05-11-2013, 11:54 PM
SINGAPORE: Touted as an enclave for the super-rich, Sentosa Cove "has lost some shine of late" after the 2008 global financial crisis and the raft of local property cooling measures in recent years, according to a report released by real estate company Colliers International.
As a result, residential properties at the cove are now within reach of the mass market, the report said, with the difference in price between condominium units there and those located in the mainland's Outside Central Region (OCR) at an historically low level.
In fact, Colliers pointed out that based on transactions in the first nine months of the year, an entry-level condominium unit on the cove can be bought for between S$1.7 million and S$2 million -- lower than the median transacted price of S$2.1 million in the same period for units of similar sizes at 99-year leasehold Centro Residences in Ang Mo Kio.
"Homebuyers need not be put off by the cove's seemingly high price... at S$1,646 per square foot (psf). The median price of condominium units is just 25.6 per cent higher than the S$1,311 psf median price of 99-year leasehold mass-market condominiums located in the OCR in 3Q 2013," the report said.
That price difference is in stark contrast to the 77.6 per cent gap seen in the 4th quarter of 2004, when condominium projects were first sold on Sentosa, and the huge 315.9 per cent price difference in the first quarter of 2008, when the luxury market was buzzing with activity as a result of strong interest from foreign buyers.
As a result, Sentosa Cove property could currently offer some appeal as an exclusive home away from home or even as an investment product in a niche market which holds solid fundamentals for the longer term, Colliers said.
However, other property analysts are more skeptical: they noted that while prices on a psf basis have narrowed, condominiums on Sentosa Cove are bigger than the average mass market home, which means that buyers would have to dig deeper into their pockets to buy a unit there.
"The smallest unit in Sentosa can easily be S$2 million, which can be quite out of reach. Also rental demand won't be very strong; right now, I think the vacancy rate is at 30 per cent," said Chief Executive of Century21 Singapore Ku Swee Yong.
Mr Nicholas Mak from SLP International Property Consultants is also doubtful that a property at Sentosa Cove would see healthy capital appreciation, as property cooling measures as well as the total debt servicing ratio (TDSR) have affected the luxury market the most.
"I wouldn't discount the opportunity to invest, but we have to recognise that it's a risk: properties there could face further price pressure because of all the measures," Mr Mak said.
The closing of the gap between property prices in Sentosa Cove and other parts of Singapore can be traced back to the start of the global financial crisis in 2008, according to Colliers.
That year, the level of transactions on Sentosa fell to all-time low of 69 units and median prices of condominiums tumbled 54.8 per cent in the space of just nine months, from S$2,658 psf in the first quarter to S$1,200 in the final quarter.
Cooling measures took more wind out of the sails of one of the most exclusive corners of the local property market, with speculative activity being particularly hard hit as sub-sale transactions ground to a halt from the second quarter of 2011.
Nevertheless, Colliers suggested that the longer term prospects for property on Sentosa are solid, with its unique island resort lifestyle likely to continue to appeal to the affluent and, perhaps, mainstream looking for something different.
As a result, residential properties at the cove are now within reach of the mass market, the report said, with the difference in price between condominium units there and those located in the mainland's Outside Central Region (OCR) at an historically low level.
In fact, Colliers pointed out that based on transactions in the first nine months of the year, an entry-level condominium unit on the cove can be bought for between S$1.7 million and S$2 million -- lower than the median transacted price of S$2.1 million in the same period for units of similar sizes at 99-year leasehold Centro Residences in Ang Mo Kio.
"Homebuyers need not be put off by the cove's seemingly high price... at S$1,646 per square foot (psf). The median price of condominium units is just 25.6 per cent higher than the S$1,311 psf median price of 99-year leasehold mass-market condominiums located in the OCR in 3Q 2013," the report said.
That price difference is in stark contrast to the 77.6 per cent gap seen in the 4th quarter of 2004, when condominium projects were first sold on Sentosa, and the huge 315.9 per cent price difference in the first quarter of 2008, when the luxury market was buzzing with activity as a result of strong interest from foreign buyers.
As a result, Sentosa Cove property could currently offer some appeal as an exclusive home away from home or even as an investment product in a niche market which holds solid fundamentals for the longer term, Colliers said.
However, other property analysts are more skeptical: they noted that while prices on a psf basis have narrowed, condominiums on Sentosa Cove are bigger than the average mass market home, which means that buyers would have to dig deeper into their pockets to buy a unit there.
"The smallest unit in Sentosa can easily be S$2 million, which can be quite out of reach. Also rental demand won't be very strong; right now, I think the vacancy rate is at 30 per cent," said Chief Executive of Century21 Singapore Ku Swee Yong.
Mr Nicholas Mak from SLP International Property Consultants is also doubtful that a property at Sentosa Cove would see healthy capital appreciation, as property cooling measures as well as the total debt servicing ratio (TDSR) have affected the luxury market the most.
"I wouldn't discount the opportunity to invest, but we have to recognise that it's a risk: properties there could face further price pressure because of all the measures," Mr Mak said.
The closing of the gap between property prices in Sentosa Cove and other parts of Singapore can be traced back to the start of the global financial crisis in 2008, according to Colliers.
That year, the level of transactions on Sentosa fell to all-time low of 69 units and median prices of condominiums tumbled 54.8 per cent in the space of just nine months, from S$2,658 psf in the first quarter to S$1,200 in the final quarter.
Cooling measures took more wind out of the sails of one of the most exclusive corners of the local property market, with speculative activity being particularly hard hit as sub-sale transactions ground to a halt from the second quarter of 2011.
Nevertheless, Colliers suggested that the longer term prospects for property on Sentosa are solid, with its unique island resort lifestyle likely to continue to appeal to the affluent and, perhaps, mainstream looking for something different.
