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This may not come as a surprise to most, but according to a report by Savills prime properties (e.g., the high-end luxury stuff, like you’ll find in our Core Central Region) might dip by around 3.9 per cent this year. This is on the back of higher interest rates, which we also explained here

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Now this is a bit counterintuitive; because as far as interest rates go, I would imagine that has a bigger impact on the fringe regions than the prime area. Let’s face it, the people buying $10 million penthouses could probably use less in the way of loans if they wanted – some might even be able to buy with no loan, they just want the leverage. 

But it’s not like a regular home buyer can pull $1.6 million out of their back pocket for a resale condo. The average Singaporean needs a loan – and a sizeable one at that – to make that leap into private property. So if interest rates alone could cause prime region properties to fall in price, then it would be doubly true for non-prime areas, where the typical buyer is even more dependent on loans, and even more susceptible to rising interest rates. 

I think if prime region properties do see a price drop, it will be more related to our ABSD rates than to bank loan rates. The ABSD on foreigners is now at 60 per cent, which is a far bigger concern than the interest rate creeping up a percentage point or two; and if this does deter foreigners, the prime regions are where we’ll see the first effects. 

The economic headwinds may also be a much bigger factor

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There’s sometimes a lag between events in the wider economy, and the impact on the property market. Right now, I think we haven’t fully processed the impact of rising geopolitical tensions, and the (metaphorical) massacre going on with tech companies. 

Also, it looks as if higher interest rates are here to stay, which means companies tend to put the brakes on growth. All of this, in short, turns employers cautious. 

I was in the property game during the last financial crisis, and I remember how sudden things can change: One day an expat has their pick of any River Valley condo, the next they’re haggling over the price of a walk-up in Geylang. 

As housing allowances shrink, and companies replace expatriate workers with locals (hooray!), we might see a quicker general exodus from the prime regions into city fringe or even fringe areas. And I suspect in the coming years it will be this issue, rather than higher interest rates, that puts downward pressure on prime property prices. 

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In any case, this all represents an opportunity to the prepared. If you’ve been sitting on huge savings and waiting, well, now’s the time when the price gap between CCR and RCR might significantly narrow. Just be careful not to use too much of a loan, when you upgrade.

In related news, the Marina Gardens Crescent site was not awarded to the consortium

Last week – and I guess at the top of this newsletter, heh – I mentioned how certainty in the CCR is dropping. This was what allowed a single bid for the Marina Gardens Crescent site to win. The offer was $770.5 million, or $984 psf; an amount that’s been matched or exceeded by even non-central sites. 

This has caused some people to ask if it’s right. After all, if the bid is lower, the developer can charge less; and that makes properties more affordable. The government, or so the opinion goes, could stand to make less. And it’s not a perspective that the government hasn’t considered.

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The issue is that, even if that consortium of developers had gotten the site for cheap, the property wouldn’t be cheaper than other Marina Bay area properties. In the end, the developer is a profit-driven entity; and the prices will still be based on prices in the surrounding area, regardless of what price they got the land for. 

What it does give though, is more leeway for the developer to take risks. Especially with a developer like GuocoLand, who has shown with Midtown and Lentor that they are able to add in a certain amount of transformation to an area. And it’s also telling already that besides the bullish Kingsford bid, the weak demand from the developers for the Marina sites have not been a vote of confidence that this would be an area of growth. 

Perhaps on the flipside, turning down the bid is a sign of confidence that URA has in the area in the future. What do you guys think? Let us know. 

Meanwhile, in other property news:

STACKED WISHES ALL OF YOU A VERY HAPPY AND PROSPEROUS CHINESE NEW YEAR!

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May you have a long life, good health, and a property that sells for so high it appears on agent’s flyers (sometimes even with your permission). 

Weekly Sales Roundup (22 January – 28 January)

Top 5 Most Expensive New Sales (By Project)

PROJECT NAME PRICE S$ AREA (SQFT) $PSF TENURE
19 NASSIM $6,000,000 1733 $3,462 99 yrs (2019)
TERRA HILL $5,161,150 1894 $2,724 FH
THE RESERVE RESIDENCES $4,247,192 1625 $2,613 99 yrs (2021)
WATTEN HOUSE $3,212,000 990 $3,244 FH
THE LANDMARK $2,957,800 1141 $2,592 99 yrs (2020)

Top 5 Cheapest New Sales (By Project)

PROJECT NAME PRICE S$ AREA (SQFT) $PSF TENURE
NORTH GAIA $1,210,112 969 $1,249 99 yrs (2021)
THE ARDEN $1,233,000 657 $1,878 99 yrs (2023)
LUMINA GRAND $1,379,000 936 $1,473 99 yrs
MIDTOWN MODERN $1,540,440 409 $3,766 99 yrs (2019)
THE MYST $1,595,000 700 $2,280 99 yrs (2023)

Top 5 Most Expensive Resale

PROJECT NAME PRICE S$ AREA (SQFT) $PSF TENURE
THE GLYNDEBOURNE $7,338,000 3563 $2,060 FH
CORALS AT KEPPEL BAY $6,300,000 2573 $2,449 99 yrs (2007)
RIVERGATE $5,050,000 1798 $2,809 FH
MARINA BAY SUITES $5,000,000 2680 $1,866 99 yrs (2007)
THE COSMOPOLITAN $4,600,000 1679 $2,739 FH

Top 5 Cheapest Resale

PROJECT NAME PRICE S$ AREA (SQFT) $PSF TENURE
RIZ HAVEN $620,000 452 $1,371 946 yr (1938)
METRO LOFT $668,000 452 $1,478 FH
VIVA VISTA $685,000 323 $2,121 FH
THE SANTORINI $732,000 527 $1,388 99 yrs (2013)
CARISSA PARK CONDOMINIUM $788,000 646 $1,220 FH

Top 5 Biggest Winners

PROJECT NAME PRICE S$ AREA (SQFT) $PSF RETURNS HOLDING PERIOD
HAWAII TOWER $4,000,000 2239 $1,787 $3,225,000 25 Yrs
THE COSMOPOLITAN $4,600,000 1679 $2,739 $2,975,567 19 Yrs
SOMMERVILLE GRANDEUR $3,800,000 1830 $2,077 $2,550,000 19 Yrs
RIVERGATE $5,050,000 1798 $2,809 $1,777,640 14 Yrs
SPRING GROVE $2,500,000 1389 $1,800 $1,580,000 26 Yrs

Top 5 Biggest Losers

PROJECT NAME PRICE S$ AREA (SQFT) $PSF RETURNS HOLDING PERIOD
MARINA BAY SUITES $5,000,000 2680 $1,866 -$1,288,000 14 Yrs
ROBINSON SUITES $1,800,000 936 $1,922 -$983,555 11 Yrs
OUE TWIN PEAKS $3,200,000 1399 $2,287 -$600,000 7 Yrs
SPOTTISWOODE SUITES $1,080,000 441 $2,447 -$185,000 10 Yrs
ONE SHENTON $1,350,000 872 $1,548 -$150,240 17 Yrs

Transaction Breakdown

Type Of Sale Proportion NEWSLETTER

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