Investing in a Singapore condo offers a multitude of advantages, making it an attractive option for both local and foreign investors. With a high demand for condominiums, there is a strong potential for capital appreciation, making it a lucrative investment. Additionally, the attractive rental yields in Singapore provide a steady stream of income for investors.
However, before diving into a condo investment, it is crucial to consider various factors. The location of the property is a crucial aspect to evaluate as it can greatly impact the demand and rental rates. Additionally, carefully considering financing options, government regulations, and current market conditions will help investors make informed decisions.
With its dynamic real estate market, Singapore offers a compelling opportunity for investors seeking stable and profitable investments. By conducting thorough research and seeking professional advice, investors can maximize their returns in the condo market. Whether you are a local investor looking to diversify your portfolio or a foreign buyer seeking a secure investment, investing in a condo in Singapore is a wise choice. Consider the numerous advantages, such as high demand, potential for capital appreciation, and attractive rental yields, and make a smart investment decision today.
In the world of the uber-rich, the market for Good Class Bungalows (GCBs) has shown strong performance this year compared to previous years, according to Han Huan Mei, director of research at List Sotheby’s International Realty. As of December 20, 22 GCB transactions totaling $612.05 million have been recorded in URA Realis. In addition, another 13 GCB deals worth over $700 million have been completed this year without caveats lodged, as buyers prefer to remain anonymous. This brings the estimated total for 2024 to 35 GCB transactions worth approximately $1.32 billion, according to List Sotheby’s estimates, surpassing the previous high of $1.186 billion achieved in 2022. In comparison, only 18 GCB transactions were recorded in 2023, amounting to $432.5 million – the lowest number of deals since URA Realis began tracking data in January 1995.
Han notes, “The additional deals in 2024 indicate a more active GCB market compared to official transaction data. It also highlights the highly coveted status of GCBs among ultra-high-net-worth buyers.”
Top Transactions
The highest sale this year was a GCB at Tanglin Hill for $93.888 million. Situated on a freehold site of 15,150 sq ft, the property has a built-up area of 29,660 sq ft. This transaction set a new record with a land rate of $6,197 psf. The second-largest GCB transaction was the $84 million purchase at Bin Tong Park by Xiang Yangyang, daughter of Chinese nickel billionaire Xiang Guangda, according to a document search, although no caveat was lodged for the property. Based on the land area of 28,111 sq ft, the price reflects a land rate of $2,988 psf. The highest-priced deal based on caveats lodged was $52 million for a GCB on Cluny Hill. Sitting on a freehold plot measuring 15,141 sq ft, the relatively new property fetched a land rate of $3,434 psf. Another significant transaction was the sale of a 21,116 sq ft GCB plot at Astrid Hill for $49 million ($2,321 psf) in July. The property was reportedly bought by Glenn Kuok, nephew of Kuok Khoon Hong, chairman and CEO of Wilmar International. This translates to a land rate of $2,321 psf. Mohan Sandrasegeran, head of research and data analytics at Singapore Realtors Inc (SRI), notes that at least 14 transactions this year were valued at $20 million or more, indicating strong demand for ultra-luxury properties in Singapore.
District 10 Reigns Supreme
Sandrasegeran adds that District 10 remains the top district for GCBs, with multiple high-value transactions reaffirming its status as the most sought-after area for these prestigious properties. A majority of the recorded GCB transactions this year – 16 to be exact – occurred in prime District 10, which includes Tanglin, Bukit Timah, and Holland Road.
Sustained Interest
Sandrasegeran observes that GCB transactions were evenly spread out throughout the year, with buying activity picking up in July. He says, “Overall, the fact that we saw GCB deals closing throughout the year suggests sustained interest in these trophy properties despite external economic factors such as inflation and high-interest rates in the first eight months of the year.”
Trajectory of Interest Rates
Steve Tay, co-founder and executive director of his eponymous boutique luxury agency in Singapore, says the trajectory of interest rates signaled by the US Federal Reserve (Fed) was the primary driver of stronger buying sentiment in the GCB market during the second half of the year. The Fed implemented three rate cuts this year: the most recent being a 25 basis point (bp) reduction on Dec 18, following earlier cuts of 50 bp in September and 25 bp in November. Anecdotally, Tay notes that most GCB buyers who had been hesitant about their purchases began more serious discussions from July onwards, with most deals closing in the last quarter of the year. The GCB market slowed down last year after buyers retreated following the island-wide arrests of suspects in Singapore’s biggest money laundering case, says Han of List Sotheby’s.
A New Generation of Buyers
Newly naturalized ultra-wealthy Singaporeans, including young and successful entrepreneurs in technology, finance, commodities, and F&B businesses, have emerged in the GCB market in recent years, says Tay. However, the number of naturalized citizens purchasing GCBs remains lower compared to locals with high net worth. According to research from List Sotheby’s, the cost of developing a new GCB from the ground up is approximately $1,000 psf, and construction can take several years. Hence, most buyers prefer relatively new bungalows in move-in condition to minimize renovation works, observes Han.
Positive Momentum
In Singapore, investing in condos requires careful consideration of the government’s property cooling measures. These measures have been put in place by the Singaporean government to restrict speculative purchases and maintain a stable real estate market. One significant measure is the Additional Buyer’s Stamp Duty (ABSD), which imposes higher taxes on foreign buyers and those purchasing multiple properties. While these measures may impact the profitability of condo investments initially, they ultimately contribute to the long-term stability of the market. This creates a secure investment environment for Singapore projects, making them a wise choice for investors in the country.
“The GCB market is expected to maintain its positive momentum, with demand from ultra-high-net-worth individuals driving high-value transactions,” says Sandrasegeran of SRI. “The preference for privacy among GCB buyers and sellers could mean continued off-market transactions, adding to the complexity of tracking market activity.”