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Prices of Sentosa Cove homes hit by property-cooling measures

Investment demand has dropped due to measures such as the additional buyer's stamp duty and the total debt servicing ratio framework, and some observers have noticed non-landed homes there being resold at prices below market value. 

SINGAPORE: The number of transactions involving non-landed homes in Sentosa has fallen considerably over the last three years. According to caveats lodged, property analysts say only 10 units were sold in the first seven months of this year.

A 3,046 sq ft penthouse unit at The Berth By The Cove was sold under valuation for S$3.5 million in July. That works out to about $1,150 per sq ft (psf) - cheap by Sentosa Cove standards.

Century 21 Singapore has observed that units resold in Sentosa recently were below market value. Two units at Turquoise went for under $1,500 psf, while another at The Oceanfront was sold at just over $1,600 psf.

Prices of luxury homes have been hit by recent property-cooling measures, such as the additional buyer's stamp duty (ABSD) and the total debt servicing ratio framework. Sentosa has not been spared as investment demand, especially from foreigners, took a dive.

Mr Mohd Ismail, CEO of real estate agency PropNex, said: "Prior to the ABSD in 2012, 2011, Sentosa condominiums commanded an average price closer to the range of S$1,900 to S$2,000. Some of the good facing units were above S$2,000 per square foot. Right now, it has dropped on average about 20 per cent. Today, the average price of most of the Sentosa units is about S$1,500 to S$ 1,600 psf."

PropNex says the sales volume for Sentosa homes has dropped from 71 transactions in 2012, to 34 in 2013, and just 10 in the first seven months of this year. Analysts say most owners of high-end homes have strong holding power and are not in a hurry to sell. Some of those who have done so could either be taking profit, or have run into financing problems.

Analysts also say that the weaker property markets in District 4 - comprising properties in Sentosa and the Keppel Bay area - as well as District 1 at downtown Marina Bay are seen as putting a drag on the Core Central Region (CCR).

"The price drop within districts 9, 10, 11 of the CCR isn't that significant - perhaps we have lost 2 per cent over the last 12 months compared to the previous 12 months. It is the drag of districts 1, 4 and the 99-year properties that is causing the CCR to drop by a bit more. Districts 9, 10, 11 consist mainly of freehold properties, so the price drop would be a lot less," said Mr Ku Swee Yong, chief executive of Century 21 Singapore

Home prices in the Core Central Region have fallen in the last few years, and they have not been able to catch up with the peak prices set in 2008. Some analysts expect home prices in this area to fall by over 5 per cent this year.

In the first half of 2014, prices of high-end homes have already declined by 2.6 per cent, according to data from the Urban Redevelopment Authority.