Wealthy buyers continue to shop for luxury homes in Singapore even as overall private home sales plunge

PUBLISHED MAY 28, 2020, 9:24 PM SGT

SINGAPORE – With no travel plans in the near future due to Covid-19, Mr David Yong is planning to sample the resort life instead in Sentosa Cove, an upscale residential enclave on the southern island.

The 33-year-old bachelor has been shopping for his next home there since the beginning of the year. His budget: $10 to $15 million.

He used to shuffle between Cambodia, Korea and Japan for work but finds himself spending much of his time at home now because of the coronavirus pandemic.

“Since I can’t travel, home has become an even more important place to work from and to relax. Besides, I enjoy the chill resort lifestyle that Sentosa Cove provides and I have many friends who live there,” said Mr Yong, who is the chief executive of Evergreen Assets Management and managing partner of YSL Legal LLP.

He is currently living in his family home at Goodman Road in the east coast but hopes to secure his ideal home in Sentosa within the next few months.

Wealthy Singaporeans are still buying high-end properties, even as the overall private housing market slumped in April and the first half of May when strict measures to stem the viral outbreak curtailed non-essential activities.

New private home sales was down by 58 per cent last month compared to March, reaching a five-year low, according to figures released by Urban Redevelopment Authority (URA) on May 15. Only 277 private homes were sold last month compared with 660 in March.

The figures exclude executive condominium (EC) units, which are a public-private housing hybrid.

Of these 277 homes, 102 were properties located in Singapore’s core central region (CCR), taking up 36.8 per cent – or slightly over one-third – of the overall sales volume. It is an increase from 11 per cent last year and 6.96 per cent in 2018.

Experts say the steady sales of luxury homes, defined as those located in prime areas, is remarkable but should not come as a surprise as buyers with the financial capability see a weak economy as an opportune time to grab a good buy.

Property analyst Ong Kah Seng said wealthy buyers are not affected by issues such as affordability but rather are looking at the long-term returns on their property investments.

He said: “Those who purchase during the pandemic are opportunistic buyers who are confident in the longer-term price growth after Singapore ultimately emerges from this recession.”

The slight dip in prices has also helped motivate wealthy buyers to actively seek out potential luxury homes to purchase, he added.

Prices of landed properties and luxury condominiums in the core central region decreased by 0.9 per cent and 2.2 per cent in the first quarter of this year, according to URA’s real estate statistics released on April 24.

Mr Lester Chen, 39, senior division director at Singapore Realtors Inc (SRI), said: “People turn to property during this time because if they don’t put their money in properties, it will depreciate during a recession. Stocks are also dangerous.”

“If you buy a property at a good price and hold on, when the market goes up hopefully in three to four years’ time, you still can sell it.”

Mr Chen, who specialises in luxury properties in Sentosa, Marina Bay and Orchard, said he has about 100 potential buyers who are shopping for homes at the moment, with a handful waiting for in-person property viewing to be allowed again before committing. He has closed three sales and seven rental deals since the start of the circuit breaker.

Some buyers have even given him cheques so he can snatch up the ideal condominium unit the moment it becomes available.

For some popular luxury developments such as Marina One Residences, sought-after units such as those on the higher levels with a good view can be sold in as little as 30 minutes, said Mr Chen.

A curb on in-person property viewing during the circuit breaker did not deter some buyers.

SRI’s managing partner Bruce Lye, 37, sold a good class bungalow (GCB) to a Singaporean businessman for $21.68 million, or $1,028 per square foot, last month. The buyer only looked at the land plans.

The property, located at Windsor Park Road, off Upper Thomson Road, is one of five GCBs sold this year. There are around 2,800 GCBs in Singapore.

He said: “When it comes to super high-end properties like this, it’s not about the actual building but the shape of the land and its location. The buyer will probably just tear down and rebuild it so there’s no need to view.”

Mr Lye, who has been an agent for 15 years, said the downtime afforded by the circuit breaker may also allow busy businessmen, who were “caught up in the rat race”, to slow down and think about their housing needs.

“Maybe now they have more time to think about their family’s future housing needs after realising that having a conducive space to work at home is quite important,” he said.

The interest is also an indication that the ultra-rich continue to view Singapore as a safe haven to park their funds, say analysts.

Ms Christine Sun, head of research and consultancy at OrangeTee & Tie, said investors, both locals and foreigners, have confidence in Singapore’s ability to bounce back after an economic crisis.

“Although the long-term effects of the coronavirus pandemic remain uncertain, the bright side is that Singapore’s property market has always recovered after every economic crisis,” said Ms Sun.

“Private properties have generally yielded positive capital appreciation over the past 30 years and have weathered some of the toughest crises like Sars, the Asian financial crisis and the global financial crisis, giving investors confidence in the long term prospects of buying properties here.”

Mr Leonard Tay, head of research at Knight Frank Singapore, shares the same sentiments: “Historically, Singapore has always been a safe haven for high-net worth individuals to park their investments due to its stable political environment and pro-business economy.”

While analysts agree that private home sales will likely see a surge in June due to pent-up demand when the economy gradually starts to open up after the circuit breaker, some are uncertain whether the demand will be sustained in the medium to long term.

Said Mr Tay: “It’ll depend on whether additional waves of Covid-19 infections will recur and whether business activities can resume without too many prohibitive restrictions.”