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Sentosa Cove Luxury Property Sales Increase in H2 2022

Sentosa Cove Oceanfront Bungalows

According to a report by CBRE, luxury house sales in Sentosa Cove experienced an upswing in the second half of 2022 while the high-end landed market softened elsewhere. Bungalow sales on the island saw a significant increase of almost 60% in value, reaching S$207.5 million with 10 units sold between July and December. This is compared to the first half of the year, where eight bungalows were sold for S$130.3 million.

Notably, Sentosa Cove is the only location in Singapore where a foreigner who is not a Singapore permanent resident may purchase a landed property. All properties in Sentosa Cove are on 99-year leasehold tenures.

On the other hand, the Good Class Bungalow (GCB) market experienced a slowdown in both volume and value during the second half of 2022. CBRE's report revealed that only 18 GCBs were sold for a total of S$613.5 million in H2, compared to 29 GCBs sold for S$751.4 million in the first half of the year. This occurred despite an increase in average prices in H2, rising by 14.3% to S$2,106 per square foot (psf) from S$1,842 psf in the first half of 2022.

Meanwhile, Sentosa Cove bungalow prices also increased, averaging at S$1,940 psf in 2022, which is a 9.1% rise from S$1,778 psf in 2021. However, sales volume decreased year-on-year, with 18 bungalows sold for a total of S$337.7 million in 2022, compared to 26 bungalows sold for S$440.4 million in 2021. This represents a 23.3% decline in value.

According to Tricia Song, the Head of Research for Southeast Asia at CBRE, the sales of Sentosa Cove bungalows continued to increase in the second half of 2022, despite the downturn in the GCB market, due to their relatively attractive prices. In 2022, the average price of Sentosa Cove bungalows was around S$18.8 million, which is lower than the average price of GCBs at S$29 million.

Additionally, Song noted that the prices of Sentosa Cove bungalows have risen at a slower rate of 12.3% since 2020, with the average price for 2022 at S$1,940 psf. In contrast, GCB prices reached a record high of S$1,952 psf in 2022, representing a growth of 37.5% from S$1,419 psf in 2020.

Despite rising prices, some Sentosa Cove owners experienced loss-making transactions in 2022, such as Indian singer and businessman Shael Oswal who sold his villa for S$32 million, which is below his purchase price of S$39 million in 2012. Song attributed this to the average prices of bungalows still being lower than the peak of S$2,150 psf in 2012 in addition to cooling measures in the market.

Song observed that the private residential market had been affected by six rounds of property cooling measures, including the increase in additional buyer's stamp duty (ABSD) for foreigners, which was introduced in January 2013 and had a particularly adverse impact on the Sentosa Cove market.

However, sales of Sentosa Cove condominiums saw a significant increase in the second half of 2022, following the launch of the Cape Royale project by Ho Bee and IOI Properties in July. The sales of Sentosa Cove condos rose by 85%, with 74 units sold in H2 2022, compared to 40 sales in H1. The transaction value also more than doubled, increasing from S$159.8 million in H1 to S$357.6 million in H2.

In 2022, the total value of transactions for condos in Sentosa Cove saw a slight increase, reaching S$517.4 million with 114 units sold, compared to S$516.9 million and 128 apartments sold in 2021. The average price per square foot for condos rose by 13.4% to S$1,936 from S$1,707 in 2021.

The launch of Cape Royale in July 2022 played a significant role in propping up the prices, with 20-25 units sold during that period. During the second half of the year, CBRE reported that 46 units sold at a median price of S$2,174 per square foot. As of March 17, 2023, URA caveats have recorded a total of 62 Cape Royale units sold at prices ranging from S$3.53 million for a 1,680 sq ft unit sold in July 2022 to S$11.02 million for a 4,810 sq ft unit transacted in September 2022.

During the sales launch, the developers of Cape Royale sold units that were already tenanted, as they had held the properties for rental after the project's completion. At that time, around 95% of the units were occupied by tenants.

In May 2022, it was reported that three-bedroom units at Cape Royale with sizes ranging from 1,900-2,000 sq ft were renting for S$8,200 to S$11,200 per month, while four-bedroom units with sizes ranging from 2,500-4,200 sq ft were being leased for S$12,800 to S$22,000.

The latest data as of March 17, 2023 shows that leases signed in January and February 2023 for three-bedroom units were ranging from S$13,500 to S$18,000 per month, while four-bedroom units were renting for S$17,000 to S$26,000 per month.

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