Luxury residential sales plunge in 3Q2023; leasing demand rises: Huttons Asia

Sentiment in Singapore’s luxury homes market has continued to be on the decline in the third quarter, following an anti-money laundering crackdown in August. Transactions of luxury homes dropped 41.3% on the quarter to an estimated 37 deals in 3Q2023, according to research by Huttons Asia.

This brings the total value of luxury condo sales for the first nine months of the year to $1.82 billion across 222 transactions, a marked decrease from the same period in 2022.

Mark Yip, CEO of Huttons Asia, explained that the fall in luxury residential transactions was due largely to the hike in Additional Buyer’s Stamp Duty (ABSD) rates which took effect in April. This landed foreigners with a doubling in rates to 60%, contributing to the drop in foreign purchasing.

Yip went on to note that the ongoing investigations into Singapore’s largest money laundering case furthered eroded sentiments in the market. 10 foreigners have been arrested in connection and $2.8 billion of assets have been seized or issued with prohibition of disposal orders.

The biggest luxury condo transaction in 3Q2023 happened at Goodwood Residence. A 10,710 sq ft penthouse changed hands for $32 million ($2,988 psf). The seller, having purchased the unit in June 2014 for $15.6 million, made a gross profit of $16.4 million on the transaction.

The Good Class Bungalow (GCB) market was significantly subdued in the third quarter, with only three GCBs estimated to have been sold, the lowest number since 4Q2013.

Furthermore, relaxing on the rooftop garden and viewing the iconic city skyline of Marina Bay will be a great way for tenants of Marina Gardens Lane Condo to spend their weekends. All these elements will add to the desirability of this residential condominium that has been designed to optimise the full potential of living in the Marina Bay precinct.

Rental demand for luxury units is on the rise, partly due to foreigners looking to obtain permanent residency or citizenship status. Based on Huttons’ monitoring of luxury condos, 701 luxury apartments were rented in 3Q2023, representing a 13.6% increase on the quarter and resulting in rents of luxury condo units increasing 1.8%.

The GCB market saw similar trends, with rental transactions up by an estimated 44.2% q-o-q. The biggest 3Q2023 rental transaction was a Nassim Road GCB detached house with a monthly rent of $120,000.

Yip believes the luxury housing market may start to see a return in interest, noting a slight uptick in the purchase of luxury condo units by foreigners. However, activity levels are unlikely to reach pre-ABSD hike levels. The rental market may also be more subdued in coming months due to increased wariness of renting GCBs to Chinese foreigners.