According to data gathered from the Urban Redevelopment Authority (URA), there were a total of 814 condo/apartment transactions in the posh District 10 in the third quarter (Q3) of 2009, out of which 86 top end deals exceeded $5 million in absolute price quantum.

There were 33 similar top end transactions in D10 in Q2 2009 but only 6 in Q1 2009. So the stage appeared set for a glorious upswing in the high-end home segment -but that was not to be.

The glitters of the high-end home sales toned down in the final quarter of the year, ending with a modest 424 transactions of condo/apartments in D10 with only 46 deals exceeding $5 million in absolute sale prices. Compared with the 86 top end deals in the preceding quarter, that is a drastic 47.9% drop in the D10 sales volume in Q4 2009.

The abrupt loss of sales volume in Q4 2009 may be caused by the surprised November statement by the Monetary Authority of Singapore (MAS) that ‘further action may be needed to cool the market’ if the withdrawal of the Interest Absorption Scheme (IAS) and the Interest Only Loan (IOL) proved insufficient.

This case study seeks to determine the price movements in the posh districts of D9 and D10 in the second half of 2009 to verify the extend the earlier warning shot  fired by the central bank has altered the course of events in the high-end home market in Singapore; and whether the claim of ‘foreigners coming’ can be substantiated. [See Annex A - COMPARISON OF FOREIGNERS BUYING PRIVATE HOMES IN SINGAPORE FROM 2007-2009]

[Traditionally, foreign participation in Singapore’s real estate concentrates in the prime areas and involves mostly high-end homes with dearer price tag.]

QUIET UPSWING IN D10 UNSUSTAINABLE IN Q4 2009

• DISTRICT 10 IN OCTOBER 2009

There were a total of 155 condo/apartment transactions in D10 in October 2009, out of which 20 of them exceeded $5 million in absolute sale price. [Table 1]

Table [1] – 20 condos exceeded $5 mil in absolute sale price in OCTOBER 2009 in D10

Source of data: URA website

Among the 20 top end transactions, eight (08) of them crossed the $2,500 psf psychological threshold. [Table 1-A]

Table [1-A] – Eight transactions exceeded the $2,500 psf psychological threshold in OCTOBER 2009 in D10

Source of data: URA website

• DISTRICT 10 IN NOVEMBER 2009

The condo/apartment transactions in D10 in November 2009 began to show sign of weariness and the month ended with 142 transactions, out of which 11 of them exceeded $5 million mark. [Table 2]

Table [2] – Eleven condos exceeded $5 mil in absolute sale price in NOVEMBER 2009 in D10

Source of data: URA website

Though the highest sale price breached the $4,000 psf ceiling, the quantity of transactions that crossed the psychological barrier of $2,500 psf was two shy of the previous month’s figure at only six deals in November 2009. [Table 2-A]

Table [2-A] – Six transactions exceeded the $2,500 psf psychological threshold in NOVEMBER 2009 in D10

Source of data: URA website

• DISTRICT 10 IN DECEMBER 2009

In December 2009, the condo/apartment transactions in District 10 disappointed with 127 deals, though 15 luxury home units (which is four more than November) were sold at prices exceeding $5 million in absolute quantum. [Table 3]

Table [3] – 15 condos exceeded $5 mil in absolute sale price in DECEMBER 2009 in D10

Source of data: URA website

The quantity of transactions that crossed the psychological barrier of $2,500 psf continued to be subdued and it came down to five deals in December 2009. [Table 3-A]

Table [3-A] – Five transactions exceeded the $2,500 psf psychological threshold in DECEMBER 2009 in D10

Source of data: URA website

FINDING: HIGH-END HOME BUYERS MORE CAUTIOUS

The case study uncovers the following: i.e. as we approached the end of the year, fewer transactions breached the psychological barrier of $2,500 psf.

For example, in October 2009, 5.16% of the 155 transactions in D10 crossed the $2,500 psf psychological threshold. But the percentage was down to 4.22% (of 142 transactions) in November 2009, and 3.93% (of 127 transactions) in December 2009.

Next, let’s look at the relevant numbers in District 9.

DISTRICT 9 TRANSACTIONS SOFTENED IN Q4 2009

The same abrupt deceleration seen in District 10 was mirrored in District 9 over the same three-month period in Q4 2009.

In fact, the 297 total condo/apartment transactions in D9 in the final quarter of 2009 was a massive 68.3% drop in sale volume when compared with the 938 total transactions in the same district in the preceding quarter.

Likewise, there was a 50% drop in the sales volume of private homes in the top end price bracket of $5 million and above.

