More luxury homes above $5 million sold this year

The difference is 198 per cent – for Indonesians keeping their cash overseas without declaring it and in Indonesia for at least 3 years. And that whooping amount is possibly pushing wealthy Indonesians to pick up luxury properties in Singapore before the new law kicks in. Singapore will soon be sharing financial information with Indonesian authorities.

The TomlinsonAt the moment under a tax amnesty scheme, Indonesians pay a tax rate of 4 per cent and upwards on properties or funds outside of Indonesia. The rates are increased in stages up to 10 per cent up till March 2017, when the amnesty closes. It is uncertain if the information shared will be of both real estate and funds, but some buyers are understandably moving their monies into real estate ahead of time.

Local properties priced at $5 million and above have been attracting interest from Indonesians who have been closing deals quickly over the year. The number of such properties sold this year have already far surpassed last year’s, by almost 4 times. 30 properties valued at $5 million and above have been sold this year as of August, compared to just 8 the whole of last year.

Whitley ResidencesMost Indonesian buyers see the potential of high-end Singaporean properties and have been keeping an eye on the market, waiting for an opportune time to pick off prime properties. A total of 189 purchases, and possibly more as declarations of nationality is voluntary, were made by Indonesians from January to August this year.

High-end Properties moving more units on Mainland

Luxury residential properties seem to be enjoying a bit of the respite from the sting which property cooling measures have brought to the sector. In prime district 10, Leedon Residence has moved 24 units within the last 6 weeks with a total net worth of $110 million. Developed by GuocoLand, the property received its temporary occupation period (TOP) in June. Their other district-1o property, Goodwood Residences also saw some sales, with only 12 units left unsold. Over at District 1, Marina Bay Suites moved 10 units in Q2 alone.  Both Goodwood Residence and Marina Bay Suites were ready for occupation in June 2013.

Leedon Residence on Holland Road.

Leedon Residence on Holland Road.

Property analysts are according this rise in sales to how ultra-high-net-worth buyers are often more comfortable purchasing physically present products, and not off-plan. Current prices may have reached a stagnant as developers with properties still in construction may not be willing to provide hefty discounts in order to move units as yet, especially those with deeper pockets. They are likely to hold on to their existing units in view of long-term gains.

On Sentosa however, sales were a little slower, with more action in the nearby district 4. Corals at Keppel Bay sold 8 units and Caribbean at Keppel Bay moved 10 units in the second quarter. Considering they come with assets of being close to the Central Business District (CBD) and having a seafront view, the current selling prices of 4 to 5 per cent lower are probably worth every penny.

Deflating rental prospects hurt home sales

Buying a property and collecting rent used to be one of the most popular ways to start your investment journey. Usually the case for cosmopolitan cities, the situation may have changed in this developing country. Rental rates have continued to deflate as immigration policies were adjusted.

According to URA data, vacancy rates have reached the highest point since 2006. City centre and luxury homes have been hardest hit as expatriates are now choosing to live further away from the city with more and cheaper housing options. And as sentiments go, the less lived in a property, the less others will want to live in it. And it’s a cycle which if not arrested soon, may be detrimental to the market.

But most of the unsold units reside in the prime districts 9, 10, 11. Further away in Sentosa, the Cape Royale is 100 per cent unsold with its 302 units still on the market. It was completed last year. Developers IOI and Ho Bee are going with the decision to rent the units out instead of trying to sell them.

The Interlace at Depot Road.

The Interlace at Depot Road.

And as more developments were finished in 2014, the number of unsold homes in completed projects continues its climb. Some of these include The Interlace at Depot road, Starlight Suites in River Valley, TwentyOne Anguilla Park and Concourse Skyline on Beach road.

Developers have been steadily offering discounts or cutting prices in order to bring the buyers and tenants back into the market. As shown by recent sales at The Vermont, where slashing the prices have sold 30 of its 37 unsold units. From $2,400 psf, it dropped to just a little over $2, 000 psf.

Rental may not earn you your investment money

Especially with property tax revisions in the 2013 Budget. The removal of tax refunds for vacant properties will take a huge chunk of potential income away from individual as well as corporate investors. They can no longer bank on getting money back on units they are holding on to whilst waiting for a good time to rent. Only those with extensive holding power will be able to hold on to their units and wait out the lulls in the real estate market.

Emerald Green condominium.

Coupled with the increase in taxes for luxury properties, more and more resale private residential properties may be pushed back into the market, which unfortunately is dominated by new homes at the moment. This may intensify competition within a saturated market which may or may not see a price drop, depending on how strong a holding power the investors have.

Starting January 2014, the concession for such properties will cease and 2013 might be the year where the price battle between resale and new properties may be fought most intensely. From next January, higher tax rates will apply, 5 different tiers in fact, ranging from 8 to 16 per cent. If luxury properties were not seen to be doing well in the current market, will things take an even worse turn come 2014?

On the other hand, might overseas properties be more promising for investors and how do you get your hands on one? Which countries hold the most potential? Answers could often be best found at property seminars and talks, where you get to pick the brains of property experts and those who have had experience doing just that.