Singapore‘s luxury property market is likely to continue its bull run in the first six months of this year, driven by buying from wealthy foreigners and locals, a property consultancy said on Tuesday.
The market is expected to take a breather from the second half but would mount another strong rally from early 2009, when Singapore is scheduled to open its first integrated resort (IR), said Tay Huey Ying, director of research and consultancy at Colliers International.
She said a buying frenzy for luxury homes in the fourth quarter of 2006 was likely to have been spawned by optimism after authorities awarded the contracts to the winning bidders of two multi-billion-dollar IR projects.
Las Vegas Sands, which has operations in the booming southern Chinese gambling enclave of Macau, got Singapore’s first IR licence in May last year.
Its bid underlined an effort to strengthen Singapore’s position as a top meeting and conventions destination.
Singapore named Genting International and Star Cruises, both part of Malaysia’s Genting Group, as winner of a second IR licence on Sentosa island.
Their family-oriented proposal features a Universal Studios theme park and the world’s largest oceanarium.
“I think this buying frenzy will probably last for another six months or so. This will be supported by a strong line-up of potential launches,” Tay told an industry conference.
“In the second half, unless there are more high-profile launches, unless the government announces some very revolutionary economy-boosting initiatives…then perhaps the excitement…may wear off a little bit,” she added.
While prices will continue to trend higher, they “will probably slow down a little bit”.
The opening of the IR in 2009 and the completion of other luxury residential projects are likely to reignite another strong run.
“I think we could possibly see another bullrun come 2009,” Tay said, adding that the price of luxury apartments could reach an average 4,000 Singapore dollars (US$2,600) per square foot by the end of 2010.
Prices of luxury apartments rose 35 percent on the year to an average 1,970 dollars per square foot as of end 2006.
Press reports have said some top-end apartments sold at more than 3,000 dollars a square foot.
Despite their prices, the luxury homes segment had the highest take-up rate of 81 percent last year, Tay said.
This compared with a 57 percent take-up rate for the mass market and 75 percent for mid-tier homes.
Source: Channel NewsAsia, 24 January 2007