Latest industry and official figures show that new launches and sales volume in Singapore touched an all-time high in 2006. Developers bought 94 sites for S$10.2bn ($6.7bn) from both the government and private sector, up from 49 sites for S$4.54bn in 2005. The private residential property price index touched 130.2 in the final quarter of 2006, the highest level since 2001. Overall, prices rose 10.2% year on year.
Last year saw 20,550 units transacted, with the primary market clocking 10,360 private units, up from about 9000 in 2005, which topped the previous peak in 1996. Nearly 11,000 units were sold in the secondary market, 40% more than the 7600 sold in 2005. In the final quarter of 2006 alone, four projects – Regency@Tiong Bahru, Grand Duchess At Patrick’s, Ford@Holland and Marina Bay Residences – comprising 792 units were fully sold.
New public housing projects are also being snapped up. When the Housing Development Board (HDB) launched the 616-unit Premiere@Tampines under its Design-Build-Sell Scheme with Sim Lian Group, Singaporeans oversubscribed it almost five times. The 1848-unit Pinnacle@Duxton was similarly oversubscribed.
Private housing, especially the luxury tier, is booming and has caught the attention of investors worldwide, attracting billions of dollars in investment and spurring massive new projects. Tay Huey Ying, director of research at Colliers International, says: “Super-luxurious condominiums around Orchard Road, Marina Bay and Sentosa Cove are attracting the most foreign attention. They offer unique features such as branded homes, bay-front inner-city living and island-style resort living.”
New financial centre developments, upcoming integrated resorts that will house world-class casinos, extensive business investment and Singapore’s aspirations to replace Hong Kong as Asia’s top financial hub have all combined to put the island firmly on investors’ radars.
Singapore’s value proposition lies in its synergy, which compensates for its “catch-up player” image, says Ku Swee Yong, director, marketing and business development, at property brokerage Savills. “We may not be trend-setters but we are very good at bringing in the latest from every field and integrating them all into one fine package.”
A booming economy, a robust stock market and the surging number of high net worth individuals residing in Singapore have all helped lift the top end of the market. Marina Bay Residences, part of the Marina Bay Financial Centre development, stunned the market when all 428 units were sold within the space of two days, with prices averaging at S$1900 per square foot. Penthouses touched the range of S$3000-3500 per square foot in various top-end projects.
Exclusivity is a key driver, and the upcoming 240-unit project Hilltops by SC Global will have a resort-style steam spa-room in every flat. The 175-unit Orchard Residences by CapitaLand, scheduled to open for sale in April, will be housed in the upper floors of a 56-storey tower that will have a retail mall in lower floors and a commuter train station underground. The 1800-2800 square feet units will offer spectacular views. Landscaped gardens will occupy 75,000 square feet on the 9th floor, complementing the famous Orchard Road shopping area, which is being revitalised.
Data shows that about 40% of the buyers in the top-end segment are foreigners. Overall, 25% of buyers are foreign, mostly from Indonesia, Malaysia, China, India, Hong Kong, Taiwan, the UK and the US.
Many foreign companies, including those that left in the aftermath of the 9/11 terrorist attacks, are entering Singapore as a first step towards expansion into the resurgent Asia-Pacific region. Players from China, Russia, India and the Middle East that have attained emerging wealth are also in Singapore for similar reasons.
Singapore developers are quick to adopt latest technologies such as wind engineering and structural mechanics that help cut costs and maximise benefits from unique features of every site.
Demand for top and high-end units generated investment sales of more than S$8bn in 2006, and by mid-March 2007, 17 collective sales worth S$2.43bn had been made. This year is expected to surpass 2006 as collective sales spread from the main city to central and fringe areas such as Farrer Road, the East Coast and Thomson.
Supply is a worry, according to Citigroup. The local market is going through a sixth year of low supply and this could pose a real risk to Singapore’s tremendous growth potential. At present, 25,000 new households are formed annually but the total number of new housing units added every year remains lower.
Tay Huey Ying of Colliers explains that strong price and rental increases are contained within the high and luxury segments, with the mid-tier segment likely to experience the filtering down effect this year. “We believe the demand fundamentals for these segments are capable of supporting further price and rental increases.”
One side-effect of price spurts is speculative buying, and Mr Tay warns: “Should this bull run spill over onto the mass-market, so that prices and rentals of mass market homes start to soar ahead of demand fundamentals, there could be a risk of a housing bubble forming at this tier of the market.”