JPMorgan analyst Brandon Lee said that luxury properties in Singapore are “now cheap” compared to other major capital cities such as New York, London, and Hong Kong.
Prices in the city-state’s residential properties are now as much as 165 percent lower than the three other key cities. Lee noted that a decline in Singaporean luxury home prices since 2011 present a great opportunity for deep-pocketed investors to shop for extremely-high-end properties like Residences at Reflections.
Panache Management CEO Alexander Karolik Shlaen considered property prices in Singapore to be extremely attractive versus those in Monaco.
Price Gap
The difference in prices among these global cities have led private equity and global property funds to snap up several apartments via block transactions, according to Lee. The situation somehow indicated that institutional investors are buying homes as if these are bargain deals at a flea market.
Analysts partly attributed a hefty decline in Singaporean home prices during the third quarter to developers’ failure to offer discounts on time to hasten property sales. They do this to comply with a regulatory policy by the government that imposes tough penalties on unsold units after two years.
Urban Redevelopment Authority data showed that private residential property index sank 1.5 percent between July and September, the highest drop in seven years.
Silver Lining
Despite the price movement in luxury properties, overall real estate investment sales surged 16 percent in the same period year over year, amounting to S$4.61 billion, according to Jones Lang LaSalle Singapore’s initial estimates.
For the first nine months of 2016, sales rose to S$15.41 billion from S$14.49 billion in the year-ago period, according to the preliminary statistics.
A steep decline in prices doesn’t just benefit institutional investors, as it also means ordinary people can afford to stay in luxury accommodation even for just a short period of time.