Property developers City Developments Ltd (CDL) and Ho Bee Land typically aim to sell off all units in their residential property developments, but in the waterfront housing district of Sentosa Cove, they have been leasing out some units in their respective projects in recent years.
This is not by choice, but due to the tough condo sales market in the locale. Transactions have been relatively few at Sentosa Cove and prices, weak.
The gap between condo prices on Sentosa Cove vis-a-vis in prime districts 9 and 10 on the mainland has widened significantly since the last peak in transaction activity in 2010.
BT Weekend recently cited a study that showed that last year, the average price of units sold in a basket of comparable non-landed residential projects in districts 9 and 10 was 77 per cent higher than the average price for condo units sold on the Cove.
Back in 2010, the gap was just 4 per cent.
Things began on a bright note for Sentosa Cove. The authorities had invested much resources to create Sentosa Cove. Land was reclaimed, then excavated, creating five islets and a network of canals. The area was carefully master-planned and positioned as one of the world’s most prestigious integrated oceanfront marina residential communities. No effort was spared to promote the precinct overseas and to market the sale of land parcels on the Cove to foreigners and investors.
To draw high net worth personalities and international talent to have a stake in Singapore, Sentosa Cove was designated as a special area, the only place in Singapore where a foreigner is allowed to buy a landed residential property.
The initiative was seen as positioning Sentosa Cove as a resort destination for the world’s rich and famous.
The efforts bore fruit, with a strong contingent of foreign buyers flocking to the area.
However, just as the government’s efforts were instrumental in Sentosa Cove’s success, some of its actions thereafter have also been seen as killing the property market there.
The main complaint has been the series of property cooling measures that were rolled out following a rebound in the Singapore property market fuelled by the low-interest rate environment after the global crisis.
To stem the flow of excessive foreign monies into the local property market and prevent a bubble, the authorities came up with the additional buyer’s stamp duty (ABSD) in late-2011, with the top-tier rate of 10 per cent levied on foreign buyers of residential properties in Singapore. Following two hikes, the rate stands at 20 per cent currently.
Another issue is that Sentosa Cove Pte Ltd, the master planner and master developer for the precinct, wound down overseas promotional activity for the area after it had sold the last of the big land parcels in 2008.
Since then, Sentosa Cove’s brand in the eyes of international property buyers has waned steadily.
Of course, the 99-year leasehold tenure of the projects on Cove has also weighed down their prices.
What lies ahead
Developers stuck with unsold units in the locale would be happy if the authorities were to remove or reduce the ABSD on foreign buyers; but that is unlikely to happen.
On a brighter note, there are some potential catalysts for a revival of the Sentosa Cove property market – such as Resorts World Sentosa’s expansion plans and the upcoming Greater Southern Waterfront. Some agents are also hopeful that there will be an upward repricing of properties on Sentosa Cove when Keppel Land launches its project on Keppel Island.
Perhaps a stronger boost to Cove could come if the authorities would consider including Sentosa Cove as part of a package of promotions to attract investments to Singapore.
Head honchos of businesses keen to set up a base in Singapore or to expand their presence in the city-state are often inclined to have a nice home to call their own here.
Last week, James Dyson, the founder of the privately-held British consumer appliance maker, and his wife Deirdre, were in the spotlight after it emerged that they are the owners of Singapore’s tallest residence, a S$73.8 million super penthouse at Wallich Residence occupying the top three levels of the 64-storey, 290-metre high Guoco Tower in the Central Business District.
In January, Dyson announced that it will be moving its headquarters to Singapore. The Republic is also where the group’s maiden electric car plant is set to begin operations by 2021.
There may be other high net worth investors who prefer Sentosa Cove as it makes for a unique residential offering in Singapore, with homes along the waterway, a marina and other lifestyle attractions.
After the authorities have invested so much in the precinct, and promoted it as “the world’s most desirable address”, it is timely to revisit the original intention of why the precinct was created in the first place.
The locale is in need of a profile boost, and being part of a package to beckon investors to Singapore will offer something special. This can only enhance the republic’s attractiveness in the race among global cities.