LUXURY HOME PRICES
SLUMP AMID RENTAL ROUT
April 18, 2016
Prices of high-end condominiums in Singapore have slumped to
new lows as owners dispose their units due to falling rents, reported The
Straits Times.
For instance, a four-bedroom unit measuring around 3,000 sq
ft at Cairnhill Plaza is understood to have been sold for about $1,300 psf, a
price not seen since 2007.
A 678 sq ft studio apartment at The Sail @ Marina Bay also
changed hands in February for $1,475 psf, the lowest price in more than five
years.
Although the previous owner of the apartment at The Sail is
unlikely to have incurred losses, as units there were originally priced at $900
psf during its launch in 2004, other sellers have suffered losses in the past
few months.
For example, all three deals at Orange Grove Residences so
far this year reported losses of nearly $1 million each.
Data shows that 63 second-hand condos were sold at a loss
during Q1 2016 in the Core Central Region (CCR), which includes Sentosa Cove
and the downtown core, compared to 60 in the previous quarter.
According to experts, a major reason for the significant
drop in luxury home prices is the large supply and sluggish rental demand.
“Many of the apartments are vacant and it is quite difficult
to get leases renewed at a good rate. The returns are not that great and if
owners have made capital gains, it may be time to recycle (the asset),” said
Suzie Mok, Senior Director of Investment Sales at Savills Singapore.
Furthermore, expatriates arriving nowadays are usually at
the middle-management or executive level, but with smaller housing budgets than
in the past, noted Desmond Sim, CBRE’s Research Head for Singapore and
Southeast Asia.
As such, demand for large and posh condos that are common in
the CCR has weakened substantially, he added.
Info courtesy -
Propertyguru
