A bungalow at Ocean Drive was sold for nearly $30 million in October, while a duplex house in Hong Kong, which is about one-third the size, was sold for as much as three times the price of the bungalow.
Luxury-home prices in Singapore are no match for Hong Kong’s due to the increasing number of buildings. According to Savills Plc., Singapore will see an increase of new apartments over the next three years, as much as nine times compared to Hong Kong.
Prices of high-end and luxury homes in Singapore rose four percent last year, while Chinese buyers boosted the 45 percent increase in HK, said Savills.
“Hong Kong has some unique factors which drive the super luxury market, particularly mainland buyers who have been very aggressive,” said Simon Smith, Savills’ head of research and consulting who’s based in HK. “We will always see some dramatic prices in Hong Kong that you wouldn’t necessarily see in Singapore.”
According to a report by Goldman Sachs Group, Singapore’s luxury property prices are 19 percent lower that the 2007 peak. Goldman also said that luxury property prices are expected to increase by 15 percent this year, though still remain 7 percent below their highs by the end of 2010. HK’s luxury prices, on the other hand, surpassed its mid-2008 peak and it will continue to increase by 15 percent in the next six months, said Colliers International Ltd. on its forecast in January.
The two IRs being built in Singapore with hotels, casinos, restaurants and several attractions are expected to triple the annual tourism revenue to $30 billion by 2015 and lure more than 17 million tourists.
Resorts World Sentosa partly opened its $4.5-billion Sentosa project last month, while Marina Bay Sands is expected to open in April after several delays in its construction.
Nearly 900 apartments around Sentosa Cove and more than 130 apartments around Marina Bay have yet to be put on sale. City Developments Ltd, the second biggest property developer in Singapore, and YTL Corp, the biggest builder in Malaysia, are working to put more residential houses on the market this year.
About two-fifths of the total supply or more than 11,000 apartments and condominiums in the prime districts are expected to put on the market over the next three years, said Savills. This compares with more than 1,260 luxury homes in HK over the same period.
“In Singapore, we’re going to see slightly elevated levels of supply in 2011 and 2012, which would moderate price growth,” said Mr. Smith of Savills.
Hong Kong-based builder Henderson Land Development Co. sold a 6,158-square-feet duplex apartment in October for a record price of HK$88,000 per square foot (psf) or for HK$439 million. HK luxury homes are defined as those that are bigger than 1,000 square feet and worth at least HK$10 million.
The 17,115-square-foot bungalow on Sentosa was sold for $1,753 psf. Savills has defined Singapore luxury houses as those with prices ranging from $1,900 to $2,000 psf that are located in the prime districts.
Increasing prices have raised concerns of a possible property market bubble in Hong Kong. For the first time since 1991, officials tightened the down-payment requirements for luxury homes and suspended the mortgage insurance for rental properties in October.
The Singapore government said it will bar interest-only mortgages for uncompleted housing projects and launch more sites to be sold. Still, the government is not likely to clamp down on the luxury market, said Donald Han, Managing Director of Cushman & Wakefield.
“The high-end market is less of a concern, it’s more of a private playground for the rich,” said Mr. Han.
Wealthy Indonesians and Malaysians are the main buyers of high-end properties in Singapore. Rich buyers from Norway, Austria, Russia and Sweden are now showing interest in the luxury market, as well as professional golfers and Asian celebrities, said Kemmy Tan, Director of YTL Singapore Pte.