-end residential prices will likely jump this year. And among property consultants, the expected price growth is 5 to 10 percent for the most part, although others are predicting an increase of as high as 30 percent.
Data released by Savills Singapore showed that prices of high-end homes in Districts 11, 10, 9 and 1, including Holland, Shenton Way, Orchard, Bukit Timah and Newton have been climbing since the second quarter of last year.
The average unit price of high-end homes dropped to $1,174 psf in Q1 2009 from $1,621 psf in Q2 2008, one property firm said. However, home prices had rebounded and the average unit price of high-end homes in Q4 2009 was $1,543 psf.
“We are very positive on the luxury sector,” said Michael Ng, Managing Director of Savills Singapore. “The segment is still a laggard (in terms of prices) compared to the mass and mid-range markets.”
OCBC Investment Research Analyst Foo Sze Ming also said, “We reiterate our positive view on the high-end property segment, as it is likely to benefit most from the opening of the two integrated resorts this year.”
However, estimates on the price increases for this segment varies greatly, with predictions ranging from 5 percent to 30 percent.
Over the last year, mass and mid-range private home prices have surpassed the previous peak. But for the luxury and high-end segment, prices are still 25 to 30 percent off the peak, said Mr. Ng
“We are confident that (high-end/ luxury) prices will move as much as 30 percent over the next 12-24 months,” he said. “We have already seen this happen in the mass market, over just the last nine months.”
Most of last year’s transactions took place in the second half of the year, including the 35 GCBs sold in the third quarter and 15 in the fourth quarter.
“A lot of people jumped into the GCB bandwagon from April last year,” said Steven Ming, director of investment sales and prestige homes for Savills Singapore. “People sidelined themselves from the GCB market in 2008 in anticipation of a further slowdown in the economy. So there was a backlog of demand.”
Sales were also fuelled by the low interest rates environment.
As for 2010, Mr. Ming expects a slight decline of GCB transactions, and estimates that 60 to 80 bungalows will be sold. “’We are expecting volumes to slow in 2010 because those investors who wanted to buy in the last two years would have bought last year.”
And in terms of prices, no big increases are expected either, with Mr. Ming predicting a 5 to 10 percent surge for the GCB market this year.