Consultants believe that the luxury home market will likely bear the brunt of the overall decline in private property prices.
Most analysts expect overall private home prices to fall between 5 and 10 percent this year.
Notably, overall prices climbed 1.1 percent last year, down from 2012’s 2.8 percent gain as revealed by the Urban Redevelopment Authority.
Ong Teck Hui, Research Head at Jones Lang LaSalle Singapore, noted that luxury homes located within the city centre will feel the greatest pressure this year due to the sluggish demand from investors.
The situation could worsen once real estate funds, which bought luxury homes in bulk, exit their investments to look for better yields, said market watchers.
As stated by Desmond Sim, Research Head at CBRE, "If you are a real estate fund in Singapore, you definitely would like to look at other segments."
In December 2012, for instance, US financial group Wachovia sold its share of an investment in a Grange Road project to partner City Developments for a huge loss of approximately S$55 million.
Earlier this month, the developer of Newton Imperial condominium placed 21 unsold units back on the market at a reduced price.
Nonetheless, the few funds that own high-end homes here may opt to hold on to them until the government lifts some of the property cooling measures, said Sim.
Christopher Chitty, Senior Content Producer, at PropertyGuru edited this story. To contact him about this or other stories, email christopher@propertyguru.com.sg
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