What Is The Outlook for Luxury Properties in Singapore?

J.P. Morgan reported that consumers in the U.S. are reducing their spending on non-essential goods, and this is weighing on luxury sales. However, China’s reopening is a tailwind for the sector, especially as Chinese consumers are a major driver of luxury spending. Upscale brands — along with hard luxury goods such as watches and jewellery — are expected to be most resilient amid this uncertain macro environment, depending on specific brand momentum. (April 27, 2023)

Luxury goods and luxury property are often considered to be part of the broader luxury industry, but they are distinct sectors with some degree of correlation with a shared target audience, wealth and lifestyle indicators, complementary experiences, investment diversification.

Singapore is also in the top 10 Countries for Growth in the Number of Adults with Wealth Above USD1 Million in Key Luxury Markets, 2020-2021 - Euromonitor International Income and Wealth Distribution Model.

What is the outlook for luxury property in Singapore?

Singapore's luxury housing market has traditionally been resilient and attractive to high-net-worth individuals and foreign investors. Several factors contribute to the outlook for luxury houses in Singapore:

Stable market: Singapore has a stable political environment, robust legal system, and efficient infrastructure, which make it an appealing destination for luxury property investments. One of the lowest Country Risk Premium (CRP).

Limited supply: Land scarcity in Singapore restricts the availability of prime luxury properties, particularly in sought-after locations like Orchard Road, Sentosa Cove, and Districts 9, 10, and 11. Limited supply often supports property prices, especially in the luxury segment. proportion of Owner-Occupied Resident Household is at 89.3%.

Government policies: The Singaporean government has implemented cooling measures to maintain the stability of the property market and curb speculative activities. These measures include Additional Buyer's Stamp Duty (ABSD) and Seller's Stamp Duty (SSD), which affect luxury property transactions. It is important to monitor any changes or adjustments in government policies, as they can impact the luxury housing market.

Foreign demand: Foreign buyers have historically shown interest in Singapore's luxury housing market, contributing to its growth. Factors such as political stability, quality of life, and business opportunities attract high-net-worth individuals and expatriates to invest in luxury properties.

Lifestyle amenities: Singapore offers a high standard of living, excellent infrastructure, world-class healthcare and education facilities, and a vibrant cultural scene. No surprises we are on the top for the most liveable locations for East Asia expats. These lifestyle amenities, along with luxurious features and services offered by high-end properties, can continue to attract affluent buyers.

Market fluctuations: Like any real estate market, luxury housing in Singapore may be influenced by broader economic factors, both domestic and international. Changes in interest rates, global economic conditions, or geopolitical events can affect buyer sentiment and demand. However, its high owner-occupied rate, cooling measures and anti-speculative measures have kept it stable.

Sustainability and green features: Increasingly, sustainability and eco-friendly features are becoming important considerations for luxury buyers. Developers incorporating sustainable practices and green features into their properties may attract environmentally-conscious buyers. More and more developments have been assessed for the Building & Construction Authority’s Green Mark Certification Scheme which is a rating system designed to evaluate a building’s environmental impact and performance.

Additionally, the mean wealth per adult and the number of millionaires in Singapore is expected to increase, Credit Suisse Global Wealth Report.

The recent increase in ABSD (April 2023) would have an impact on the luxury market but the ultra-luxury segment would still have its appeal globally given the above factors. Before the ABSD increase, Luxury property sales dipped in Q4. The market was expecting more high-profile deals with the return of super wealthy Chinese as China reopens and mobility resumes.

While these high-net-worth individuals be a Foreigner, Singapore Permanent Resident or Singapore Citizen. One thing is for sure that the overall population growth is expected to continue. Singapore Population grew 3.4% last year, reversing 2 consecutive years of decline.

Singapore’s advanced infrastructure, economic stability, high quality of life, low taxes (and on real estate investments), makes it an attractive destination for foreign investors looking to invest in property in Asia. Singapore has a number of exclusive residences that appeal not only to Singapore but Global high-net-worth individuals. The Good Class Bungalows (GCB), Orchard District, CBD District, Sentosa Cove and Emerald Hill Conservation Area are home to some of the most beautiful and luxury properties, which are ideal for luxury property buyers.

Perhaps the 60% ABSD tax would be a good hedge, be it for long-term investment, diversifying assets, estate planning or collateral asset in case of emergency. Since its introduction, we’ve seen foreigners purchase 4 units of Blossoms By The Park last month and 2 high-end Condos setting a record with $7.5million and $8.45million in ABSD (transacted price of $20million and $22.53million respectively).

Singapore’s property market and economy has been resilient during times of volatility and this would appeal as one of best destination to diversify one’s wealth.