SINGAPORE - Although sales of luxury apartments and good class bungalows (GCBs) in Singapore dropped in the second half of 2023, their prices remained stable, said CBRE on March 26.

There were nine GCB transactions worth $202.05 million in the second half of 2023, down 64.9 per cent from $575.27 million for 14 GCB transactions in the previous six-month period. The latest sales figure was also about a third of the $613.45 million transacted in the second half of 2022.

For 2023, a total of 23 GCBs were sold, the lowest since 1996. Total transaction value for the year stood at $777.32 million, CBRE said. This was about half of the $1.37 billion achieved in 2022, when 47 GCBs were sold, and the lowest since the $714.78 million across 33 GCBs in 2015.

CBRE attributed the slowdown in sales to rising interest rates, global economic uncertainties and the ongoing money laundering crackdown since August 2023.

The property consultancy firm noted that despite lower transaction volume, prices still grew. Although average GCB prices fell 25.4 per cent from $2,631 per sq ft (psf) in the first half of 2023 to $1,963 psf in the second half, for the whole year, overall prices grew 23.8 per cent year on year from $1,952 psf in 2022 to $2,417 psf.

Asking rents for GCBs have also become more “realistic”, said CBRE, mirroring the Urban Redevelopment Authority’s landed rental index, which fell 4.1 per cent quarter on quarter in the fourth quarter of 2023, ending a 78 per cent run-up since the third quarter of 2020.

CBRE noted that GCB rents surged in 2022 on the back of higher demand from ultra-high-net-worth foreigners willing to pay a premium to rent a spacious residence to accommodate their lifestyles, but this slowed considerably since the money laundering crackdown and the general slowing sentiment in the market.

The recent revision to the annual values for high-value properties could lead to higher property tax bills, possibly leading some owners to put their GCBs up for sale, said CBRE. 

But it added: “If interest rates start easing and the economy recovers strongly in H2 2024, the price gap between buyers and sellers could narrow and GCB market activity could pick up.”

In the luxury apartment segment, the number of transactions fell in the second half of 2023 after the additional buyer’s stamp duty levied on foreigners was doubled to 60 per cent.

CBRE defined luxury apartments as apartments in the core central region that are larger than 2,000 sq ft and sold for $2,500 psf and above.

A total of 63 luxury apartments with a transacted value of $579.65 million changed hands in the second half of 2023, down from the 92 units recorded in the preceding half-year with a transacted value of $964.67 million.

For the full year, there were 155 transactions worth $1.54 billion in 2023, down from 223 units worth $2.18 billion in 2022, and the lowest since 2020, noted CBRE.

But sales experienced a quarter-on-quarter uptick in the fourth quarter of 2023, driven by healthy demand of Watten House, which sold 102 units at an average price of $3,230 psf during its launch in November 2023.

Based on CBRE Research’s basket of freehold luxury projects, average luxury apartment prices rose 2.2 per cent to $3,417 psf in 2023 from $3,343 psf in 2022, supported by limited premium stock.

Ms Tricia Song, CBRE’s head of research for Singapore and South-east Asia, said the long-term outlook for luxury apartments looks bright, as Singapore’s strong fundamentals as a business hub should continue to draw investors looking for a safe haven to park their wealth.

Meanwhile, Sentosa Cove properties recorded a lower transaction volume in 2023, due to economic weakness, higher interest rates and the cooling measures.

For the second half of 2023, two Sentosa Cove bungalows worth $35.66 million were sold, down 74.4 per cent from the transaction value of $139.39 million in the first half of that year, when seven bungalows changed hands.

Based on CBRE’s data, nine bungalows worth $175.05 million were sold in 2023, representing a 48.2 per cent drop from the $337.7 million across 18 bungalows in 2022, and the lowest level since 2019.

Despite the lower sales volume, prices remained firm, with average prices increasing 15.8 per cent year on year to $2,470 psf in 2023. THE BUSINESS TIMES