Singapore’s ‘nouveau riche’ drum up luxury home demand in first half of 2021

Developers in Singapore sold 872 new private homes in June, easing 2.6 per cent from May’s 895, according to data from the URA on Thursday. 

Updated from : The Business Times, 15 July 2021

DEMAND for luxury and prime-area private housing picked up in the first half of this year, reflecting the gains from the nouveau riche in the finance, technology and pharmaceutical sectors, analysts said.

Based on current numbers, some analysts expect overall sales volume for 2021 to cross the 10,000-mark.

The Urban Redevelopment Authority (URA)’s monthly developer sales data released on Thursday indicated that 1,529 new private homes were sold in the Core Central Region (CCR) in the first half of this year.

This is the highest half-year sales for CCR homes recorded since 2010, when 2,506 units were transacted, noted Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie. 

She added that H1 2021 sales were also higher than the full-year sales of 2014 to 2020.

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 “The exponential growth in luxury-home sales may be triggered by the flood of super-wealthy investors and foreign buyers flush with cash, snapping up luxury apartments, villas, penthouses and multi-million exclusive properties here,” she said.

Leonard Tay, head of research, Knight Frank Singapore, said sales at existing projects continued in steady rhythm on the back of positive economic recovery and Singapore being a safe venue for private wealth.

“(This is) especially among the nouveau riche from the finance, technology and pharmaceutical sectors,” said Mr Tay.

In May, Shun Tak Holdings’ luxury condo Park Nova sold five units for a total of over S$100 million; its biggest five-bedroom penthouse reportedly fetched S$34.438 million, or S$5,838 per square foot (psf).

That same month, a four-bedroom unit at the conglomerate’s Les Maisons Nassim was snapped up for S$39 million, or S$5,930 psf.

Riding the wave, luxury apartment complex Hyll on Holland sold 87 units at a median price of S$2,387 psf last month, securing its position as the best-selling project in June.

However, analysts noted that the rise in sales came after some discounts were offered. Before that, from January to May this year, just two units were sold in March at a median price of S$2,458 psf.

Mr Tay noted that of the yet-to-be-completed Hyll on Holland, discounts of up to 13.2 per cent were reportedly meted out on the weekend of June 26 and June 27.

This led to a boost of around 41 units being sold in that weekend alone, according to caveats recorded, Mr Tay pointed out. 

“Caveat data also demonstrated that the entire total of 87 units in the project that were transacted in the month were recorded from June 24, a surge compared to the less than 10 units sold in the preceding months.”

Nicholas Mak, head of research and consultancy at ERA, said the increase in CCR sales could be driven by new launches in the area.

He said: “The number of private homes sold in the primary market decreased by 15 per cent quarter on quarter in Q2 2021. However, developers managed to sell more homes in the CCR market. This could be because five out of seven new launches in Q2 2021 were located in the CCR.”

Besides Hyll on Holland, another 119 luxury homes were sold in other projects in the CCR last month, said Ms Sun. This includes Leedon Green (31 units), Fourth Avenue Residences (12 units) and Irwell Hill Residences (11 units).

Overall, developers in Singapore sold 872 new private homes in June, easing 2.6 per cent from May’s 895, according to data from the URA. Analysts billed the sales figures as fairly healthy and resilient, given the absence of new launches.

Including executive condominiums (ECs), sales reached 962, down 22 per cent from the 1,234 sold in May. Thursday’s figures were similar to analysts’ flash estimates published by The Business Times on Wednesday.

This marks the third consecutive month-on-month fall, after figures in May tumbled nearly 30 per cent.

June’s transactions, excluding ECs, were led by the Outside of Central Region (OCR) and Rest of Central Region (RCR), which accounted for 38.6 per cent and 37.7 per cent of new private home sales, respectively. The CCR made up 23.6 per cent of the sales.

A total of 6,530 private homes were sold in the first six months of this year, which is the strongest first half since 2013, noted Mark Yip, chief executive officer of Huttons Asia.

He said: “This puts the new-sales market on course to set a record of 10,000 to 12,000 units in 2021. We estimate prices to rise by as much as 8 per cent  for the whole year.”

“The Watergardens at Canberra and Pasir Ris 8 are the first two mass-market launches in 2021, and are widely expected to do very well on the back of the buoyant HDB resale market and attractive price points. Klimt Cairnhill, an ultra-luxury project in prime District 9, offers the well-heeled an opportunity to own a large floor plate unit, a rarity among new launches,” added Mr Yip.

ERA’s Nicholas Mak also estimated sales figures to reach about 11,000 to 12,000; Knight Frank’s Leonard Tay agreed that this year’s sales “looks certain” to breach the 10,000 mark.

However, Mr Tay noted that some risks might upset the current momentum, which has been underpinned by genuine buyers. “Perhaps not so much from possible cooling measures, but worries of more prohibitive restrictions to be implemented, should there be sudden Covid-19 eruptions in the community. Still, with the national vaccination programme forging ahead, measures are expected to relax in the later half of 2021,” he added.