Altogether, there were 21 transactions that exceeded the $5 million sale price in Q4 2009, compared with 43 in Q3 2009.

Only 10 of those deals in the top end price bracket crossed the psychological barrier of $2,500 psf in Q4 2009, and that was half the feat compared with the previous quarter.

Let’s now look at the details.

• DISTRICT 09 IN OCTOBER 2009

Out of the 119 condo/apartment transactions in District 09 in October 2009, only seven (07) of them exceeded $5 million in absolute sale price; and none of the transactions crossed the psychological barrier of $2,500 psf in unit price. [Table 4]

Table [4] – Seven condos exceeded $5 mil in absolute sale price in OCTOBER 2009 in D9

Source of data: URA website

• DISTRICT 09 IN NOVEMBER 2009

In November 2009, there were a total of 110 condo/apartment transactions in District 09, out of which 10 exceeded $5 million in absolute sale price. [Table 5]

Table [5] – Ten condos exceeded $5 mil in absolute sale price in NOVEMBER 2009 in D9

Source of data: URA website

Out of the same 110 transactions done in District 09 in November 2009, six (06) crossed the psychological threshold of $2,500 psf. [Table 5-A]

Table [5-A] – Six transactions exceeded the $2,500 psf psychological threshold in NOVEMBER 2009 in D9

Source of data: URA website

• DISTRICT 09 IN DECEMBER 2009

Probably affected by the festive season, the slide in the sales volume was more pronounced in December 2009 with only 68 transactions concluded in D09, out of which only four deals exceeded $5 million in absolute sale price. [Table 6]

Table [6] – Four condos exceeded $5 mil in absolute sale price in DECEMBER 2009 in D9

Source of data: URA website

Three (03) units at The Tate Residence were transacted at slightly higher than the $2,500 psf psychological barrier. [Table 6-A]

Table [6-A] – Three transactions exceeded the $2,500 psf psychological threshold in DECEMBER 2009 in D9

Source of data: URA website

FINDING: HIGH-END HOME BUYERS MORE CAUTIOUS

The finding in D9 is consistent with the earlier finding in D10, i.e. fewer transactions breached the psychological barrier of $2,500 psf as we approached year end.

For example, none of the D9 transactions crossed the $2,500 psf psychological barrier in October 2009. And when they did, the percentage was down to 4.41% (of 68 transactions) in December 2009 from 5.45% (of 110 transactions) in November 2009.

WHAT DOES THE TREND IN THE HIGH-END MARKET TELL US?

A couple of messages need to be decoded from the sales numbers gathered in this case study:

• Firstly, contrary to the media hype, buying mood in the prime district has turned cautious since the onset of Q4 2009.

If there were any ‘foreigners buying’ in the posh areas, they must have gone about it surreptitiously – not in a manner where the massive sales figures could bulge out of the URA caveat records.

• Secondly, buyers remain price sensitive and are keeping their purchases below the psychological barrier of $2,500 psf.

ANNEX A
COMPARISON OF FOREIGNERS BUYING PRIVATE HOMES IN SINGAPORE FROM 2007-2009

COMPARISON OF FOREIGNERS (BY NATIONALITIES) BUYING PRIVATE HOMES IN SINGAPORE FROM 2007-2009

Table [7-A] – Top five foreign nationalities who purchased the most condos/apt in Singapore in 2007 and their respective market shares

Source of information: URA

Table [7-B] – Top five foreign nationalities who purchased the most condos/apt in Singapore in 2008 and their respective market shares

Source of information: URA

Table [7-C] – Top five foreign nationalities who purchased the most condos/apt in Singapore in 2009 and their respective market shares

Source of information: URA

Foreigners whose shares of Singapore property are DECLINING

Table [8-A] – Indonesian buyers’ market share has declined over the past three years

Source of information: URA

Table [8-B] – United Kingdom buyers’ market share has declined over the past three years

Source of information: URA

Foreigners whose shares of Singapore property are RISING

Table [9-A] – Malaysian buyers’ market share has risen over the past three years

Source of information: URA

Table [9-B] – PRC buyers’ market share has risen over the past three years

Source of information: URA

Table [9-C] – SINGAPOREAN buyers’ market share has risen over the past three years

Source of information: URA

Note: Singaporeans as a single category of buyers have out-performed any other nationalities in the purchase of high-end private homes, and as such the myth that foreigners have snapped high-end properties here in the run-up to the opening of the two Integrated Resorts is effective debunked.

[Compiled and analysed by Sam Gian – The independent real estate sales consultant – of Worldview Development Consultant Pte Ltd]

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