SINGAPORE: The asking price for a new three-storey Singapore penthouse, complete with a private pool on the 64th floor, has reached a dizzying S$100 million (US$72.6 million).
Due to be formally unveiled later this year, Wallich Residence's penthouse is in the tallest building in Singapore, a nation of well-heeled stability that attracts the super-rich from its less-developed Southeast Asian neighbours, as well as multi-millionaires from mainland China.
The 'bungalow in the sky' penthouse in the GuocoLand-developed Tanjong Pagar Centre is likely to become Singapore's most expensive apartment. It will test the endurance of demand for luxury property in the country – the part of the market that has taken the biggest hit from measures aimed at cooling down property prices in recent years.
Prices for luxury homes in Singapore have fallen 15 to 20 per cent from a 2013 peak, according to JLL consultancy, part of the Jones Lang LaSalle global property services group.
But JLL is now starting to see the prospects of a turnaround – at least at the top end of the market – and is forecasting a 3 to 5 per cent increase in luxury prices this year, citing demand from both locals and foreigners who feel the market is bottoming out.
JLL said the volume of transactions in the first four months of the year in Singapore's core central region, which is popular among wealthy foreigners and includes the Orchard Road shopping area and Sentosa island, was 35 per cent higher than in the same period last year.
"A lot of people think Singapore is value for money because it's been downhill all the way - such a long winter," said Chandran VR, managing director at a real estate agency specialising in high-end homes.
"Now they feel it is the right time to come in," he said. By contrast, he noted that Hong Kong apartment prices have been soaring, adding that "sensible investors will come here," instead.
GuocoLand Singapore Group managing director Cheng Hsing Yao said buying by foreigners has picked up since the start of the year at the developer's high-end Leedon Residence project, near the 150-year-old Singapore Botanic Gardens. GuocoLand is part of Malaysian conglomerate Hong Leong Group, headed by billionaire Quek Leng Chan.
"In absolute numbers, it may not be that huge, but the ticket sizes are actually quite significant for some of them," Cheng said. Some foreigners were buying homes worth S$8-12 million in the project, he said.
The recent tightening of property market controls elsewhere, such as in Hong Kong and Australia, has played a part in attracting foreign demand to Singapore's luxury property this year, Cheng said.
City Developments Ltd (CDL), one of the largest Singapore developers, also said the average sales price at its high-end Gramercy Park project has risen to more than S$2,800 per square feet in recent months, up 8 per cent from a year ago, and foreign buyers accounted for three-quarters of the project so far.
CDL's billionaire Chairman Kwek Leng Beng is a cousin of the Malaysian developer Quek.
PLENTY OF TOOLS
Still, Singapore's broader residential market remains subdued, having fallen for 15 straight quarters to log its longest losing streak since official records began in 1975.
"We are forecasting for prices to come down between 1 to 5 per cent this year before reaching an inflection point in 2018," said Eli Lee, an analyst for OCBC Investment Research.
While prices in Hong Kong tripled and Sydney's doubled over the past decade, Singapore prices rose just 29 per cent.
Singapore introduced property price cooling measures to curb speculation as did many other "hot property" cities in the region. While some measures were relaxed slightly this year, the authorities warned last month there would be no more rolling back for now.
Singapore is not short of policy tools to ward off speculators.
Most of the island's apartment blocks were built and then managed by the government, though the vast majority of the units have been sold to citizens. This allows it to keep control of some speculative activity, and therefore prices. Initial buyers of government apartments, for example, are largely prevented from flipping a property through a fast resale.
The high home ownership rate, at about 90 per cent, also makes it easier for policymakers to craft measures targeting speculative demand when the market is overheated.
All home buyers have to pay a stamp duty at a progressive rate of up to 3 per cent, but foreigners have to pay an additional 15 per cent for their purchases. Singaporeans also have to pay an extra stamp duty of 7-10 per cent when they make second and subsequent purchases.
"With tightening measures taken in other countries, that could lead investors to shift funds back here. So we just have to watch that very closely," Ravi Menon, managing director of the Monetary Authority of Singapore, said last month.
New home sales more than doubled in March from a year earlier, reaching their highest level in nearly four years.
And developers, led by Chinese companies, are paying record sums to secure land. Shenzhen-based developer Logan Property and its partner Nanshan Group recently paid a record S$1 billion at a government land auction. That was almost 50 per cent more than the previous record set in 1997.
"The strong winning bid ... signals developers' strong confidence in the Singapore residential market and their belief that prices could return to growth soon," said Christine Li, research director at Cushman and Wakefield in Singapore.