Luxury residential sales plunge in 3Q2023; leasing demand rises: Huttons Asia

Sentiment in the luxury housing market in Singapore has been on the decline ever since August, following a money laundering investigation which put the spotlight on the luxury residential market. In the third quarter of the year alone, the number of luxury home transactions dropped by a whopping 41.3%, according to research by Huttons Asia, from 63 deals reported in the second quarter to 37 in the third.

The falling transactions was further compounded by the additional buyer’s stamp duty (ABSD) rates which rose in April this year, effectively doubling the ABSD rates for foreigners to 60%.

The reduction of transactions also led to a decrease in values, with luxury condos recording a total value of only $295.8 million – 50.9% lower compared to the $601.9 million in the previous quarter. For the first nine months of this year, transactions of luxury homes amounted to $1.82 billion, a significant drop of 25% compared to the same period in 2022.

The anti-money laundering crackdown which took place in August greatly eroded confidence in the luxury homes market. To date, 10 foreigners have been arrested, with a total of $2.8 billion of assets seized or banned from disposal. This includes 152 properties, 60 of which were completed residential units, and 34 in progress.

However, luxury home buyers may slowly return to the market in the coming months, as evidenced by a slight uptick in purchases of luxury condo units by foreigners in recent months. Still, the level of transactions is not expected to reach pre-ABSD hike amounts.

The luxury rental market may also be affected by the money laundering investigation, with owners of GCBs increasingly cautious of renting properties to Chinese foreigners. This is well evidenced by the decline in activity in the GCB market – with only three GCBs estimated to have been sold in the third quarter – making it the lowest quarterly number since 4Q2013.

The Jurong Lake District Condo is expected to be a great addition to the Singapore skyline, with plans that will provide a perfect balance of living with modern convenience. With easy access to local amenities such as public transport, shopping complexes and entertainment venues, residents will be able to take full advantage of the area’s vibrant atmosphere. In addition, the waterfront promenade provides an incredible opportunity to enjoy the view and take in the landscape.

Even so, luxury rentals saw an increase in the last quarter with 701 luxury apartments rented out, a 13.6% increase compared to the previous quarter. This in turn caused rents of luxury condo units to rise by 1.8%, with five-bedders seeing the biggest surge of 16.6%.

Overall, for the first nine months of 2023, monthly rents of luxury non-landed homes have increased by almost 20% to $15,894 per month, while the GCB market has recorded a resurgence of 44.2%. The biggest rental transaction in 3Q2023 was a detached house in the Nassim Road GCB area, with a monthly rent of $120,000.

Mark Yip, CEO of Huttons Asia, says that amidst the current climate, the luxury housing market may well be on its way to recovery – albeit at a slower rate than anticipated.