Ultra-rich driving property frenzy in Singapore

Cheryl Chiew11 Aug 2021

S$32.9 billion worth of luxury properties transacted during the first half of 2021 alone, marking it as the biggest property frenzy Singapore has seen in over 10 years.

In search of a safe harbour to park their wealth, tycoons have been stuffing cash into Singapore’s luxury properties, causing a property frenzy.

A local tech billionaire, for instance, spent ~S$129 million for a mansion in an exclusive neighbourhood shaded with rain trees, while a Taiwanese family with a grocery empire acquired all the units within a condominium project for ~S$293 million, reported Bloomberg.

Singapore’s red-hot residential market saw homebuyers spending S$32.9 billion during the first half of 2021 alone – making it the city-state’s biggest frenzy in over 10 years and twice the value registered in Manhattan over the same period.

With this, home prices in Singapore jumped by a record 4.1% in H1 2021 as the ultra-rich shift their funds from economies adversely affected by the pandemic or, in Hong Kong’s case, by political turmoil.

The boom in Singapore is evocative of 2007, when “well-heeled foreigners were lured by the glamour promised by two upcoming resorts and casinos,” said Nicholas Mak, APAC Realty’s Head of Research and Consultancy, as quoted by Bloomberg. The flurry was tamed by property curbs and the global financial crisis.

“The difference now is that there are more newly minted ultra-rich people, especially from China and India,” he said.

Bloomberg said the launch of Park Nova, Hong Kong-listed Shun Tak Holdings’ first residential project, was not only a showcase of its 54 luxury apartments. It also displayed buyers’ wealth as Ferraris, and Rolls-Royce Cullinan flocked to the site, which was 10 minutes by foot from the city-state’s famous shopping belt Orchard Road.

“I’ve never seen so many luxurious cars at one point,” said PropNex Realty’s Head of Luxury Team Dominic Lee. “If you drove a BMW that day, you’d feel depressed,” he added as quoted by Bloomberg.

All three penthouses were sold, with prices going up to S$34.4 million. “For rich people, such prices aren’t a concern. If it’s a good buy, they would want it,” Lee said, noting that the buyers were both foreign and local.

Meanwhile, transactions at Sentosa Cove – where massive waterfront houses boast private berths for yachts – tripled to S$190.7 million in H1 2021 over the same period last year, showed data from List Sotheby’s International Realty.

Lewis Cha, Executive Director at Sotheby’s International Realty, said the neighbourhood, which was the only area in Singapore where foreigners can acquire luxury bungalows, also saw prices increase 7% in 2020, mainly driven by interest from China.

“Some of the buyers decided to move out of their rental apartments for a more permanent home while others decided that Singapore is a safe haven to park their funds,” said Cha as quoted by Bloomberg.

And much like London, another factor luring ultra-rich foreign buyers to Singapore is privacy.

Buyers hide their true identities from the public and the government by using trusts. Banks, for instance, can be registered as the legal owner of a property on behalf of the person. This makes it hard for property developers to screen potential buyers for money laundering risks.

In responding to Bloomberg’s query, an Urban Redevelopment Authority (URA) spokesperson said Singapore is reviewing current laws to strengthen requirements for property developers further to guard against money laundering activities in the sale and purchase of uncompleted private properties.

The spike in property prices has fuelled speculation that authorities may roll out property cooling measures, which last happened in 2018. However, the central bank’s statement that the property market was not overheated allayed these concerns.

But with more people looking to upgrade to private from public housing, the authorities have good reason to remain vigilant.

In June, the Monetary Authority of Singapore’s Managing Director Ravi Menon said a prolonged divergence between income and prices is undesirable and unsustainable.

“If unresolved, this could lead to questions of a greater inequality gap and what the government is looking to do to reduce this,” said Nydia Ngiow, the Singapore-based senior director at strategic policy advisory firm BowerGroupAsia, as quoted by Bloomberg.

Looking ahead, the housing frenzy in Singapore is expected to continue, barring any market shocks like property curbs.

“The market appears to be going on a Poseidon Adventure, sailing into a tsunami,” said Alan Cheong, Executive Director of Research at Savills.

“The tsunami turns out to be the liquidity that is keeping the market afloat… Hence, rather than capsizing, the party could continue,” he added as quoted by Bloomberg.

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Cheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email: cheryl@propertyguru.com.sg


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