Bloomberg
Singapore’s luxury-home prices won’t match Hong Kong’s because an increase in building ahead of two casino projects in the city-state will see nine times the number of new apartments going up over the next three years than in Hong Kong, according to real estate broker Savills Plc. Singapore’s high-end home prices rose 4 percent in 2009, while Chinese buyers fueled a 45 percent jump in Hong Kong, Savills said.
“Hong Kong has some unique factors which drive the super luxury market, particularly mainland buyers who have been very aggressive,” said Simon Smith, Savills’s Hong Kong-based head of research and consulting. “We will always see some dramatic prices in Hong Kong you wouldn’t necessarily see in Singapore.”
Luxury property prices in Singapore are about 19 percent below their 2007 peak, according to a Goldman Sachs Group Inc. report published Jan. 13. They may rise about 15 percent this year, though still remain 7 percent below their highs by the end of 2010, Goldman said. Hong Kong luxury prices, which have surpassed their mid-2008 peak, will rise 15 percent in the next six months, Colliers International Ltd. forecast in January.
Holiday Resorts
Two resorts are being built in Singapore -- the city-state across the Johor Strait from Malaysia -- with casinos, hotels, restaurants and attractions that the government hopes will help lure 17 million visitors and triple annual tourism revenue to S$30 billion by 2015.
Genting Singapore Plc unit Resorts World Sentosa opened part of its $4.5 billion project on southern Sentosa island last month, while Las Vegas Sands Corp. said it may open the Marina Bay Sands, in downtown, in April after construction delays.
To make the economy less dependent on electronics manufacturing, the Singapore government in April 2005 overturned a ban on casinos that had been in place since independence in 1965. Resorts World and Marina Bay are the only two casino developments approved and the government has said there will be only two gaming operators for 10 years.
“The integrated resort is a stale story by now,” Tay Huey Ying, a Singapore-based director of research and consulting at Colliers, said at a property seminar on Jan. 13. “I do not foresee a great impact. We will need another growth story to bring the foreigners back to Singapore.”
Casinos
In contrast, the number of casinos in Macau, the world’s biggest casino hub and the only Chinese city where gambling is legal, more than doubled to 33 in 2009 from 2002, when Stanley Ho’s casino monopoly ended. Residential prices will increase as much as 15 percent in the city this year, according to a Savills report on Macau published on Jan. 27.
Sands China Ltd., the Macau unit of Las Vegas Sands, will open most of its stalled resort in Macau by December 2011, adding 300,000 square feet (27,871 square meters) of gaming space to the 849,000 square feet it already has, the company said.
More than 130 apartments around Singapore’s Marina Bay and 900 apartments at Sentosa Cove have yet to be put on sale. City Developments Ltd., Singapore’s second-biggest property developer, and YTL Corp., Malaysia’s biggest builder, are among those preparing to put more homes on the market this year.
Prime Locations
About 11,000 condominiums and apartments in the prime districts, or two-fifths of the total supply in Singapore, will come onto the market over the next three years, according to Savills. This compares with 1,260 luxury homes in Hong Kong over the same period.
“In Singapore, we’re going to see slightly elevated levels of supply in 2011 and 2012, which would moderate price growth,” said Savills’s Smith.
Henderson Land Development Co., the Hong Kong-based builder controlled by billionaire Lee Shau-kee, in October sold a 6,158 square-foot duplex apartment in the city for a world record price of HK$88,000 ($11,354) per square foot in a transaction worth HK$439 million. Luxury homes in Hong Kong are defined as those costing at least HK$10 million or bigger than 1,000 square feet.
The 17,115 square-foot bungalow sold on Sentosa island fetched S$1,753 a square foot. Prices reached as high as S$5,262 per square foot in 2007, a peak in Singapore’s property market. Singapore luxury homes are defined by Savills as those with an average price of between S$1,900 and S$2,000 a square foot in the city-state’s prime districts.
Property Bubble?
Surging prices have raised concerns of a property market bubble in Hong Kong. The government tightened down-payment requirements for luxury homes for the first time since 1991 and suspended mortgage insurance for rental properties in October.
Singapore’s government said in September it will push for more sites to be sold and will bar interest-only mortgages for uncompleted housing projects. Still, authorities aren’t likely to clamp down too much on the luxury end of the market, said Donald Han, the Singapore-based managing director of Cushman & Wakefield, a real-estate advisory company.
“The high-end market is less of a concern, it’s more of a private playground for the rich,” Han said.
Foreigners can buy condominiums and apartments in Singapore, though Sentosa Cove is the only place where they are allowed to own houses.
Rolls Royce
Wealthy Malaysians and Indonesians have been the main buyers of luxury properties in the city-state. Now rich buyers from Russia, Norway, Sweden and Austria are showing interest in the high end of the market, as well as Asian celebrities and professional golfers, said Kemmy Tan, director of international real estate at YTL Singapore Pte, which is developing 13 villas at Sentosa Cove. Tan wouldn’t give any names.
To help sell the villas, Tan has made sure the elevator to the basement car park of each villa is big enough to fit a Rolls Royce Phantom, which measures 5.6 meters (18.4 feet) long.
“Most of the cars here are Bentleys, Lamborghinis and Ferraris,” said Jason Yeo, general manager at site operator Sentosa Cove Resort Management. “Of course, you have the normal cars like Mercedes and BMWs too.”
To contact the reporters on this story: Joyce Koh in Singapore at jkoh38@bloomberg.net
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