Thursday, October 23, 2008

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Singapore High End Properties Merely High Priced

According to a news report from my paper today (shown below), some Singapore's high-end properties are merely high priced and not the sort of high-end properties pursued by high-net-worth-individuals.

Chesterton International research pointed out that a high end property should have 3 attributes: (1) prime location, (2) exclusivity and (3) spaciousness with area of 3000 sq ft or more. These are the attributes that high-net-worth-individuals would look for in a high-end property. In land scarce Singapore, properties with these attributes are few and far between; but it is precisely the scarcity of such properties that make them all the more desirable.

Many of the so-called high-end properties developed recently were enbloc developments of prime properties (in districts 9, 10,11) during the past two years. In many of these enbloc developments, there is really little value-add in terms of exclusivity or spaciousness. In fact, some of these properties were ordinary in design and downright small.

According Chesterton International research, the high prices of these properties were really the result of developers' high acquisition costs for these prime-location developments. Though these properties have been called high-end properties, they are in reality merely ordinary prime-location housing that do not really appeal to high-net-worth-individuals.

Singapore High End Property's merely High Priced Property

Knight Frank analyst said that not all high-end properties are of "grade A", some maybe of "grade A-minus". They provide condominium living that's do not necessarily meet high-end lifestyle. In a economic downturn, these "high-end" properties may not hold up as well as their other counter-parts. Developments like Sentosa Cove with a 99-lease may also not hold up as well. When supply of such properties increases, it depreciates their exclusivity that is needed to guarantee their values.

DTZ Tie Leung said that price decline in high-end properties is the result of low sale volume. Hence, owners will have to reduce their prices in order to sell their properties.

In the past, Singapore high-end properties are reckoned to be the "blue chips" of Singapore real estate, having withstood sharp price decline during crisis such as SARS. This maybe set to change with the current sub-prime crisis as both sales and prices of these high-end properties took the brunt of the economic turmoil.

May also want to read:
Fire Sale: Owners Dump Condos
The days of Cheap, Easy Credits chasing after property is OVER!
When the bubble of greed and fear burst, guess who suffer?
Property Investment Tip: Don't put all your eggs in one basket
HDB Resales: West Sees Highest Price Increase


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The blogger here has been affectionately named by close allies as "Smart Buyer" but really, he's not smart. Smart Buyer just believes that being prudent is smart. That's the essence of the message of this blog and Smart Buyer hopes it'll benefit other property buyers.

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