Luxury unit sales have dropped this year. Unsurprising, since the foreign influx has been driving prices ever upward. Since we’re not running companies that make cardboard buns matching their affluence, luxury housing is out of the question for most of us. H88 examines the situation in this article. I’ll gargle and wash the sour taste out of my mouth, while you peruse it:
This year, luxury units and bungalow sales have gone down. As of November, just under 1,300 units were sold in prime districts 1,4,9,10 and 11. Compare this to last year’s 2,156 units. That’s quite a huge difference.
Seems that more foreigners than locals are putting their money in these luxury units—the number of units owned by non-PRs rose to almost 38% this year (it was just 28.5% last year). This figure is higher than the previous highs of 31% and 33% in 2007 and 2008 respectively.
Of these PRs, Indonesians topped the list, with around 230 or so units transacted this year. Mainland Chinese came in second with roughly 170 units bought this year. Indians came in fourth on the list, with a mere 31 units bought.
Experts reckon that this is due to strong economic growth (duh) and that the Chinese are looking to place their money in Singapore property because of the recent cooling measures put in place in China. Interestingly on Sentosa Cove, the Chinese bought the most number of bungalows—they bought 5 while Singaporeans picked up 8 of the 20 bungalows transacted for the first eleven months this year.
One thing that doesn’t surprise us is that prices of bungalows on Sentosa Cove have risen from around $1,900 to more than $2,100 psf on average. A unit can go for around $18m now, as compare to $17m last year. This is probably why the number of transactions have fallen, no?
A MoneySmart Response
Singapore: 34th province of China. Kind of a huge downside. Still, there is an upside to this:
The influx of foreign cash is a double edged sword. It does mean rising inflation, and the erosion of nationalism. But money is money, and properly invested, we can turn it to our advantage. We shouldn’t strive to stop foreign investments, any more than we’d turn down an easy pay check. But what we need to do is track what the developers are doing with the money.
Ideally, we need to encourage (or even enforce) the investment of foreign cash into domestic markets. A rising tide lifts all boats, but we need to ensure the trickle down effect is happening.
What are your thoughts on foreigners purchasing luxury units? Comment and let us know!