Two newly released reports this week by Jones Lang LaSalle’s “The Residential Index” and the U.S.-based Urban Land Institute and PricewaterhouseCoopers might put some perspective into the question.
Notwithstanding a quarter-on-quarter comparison, Singapore fared as the only market in Asia (save Shanghai) to have a perceptible down trend in its luxury residential property prices, with a decrease of 4.8% in the last 12 months through to end of September this year, according to the aforementioned Jones Lang LaSalle report. Hardly the type of news you would like to hear if you are a current owner of a property bought in Singapore’s Core Central Regions (CCR) back in the heady days where the only direction luxury property prices seemed to be moving was up.
‘Capital values of Singapore’s high-end properties are expected to edge up modestly in the next twelve months, mainly supported by domestic buyers,’ said Dr Jane Murray, Head of Research, Asia Pacific, Jones Lang LaSalle.
Given today’s post-Additional Buyer’s Stamp Duty (ABSD) and cooling measures (circa 06 October) environment, how the modest projected ‘edging up’ in prices will entice foreign buyers to better bring out their cheque books remains to be seen, especially when the other regional markets are steaming ahead with better returns to offer. And Singapore’s domestic buyers are not exactly waiting to jump into the fold with cheque books ready, either.
From a source familiar with marketing Singapore’s most luxury properties in China (think Sentosa Cove bungalows and Orchard penthouses), even cashed-up mainland China buyers are increasingly wary of Singapore, citing it is ‘getting too expensive’.
By contrast, Singapore’s neighbours, Jakarta and Kuala Lumpur, are increasingly coming onto the investment radars of high yield-centric property buyers, who are on the hunt for more attractive, albeit riskier, bets.
‘With high rents, high capital values, low yields and an abundance of local capital, many international investors are struggling to see attractive investment opportunities in Asia-Pacific’s prime real estate markets,’ said Richard Price, CBRE Global Investors’ Asia Pacific chief executive, in the Urban Land Institute and PricewaterhouseCoopers report.
Singapore’s declining prices in its luxury residential market – although not necessarily a bad thing from a politically correct standpoint – may well divert the attention of property investors to other less-vaunted markets such as Jakarta, which earned itself Asia’s top destination for property investment and development, according to the latter report. Singapore fell from top to third spot this year.
Will it regain the top spot next year? As some things in the city-state are wont to go, property prices are more than what market forces alone can sway.