Luxury Condo Market Stalls as Foreign Buyer Demand Plummets

Singapore’s Luxury Condo Market Faces Slowdown

Singapore’s high-end real estate market is experiencing a noticeable chill in 2024. A scarcity of buyers and an abundance of high-priced listings are creating a challenging environment for sellers, particularly in prime areas like Orchard, where listings exceeding $10 million are plentiful.

Property portals like PropertyGuru showcase over 200 luxury condos priced above $10 million in Orchard alone, with many repeat listings and properties marketed by multiple agents, a clear indication of a sluggish market.

Driving this decline is primarily a notable decrease in foreign buyer interest. The implementation of a 60% Additional Buyer’s Stamp Duty (ABSD) on foreign buyers in April 2023, coupled with limited new luxury property launches in 2024, has severely impacted the segment.

The impact is evident in the declining number of luxury condo transactions. In 2024, only 21 units in the Core Central Region (CCR) sold for over $10 million, a stark contrast to the 36 units sold in 2023, 56 in 2022, and a record-breaking 100 units in 2021.This trend underscores the shift in the market dynamics.

“The decrease in transactions can primarily be attributed to a decline in demand from foreign buyers, who have been considerably affected by the 60 per cent ABSD,” observes Christine Sun, Senior Vice President of Research and Analytics at OrangeTee & Tie.

This trend is further emphasized by the purchasing habits of Singapore Permanent Residents (PRs) who face a 5% ABSD on their first property.While Singaporean citizens face a 20% ABSD only on their second property, they often gravitate towards landed properties.

Adding to the challenges is the limited supply of new luxury homes in the CCR. As ms. Sun explains, “Last year, the number of new luxury homes released to the market was significantly limited, particularly due to the scarcity of launches in the CCR. Fewer choices could have further dampened transaction volumes.”

Property agents anticipate this market slowdown to persist in the foreseeable future. Nicole Teo, Deputy Branch Associate Director at OrangeTee & Tie, notes, “Foreign buyers had always been the main group buying luxury condominiums, followed by PRs, and then the few singaporeans. A Singaporean with $20 million to invest in a property would rather buy a good landed property than a condo.”

Furthermore, the purchase of landed homes in Singapore by foreigners, including PRs, is subject to stringent regulations requiring approval from the Land Dealings approval Unit. This adds another layer of complexity for foreign buyers seeking to enter the luxury landed property market.

Stefanie Wong, a property agent with Singapore Realtors Inc, highlights the ongoing challenge of marketing luxury condos. “The luxury condo market remains dominated by investors, yet arranging viewings poses a significant challenge,” she explains. “With tenants in place,arranging viewings can take weeks. Sometimes it takes three to six months or even up to a year to sell a unit.”

Ms. Wong is currently marketing two luxury units at The Ritz-Carlton Residences: a $39 million penthouse unit and a four-bedroom unit priced below valuation at $10.9 million.

Alex Low, a senior agent at PropNex Realty specializing in Sentosa Cove homes, reports a shift in buyer demographics. He observes that sales in this exclusive enclave are now primarily driven by singaporean buyers, with a smaller group of foreign buyers exempt from the 60% ABSD contributing to the market. Notably, buyers from the US, Iceland, Liechtenstein, Norway and Switzerland do not have to pay ABSD for their first residential home in singapore.

Adding to the intrigue,132 condos were resold in Sentosa in 2024,with 62% of transactions originating from The Residences at W Singapore Sentosa Cove. This surge in activity could reflect spillover from the heightened demand for luxury homes in the city fringe, where prices remain higher than those in Sentosa.

singapore’s Luxury Condo Market Faces Headwinds in 2024

The Singapore luxury condo market is facing a period of uncertainty in 2024. Several factors,including a significant drop in demand from foreign buyers and a limited supply of new luxury properties,are contributing to the current slowdown.

“The most significant factor driving this trend is the considerable reduction in demand from foreign buyers,” explains Christine Sun, senior Vice President of Research and Analytics at OrangeTee & Tie. “The introduction of a 60% additional Buyer’s Stamp Duty (ABSD) on foreigners in April 2023, coupled with the limited new supply of luxury properties in 2024, has significantly impacted this segment of the market.”

