There are fears that the fire sale of luxury residential units in areas popular with expatriates last year could trigger an exodus of foreign property buyers in Singapore, according to media reports.
In 2014, some high-end apartments in Sentosa Cove and Orchard Road were sold at huge losses even though these areas have historically seen more foreign property buyers than elsewhere in the city-state.
According to data compiled by Maybank, the top loss-making transaction was the sale of a four-bedroom unit at Turquoise@Sentosa for $3.9 million in July 2014 given its original price of $7.1 million in November 2007. Moreover, eight of the top 10 loss-making deals were in Sentosa Cove and Orchard area.
“The concern around foreigners exiting en mass came about because resale values in foreign enclaves such as Orchard and Sentosa have dropped more than other areas,” said Maybank’s Research Head Ng Wee Siang.
Nevertheless, it’s premature to conclude that an exodus is happening, he explained.
“While there have been more fire sales, some of them have their own peculiar reasons – we can’t jump to the conclusion that it is because foreigners are walking away.”
Additionally, valuations of residential properties favoured by expatriates remain largely resilient based on an analysis of the top 30 developments with the highest number of foreign owners, such as Rivergate, Costa Del Sol and City Square Residences (pictured).
“This supports our view that luxury homes sold at large losses are sporadic and isolated to selected projects,” Ng added.
Chestertons Singapore’s Managing Director Donald Han agreed: “There will always be buyers that need to cash out, but we have seen rampant cases of such sellers,” he said.
“Foreigners may be concerned about the fall in resale values, but I don’t think there will be panic. If you look at Singapore, over the past 10 years, it’s becoming a wealth and private banking hub, so a lot more rich people reside here compared to before,” Ng said.
Image source: CDL
Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
