Singapore property: penthouse demand supports high-rise prices


British billionaire inventor Sir James Dyson sold his penthouse in the tallest building in Singapore last October at a loss for a reported S$62m (US$47m), according to the Business Times. If only he’d waited a few more months.

Buyers have returned to the Lion City, hoovering up flats. Local home prices rose 3.3 per cent in the first quarter, the most in nearly three years. Total transactions nearly doubled compared with the same time last year.

Singapore’s tightly regulated real estate market means the price surge has fuelled expectations of government intervention. Local developers are fretting. City Developments chair Kwek Leng Beng has cautioned that price-cooling measures could be introduced. Officials last month issued warnings to home buyers of the risk of rising interest rates. It has happened before, though it followed a faster pace of price increase. A 9 per cent rise in 2018 led to intervention.

Singapore’s residential property, long a haven asset for global citizens, still has plenty going in its favour. Foreign buyers, particularly those from mainland China and the US, have returned after coronavirus travel bans eased. Sales from this group rose more than 40 per cent in the first quarter compared with the end of 2020. Stamp duties, such as the 20 per cent imposed on foreign buyers and 25 per cent upon companies, have not deterred buyers.

Moreover, unfazed by attempts to curb demand, locals are accelerating home purchases. Lockdown-like restrictions, restarted recently as the number of coronavirus cases rose, have spurred demand. Supply is limited due to the city state’s small size, less than half the size of London.

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That does not mean equity markets fully approve. Share prices of the biggest local developers, including UOL Group, City Developments and CapitaLand, have dropped as much as 8 per cent in the past six weeks. That reflects concerns about the latest restrictions on commercial property portfolios.

The flip side is that residential developments should help to offset this worry in the current quarter. For the time being their share prices should hold up.

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