The luxury residential segment is starting to see prices inch back to peak levels recorded in late 2007 and 1Q2008. The bellwether of luxury condos, Wheelock Properties’ Ardmore Park recently saw two units change hands in the resale market at above $3,000 psf, according to caveats lodged with URA Realis from Oct 9 to 16. Some property consultants attribute it to owners re-setting their prices to more lofty levels after SC Global’s announcement early last month that six units at its luxury Seven Palms in Sentosa Cove were sold at record prices of $11 million each, or $3,100 to $3,400 psf.
The 330-unit freehold Ardmore Park, located along Ardmore Park Drive and completed in 2001, features only four-bedroom apartments of 2,885 sq ft each and penthouses of 8,740 sq ft each.
Recently, a 27th floor apartment in one of the three towers changed hands for the third time at $9.2 million, or $3,189 psf.
The vendor had purchased the apartment for $5.25 million, or $1,820 psf, in October 1999, reaping a 75% capital gain after holding the property for a decade. The first owner had purchased the property at launch in July 1996 for $5.87 million, or $2,037 psf, which was the peak of the property boom a decade ago before the Asian financial crisis.
Another apartment on the 23rd floor of the same tower was sold for $8.8 million, or $3,051 psf. The seller had purchased the apartment just six months earlier in May for $6.45 million, or $2,236 psf, flipping it for a 36% capital gain.
This is the first time this year that apartments at Ardmore Park have crossed the $3,000 psf level. The last time was in April 2008, when an apartment on the 15th floor of another tower was sold for $8.68 million, or $3,009 psf. The record price psf achieved at Ardmore Park was for a 28th floor apartment sold in October 2007 for $10.05 million, or $3,484 psf.
Jacqueline Wong, head of residential at Jones Lang LaSalle, says the recent transactions at Ardmore Park of more than $3,000 psf is an indication that prices of luxury condos at selected projects are gradually returning to the levels seen during the peak of late 2007 and early 2008. “Apartments like Ardmore Park are the crème de la crème of the top-end market because of their quality, spaciousness and location,” she adds. “There’s not much new supply of such luxury condos right now, so buyers are looking at existing properties.”
In the landed-housing market, two Good Class Bungalows (GCBs) changed hands at $37.5 million and $27.35 million in the week of Oct 9 to 16. The $37.5 million, or $862 psf, achieved was for a conservation GCB on Chatsworth Park situated on a 43,497 sq ft freehold land area. “This GCB is sitting on a large plot of land, which is a rare find nowadays,” says JLL’s Wong. In the past, there were more GCBs with land areas of 25,000 to 45,000 sq ft but, over the years, many have been sub-divided into smaller entry-level GCB plots of 15,000 to 16,000 sq ft. Thus, investors are willing to pay a premium for such large GCB plots because of their scarcity, especially if there is potential for sub-division, Wong points out.
The site at Chatsworth Park has the potential for sub-division into two smaller GCB plots, even though the existing main house is a conservation building that has to be restored, notes Wong. While buyers of GCBs are mainly Singaporeans, increasingly, they comprise foreigners-turned-citizens or permanent residents.
The other GCB, on Belmont Road and with a sizeable land area of 29,310 sq ft, was sold for $27.35 million, or $933 psf. This is the third time the property has changed hands in as many years. The vendor in the most recent transaction had purchased the property in August 2007 for $23.3 million, or $795 psf, according to a caveat lodged with URA Realis. The previous seller had flipped the GCB after barely two months, having purchased it for $21.5 million, or $734 psf, in June 2007.
Source : The Edge – 9 Nov 2009
High luxury-home prices are good
Posted by luxuryasiahome on November 12, 2009
I WORK in the real estate sector in Hong Kong but do not cover the residential property market. Nevertheless, like many residents of the Special Administrative Region, I have been fascinated by recent market developments. Over the past few months, prices have been rising, China buyers have been increasingly active, developers have been launching units and analysts have been talking about the lack of supply. Debate raged over the sustainability of price rises with the argument centring on lingering economic weakness versus abundant liquidity coupled with early signs of economic improvement.