The impact of the ABSD is undeniable. Transactions for luxury condos priced above $10 million in the Core Central Region (CCR) have experienced a sharp decline this year. “It’s likely that the current market conditions will persist in the foreseeable future,” Sun predicts. “Foreign buyers, who were traditionally a major driving force in the luxury condo market, have been greatly affected by the ABSD.”

While challenges abound, there are glimmers of hope. Data from URA Realis reveals a slight betterment in median rents for non-landed properties in the CCR. “It is indeed possible that some investors will continue to buy properties for rental investment as the rental recovery may continue,” observes Sun, expressing cautious optimism for the market.

The shift in tenant preferences, with some moving from the city fringe to prime areas where rents remain comparatively lower than a year ago, could also fuel the rental market.

What does this mean for aspiring luxury condo buyers? Sun advises, “Be patient and strategic,” encouraging buyers to carefully assess their financial situation and long-term investment goals.

Navigating the singapore Luxury Condo Market: Expert Predictions

The Singapore luxury condo market is a dynamic space, constantly shaped by a complex interplay of factors.

Christine Sun, a leading voice in the real estate industry, recently shared her insights on what lies ahead for this exclusive sector. “It’s crucial to carefully consider the long-term investment horizon and rental yields,” she advises. “Deeply research the development, its amenities, and location. Also, seek advice from experienced real estate professionals to navigate the current market dynamics.”

When asked about the key drivers shaping the future of this market, Sun highlighted several crucial elements. Beyond the existing ABSD (Additional Buyer’s Stamp Duty), she emphasizes the impact of “new supply, economic conditions, and interest rates.” Sun also recognizes the government’s role as a significant factor, stating, “The government’s continued efforts to balance the housing market and attract foreign talent will also play a significant role.”

These insights offer valuable guidance for prospective buyers and investors navigating the intricacies of the Singapore luxury condo market. Understanding these dynamic factors is essential for making informed decisions and securing a accomplished investment in this competitive landscape.

Considering the changing landscape in the luxury condo market in Singapore, what specific amenities or features are attracting discerning buyers today?

Navigating Singapore’s Luxury Condo Market: An Expert’s Perspective

Singapore’s luxury condo market has seen significant shifts in recent months.

Archyde spoke with Christine Sun, Senior Vice president of Research and Analytics at OrangeTee & Tie, to gain insight into these changes and what lies ahead for buyers in this exclusive segment.

archyde: Ms. Sun, Singapore’s luxury condo market seems to have cooled considerably this year. Can you elaborate on the primary drivers behind this trend?

christine Sun: Absolutely. the most significant factor has been the sharp decline in demand from foreign buyers. The 60% Additional Buyer’s Stamp Duty (ABSD) implemented in April 2023, coupled with limited new luxury property launches in 2024, has significantly impacted this segment.

Archyde: The ABSD clearly plays a ample role. Have we seen any shifts in buyer demographics in the luxury sector?

Christine Sun: Yes, indeed. while foreign buyers were once the primary force driving luxury condo sales, we’re seeing a notable increase in Singaporean buyers,particularly those looking for landed properties. Singapore Permanent Residents, meanwhile, face their own challenges, including the 5% ABSD on their first property purchase.

Archyde: aside from the ABSD, what other factors might influence the luxury condo market going forward?

Christine Sun: Several key factors will continue to shape the market. Government policies, economic conditions, and interest rates are crucial considerations. Additionally, new supply and the overall investment sentiment will heavily influence buyer confidence.

Archyde: Your insights suggest the luxury condo market will remain dynamic.What advice would you offer to aspiring luxury condo buyers today?

Christine sun: Patience and careful strategy are paramount. Buyers need to thoroughly research potential developments, analyze rental yields, and closely evaluate their investment horizon. Don’t hesitate to seek advice from experienced real estate professionals.Understanding these nuances is vital for making sound decisions in this evolving market.

Archyde: Thank you for your valuable insights, Ms. Sun. what potential opportunities do you foresee in this market?

Christine Sun: While challenges exist, the luxury condo market is resilient. Strategic investors, especially those looking at long-term rentals, might find opportunities. Properties with remarkable amenities, prime locations, and solid rental yields have the potential to attract discerning buyers.