Published 25 April 2011
By Linette Lim
The luxury residential property sector should be performing quite consistently this year but luxury residential property prices look unlikely to climb to pre-crisis levels anytime soon, according to market-watchers.
“Current prices for luxury residential property prices per square feet (psf) are in the S$2,500 to S$4,500 range,” said Mr Liang Thow Ming, executive director and head of residential services at Credo Property Services. “This is still some way off the record high of S$5,000 psf registered in 2007.”
Mr Liang’s pick for the star performer this year would be the mid-market segment, where he expects “a higher percentage increase in overall prices”.
He feels that the demand for luxury residential property – “which is more dependent on foreign buyers than any other segment” – is “unlikely to pick up substantially due to the geo-political situation in the world”.
Another reason could be the fact that en bloc sellers are “setting certain high expectations” in terms of prices, he said, adding that land supply for luxury residential developments in the Core Central Region (CCR) is very much dependent on collective sales.
Higher asking prices and the limited supply of land could put a damper on the number of luxury developments to be rolled out.
Similarly, market-watchers like UOB KayHian’s Mr Vikrant Pandey are not bullish, despite the shift in buying interest toward the CCR and the Rest of Central Region (RCR) for last month, as indicated by figures from the Urban Redevelopment Authority (URA).
The latter’s flash estimates showed that private home sales last month increased 25 per cent to 1,386.
Mr Pandey explains that the surge last month could be a temporary one – “a result of pent-up demand from February as buyers had held back on their property purchases due to the Chinese New Year”.
“While the month-on-month sales have picked up, the year-on-year volumes remain weak, indicating that measures are slowly but steadily taking effect,” he added.
“Market sentiment is cautious,” said Mr Danny Low, chief operating officer and executive director of Heeton Holdings. Heeton, along with KSH Holdings and TEE International, last week launched The Boutiq, a luxury residential development on the site of the former Mitre Hotel at Kiliney Road.
To date, The Boutiq has sold 39 units of the 52 units launched in Phase One at an average price of S$2,350 psf – a result that Mr Low said met expectations.
He added that he “hopes the European and United States markets will recover in speed, so that investors will come back”.
Goldman Sachs is slightly more optimistic about the luxury sector. In a recent research note on the Singapore property sector, analysts Paul Lian and June Zhu wrote: “Luxury is seeing renewed interest, mainly from foreign buyers.”
“16 units (versus only one unit in February) were sold above S$3,000 psf,” it said. “Of note, one unit at Scotts Square was sold at S$4,334 psf and one unit at Boulevard Vue fetched S$4,308 psf.”
Other luxury residential developments to be launched this year include Heeton’s iLiv@Grange and City Development’s Jean Nouvel Residences at Anderson Road, and Buckley 9 & 11.