Amidst the COVID-19 pandemic, the advantages of low taxes, stability, and capital preservation have prompted the super-rich to buy property in Singapore.
Singapore may have already surpassed many developed cities, including Hong Kong, to become one of the most favored investment destinations for the wealthy and famous.
Over the past 10 years, Singapore has vigorously developed its economic infrastructure and financial hub. This has raised Singapore’s global profile and attracted wealthy investors.
Why is Singapore so attractive to the super-rich?
Why are the super-rich still buying luxury properties amid economic instability?
Luxury Home Sales See Exponential Growth
Luxury home sales have reached a new high point in over a decade.
According to data from the Urban Redevelopment Authority (URA), private residential sales in the Core Central Region (CCR) rose by nearly 25% quarter-on-quarter to 1,930 units in the second quarter of this year. This is the strongest sales quarter since the 2,014 units sold in the fourth quarter of 2010.
Compared to last year, this is a year-on-year increase of over 4.5 times.
In the first half of this year, nearly 3,500 luxury homes were sold in Singapore, surpassing the annual sales volumes from 2018 to last year.
Demand for landed properties has also surged, with over 2,100 properties transacted island-wide in the first seven months of this year, nearly triple the 780 units a year ago.
In the high-end market, wealthy buyers snapped up 272 luxury condominiums priced above S$5 million in the first half of this year, the highest half-year transaction volume since the first half of 2014.
Among these condominium units, about 70 were ultra-luxury homes priced above S$10 million, one of which was a 611-square-meter luxury apartment at Les Maisons Nassim, sold for S$39 million in May this year.
In terms of per square foot (psf), the most expensive transaction was a 282-square-meter resale condominium at Eden in Draycott Park, which sold for S$6,024 psf in March this year.
The best-selling new luxury condominiums include Midtown Modern, Irwell Hill Residences, Leedon Green, Fourth Avenue Residences, Hyll on Holland, The Avenir, Royalgreen, Kopar At Newton, and The M.
In the resale market, D’Leedon, 8 Saint Thomas, and Marina One Residences are the most popular resale projects in the Core Central Region.
Who is Buying Luxury Properties?
An increasing number of billionaires and international celebrities are flocking to Singapore to buy luxury homes. These include Dyson founder James Dyson; billionaire entrepreneur and Facebook co-founder Eduardo Saverin; Zhang Yong, founder of the Haidilao hot pot chain; and Asian superstars like Jackie Chan and Jet Li.
The Singapore property market is benefiting from the backdrop of wealth creation and a surge in Asian wealth.
The luxury market has many new entrants who have accumulated significant wealth, including up-and-coming entrepreneurs and individuals working in emerging industries like biomedical, fintech, and big tech.
Domestic Singaporean buyers are becoming a dominant force in the luxury property market, with their market share growing faster than that of foreign buyers.
Data from the URA shows that in the first half of this year, 75.7% (2,315 units) of luxury condominiums were purchased by Singaporeans, up from 71.2% (961 units) in the first half of last year.
In absolute numbers, the quantity of luxury condominium units purchased by foreign buyers also increased from 162 to 254 units during the same period. This indicates that foreign buyers are gradually returning despite global lockdowns due to the pandemic and the increase in stamp duty in 2018.
This year, the number of millionaires in Singapore has grown exponentially, reaching about 270,000.
In terms of millionaire density, Singapore ranks 11th globally. It is home to 1,300 ultra-high-net-worth individuals with assets exceeding US$50 million (S$67.4 million).
The growing incomes of many locals have also increased their desire to own luxury properties.
Affluent families and wealthy millennials are climbing the property ladder, moving from first-time home purchases to owning personal high-end residences.
The middle-income class is getting a piece of the pie by purchasing smaller luxury apartments.
What Attracts Wealthy Investors?
During the pandemic, concerns about asset preservation led many investors to shift their funds into real estate.
Given that Singapore’s wealth, income, and inheritance taxes are low by international standards, ultra-high-net-worth individuals are flocking to buy property in Singapore.
Investors also benefit from tax savings, as there are no capital gains taxes, and the top personal income tax rate is only 22%.
Although Singapore’s property market remains susceptible to property cooling measures and economic headwinds, the combination of factors such as low crime rates, political stability, business-friendliness, and legal transparency mitigates its downside risks.
Some view Singapore as a safe haven for asset allocation or to park their excess cash.
The intrinsic value of Singapore real estate is high. In the long run, they enjoy attractive capital appreciation.
According to the URA’s price index for condominiums in the Core Central Region, property prices have risen by 4.9% over the past five years.
For those buying for rental income, the returns are also good, as our occupancy rates are over 90%, and landlords generally have little difficulty finding tenants.
The luxury market has received another boost as more foreign investors and overseas companies turn their attention to Singapore as an alternative Asian financial hub to Hong Kong.
With many uncertainties surrounding Hong Kong’s future, more multinational corporations are deploying their resources in Singapore, setting up local branches or headquarters.
As more countries progressively open their borders, we can expect a further increase in the number of wealthy international buyers entering Singapore’s luxury property market, which will inevitably drive up asset prices.
What Properties Are the Super-Rich Buying?
In recent months, sales of luxury properties have also picked up with the increase in new home inventory.
Since last year, up to 18 upscale condominium projects have been launched, offering a variety of choices from luxury apartments and waterfront villas to “sky bungalows” and super penthouses.
Recent luxury projects have pushed the boundaries in the pursuit of privacy and opulence.
Iconic developments like Riviere, which faces the Singapore River, and Perfect Ten in Bukit Timah offer panoramic views of lush green landscapes.
Integrated developments are also rare in prime districts, where the fusion of residential, commercial, retail, and hospitality offers residents unparalleled convenience and accessible amenities.
The launch of well-conceived integrated developments like Midtown Modern, Midtown Bay, South Beach Residences, and Marina One Residences has garnered significant publicity. The upcoming launch of Canninghill Piers, a project along the Singapore River on the former Liang Court site, is also expected to generate strong buyer interest.
Luxury homes in the most prestigious section of Orchard Road, such as Boulevard 88, Klimt Cairnhill, Cuscaden Reserve, Cairnhill 16, and Nouvel 18, are highly sought after by discerning investors.
Some of these are from the last batch of the “en bloc fever” since 2017.
New homes in prime locations, especially freehold or ultra-luxury properties, are a rare find.
Some may feel that if they miss the current buying opportunity, they might have to wait another 8 to 10 years for the next en bloc sale cycle to purchase these units.
We are also seeing an increasing number of investors buying properties in Novena and along Orchard Road. This is because the top-tier hospitals clustered here have advanced facilities and world-class diagnostic, therapeutic, and rehabilitation services, attracting many medical tourists and wealthy individuals seeking treatment.
Future Outlook
As the number of super-rich individuals in Asia continues to grow, more will diversify their wealth and assets overseas. Given that some countries are imposing new taxes on the wealthy, Singapore’s high-end market stands to benefit.
The government’s moderate pace of land release and the tight supply from en bloc sales will likely keep luxury homes in prime locations attractive.
With Singapore’s economy rebounding strongly, we expect consumer confidence and luxury home sales to pick up further.
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