News then broke in late October of Henderson Land’s sale of a duplex at 39 Conduit Road for HK$439 million (S$78.54 million) or a world record HK$71,280 per square foot. What has since ensued is heated discussion over whether dreams of home ownership for the middle class in Hong Kong have been shattered in part due to rich China buyers driving up prices. Calls are being made for the government to tame the raging animal spirits in the Hong Kong residential market.
The themes playing out in the Hong Kong market are to some extent applicable to Singapore, although the Singapore private residential market rally this time round has been mass-market-led while that in Hong Kong is driven by the high end. Still, with Singapore’s imminent opening of the integrated resorts, there could be a new spring in step for high-end properties.
In Hong Kong, questions being discussed include: Are foreigners pricing out locals? Do sky high prices for luxury units matter? What can and should government do to control property prices? What help if any should government render middle-class locals in owning their homes? Are the controversies in the property market a reflection of economic growth in recent years benefiting high-income earners disproportionately while the rest lag behind?
Invariably, there will be some degree of envy when wealthy foreigners come to any city and lord it over the locals. Such a scenario emerges in many a successful city, with rich Russians and Arabs in London, rich China nationals in Hong Kong and rich Indonesians in Singapore. However, should one follow the head rather than the heart, it is not just the Hong Kong property tycoons who ought to celebrate the sale of a luxury unit for HK$71,280 psf but everyone.
Wealthy people have a choice of where to invest their money. Hong Kong people should be proud that there are a fair number of rich people confident enough in Hong Kong’s prospects to pay princely sums for property in the territory. Indeed, having millions poured into residential property helps generate real-estate-related jobs plus spending by the dwellers of luxury properties. Real estate investment may not generate the same amount of economic spin-offs as investment into manufacturing but they still bring economic benefits.
Singapore and Hong Kong share many similarities, key of which is that both cities, in my view, have a bright future catering to a rapidly growing Asia as hubs of finance, trade, transport, tourism, and various other services. Economic success of both cities does depend on keeping an open door to foreigners and this includes being broadly welcoming to participation by foreigners in the property market. Hong Kong has an important strategic fight on its hands of being competitively positioned as Shanghai and Beijing make strides up the league of global cities. The people of Hong Kong should be more concerned with the city’s ability to thrive in an ever-changing global landscape than the state of the property market. Of course, should Hong Kong continue to grow as a key business hub, expect more reports of developers selling luxury units for mind-boggling sums.
Shelter is a basic need of man and owning a home is a key purchase decision for many people. Defining the type of housing that the middle class should be able to afford is, however, tricky. I believe that all policymakers can largely do is to ensure that there is adequate land supply such that there is a range of property types at different price points available. Just as with any consumer product, we should rely on developers to offer choice to meet a variety of needs.
It is not surprising that developments in the residential property market generate strong emotions. Very high prices at luxury projects are not mere aberrations and high prices at the high end can lead the rest of the market up. Nonetheless, the high end typically forms a small part of the wider market and purchasers at the high end tend to be financially strong, Thus, it would be wrong to see high luxury-unit prices as indicative of a property bubble, which is what policymakers rightly fret about. Instead, what policymakers could do is to be more effective in winning hearts and minds – that high prices at the high end are generally a good thing.
More critically, what policymakers in successful Asian cities can focus on is to put any discussion of residential real estate in a wider context. While anxieties of the middle class with regards to home ownership may be difficult to assuage, the state can focus on doing more in other areas to alleviate life’s anxieties such as providing low-cost quality education, healthcare coverage and help with retirement savings. Let the pursuit of making a city a great place to work, live and play go together with ensuring that a range of needs of local residents are well taken care of. While not everyone can live in a prime neighbourhood, everyone can perhaps get reasonably good health care and education.
The writer is a Hong Kong-based real estate executive with extensive experience in the Singapore property market
Source : Business Times – 12 Nov 2009
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