Affluent young locals who have made their money from non-traditional means lead the momentum
As an industry that heavily relies on physical labour in construction, face-to-face marketing in sales to form a connection, and property showings to close deals, the real estate sector in Singapore has been through the trenches in the past couple of years. The commercial segment was among the hardest hit, when offices, hotels, and retail spaces were forced to close as customers and users isolated themselves in the comfort of their homes.
Despite the difficulties that ravaged the industry, the leaders stood their ground, confident that if history is any indication, they can eventually reclaim their heydays.
And just as everyone had hoped for, the sector began to show signs of recovery late last year.
According to the Singapore Property Market Report Q1 2022 by PropertyGuru Singapore, the sales price index grew by 5.07 percent quarter-on-quarter. The HDB resale market propelled the growth, with its median per square foot rising for 14 quarters in a row, exceeding pre-Covid levels.
The asking prices for non-landed and landed properties rose for seven and eight quarters in a row, respectively; whereas it surged significantly for private properties, though the growth and momentum are incomparable to that of HDB flats. Knight Frank’s Head of Research Leonard Tay told CNBC that they expect private property prices to surge between one to three percent in 2022.
Young crazy rich Singaporeans take the lead
Meanwhile, the luxury residential real estate segment have experienced an increase in prices and transactions as it welcomed a new type of buyer, extremely wealthy young Singaporeans in their late 30s or 40s who have made their fortune from non-traditional ways, from cryptocurrency to e-commerce to local startups focusing on the needs of eGamers, reported Bloomberg.
Good class bungalows, described by the media company as “ornate mansions or villas dating back to colonial times” with plot sizes of 15,000 square feet (1,400 square metre) in prime districts, have picked up in the last few years.
Knight Frank revealed that the sales tripled to 60 (out of only 2,500 homes on the island) from 2019 and the median prices of these bungalows skyrocketed to SGD1,725 (USD1,283) per square foot, up by nearly a quarter in the same year.
Mary Sai, executive director of investment and capital markets at Knight Frank Singapore, explained that these younger buyers are looking to tear down the existing bungalows to construct homes that match their taste.
Developers follow suit with billion-dollar housing site bids
Whilst the wealthy young locals are snapping up luxury properties and driving up the prices, developers are keeping up with the demand by bidding for top housing sites worth USD1 billion, shared Forbes.
GuocoLand, the Best Developer Winner at the 11th annual PropertyGuru Asia Property Awards (Singapore) 2021, were among the two developers that submitted the top bids, both of which amassing SGD1.35 billion.
The firm provided the highest bid of SGD586.6 million for a plot in Lentor Hills Road, measuring around 184,460 square feet. They also outbid nine others in July for a residential site in Lentor Central.
The hot demand for the housing market in the midst of the outbreak has indeed fuelled residential developers to remain steadfast in their pursuit to producing high-quality developments that meet the demands of the buyers, especially the Gold Standard-bearers of the PropertyGuru Asia Property Awards (Singapore), namely Hoi Hup Realty Pte Ltd (Best Residential Developer), Fairview Developments Pte Ltd a unit of Tong Eng Group (Best Landed Developer), Aurum Land (Best Boutique Developer), UOL Group Limited (Best Hospitality Developer), and CSC Land Group (Singapore) Pte Ltd (Best Breakthrough Developer).
Knight Frank’s Wealth Report forecasts the number of individuals owning portfolios worth at least USD30 million will hike up by 31 percent to 4,888 between 2020 and 2025, certainly signifying a promising future for the Singaporean real estate sector.
Do you know of any outstanding residential, commercial, or industrial projects in Singapore? Nominate them for the 12th annual PropertyGuru Asia Property Awards (Singapore) on or before 19 August 2022. To know more, visit asiapropertyawards.com/award/singapore/.
Gynen Kyra Toriano, Digital Content Manager at PropertyGuru, wrote this article. For more information, email: [email protected].
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