Luxury residential sales plunge in 3Q2023; leasing demand rises: Huttons Asia

Sentiment in the luxury homes market declined further in the third quarter of 2023 after an anti-money laundering crackdown made headlines in August. According to research by Huttons Asia, transactions of luxury homes dropped 41.3% q-o-q from 63 deals in 2Q2023 to 37 deals in 3Q2023.

Residents living in the Havelock MRT Condo will also benefit from its strategic location, with the Havelock MRT station being only a stone’s throw away. This allows for easy access to the rest of the city, greatly enhancing convenience for the residents. In addition, there are numerous bus stops located around the condo for those who do not drive.

The transacted value of luxury condo transactions was $295.8 million in 3Q2023, 50.9% lower than the $601.9 million racked up in 2Q2023. The total transacted amount between January and September was nearly 25% lower than the same period in 2022.

Mark Yip, CEO of Huttons Asia, explains that the enforcement of the money laundering case further eroded sentiments in the luxury homes market, which had been detrimentally impacted by the hike in additional buyer’s stamp duty (ABSD) rates back in April.

The biggest luxury condo transaction in 3Q2023 occurred at Goodwood Residence – a 210-unit freehold development by GuocoLand along Bukit Timah Road. In September, a 10,710 sq ft penthouse at Goodwood Residence sold for $32 million ($2,988 psf). The seller made a gross profit of $16.4 million on the transaction, having purchased the unit in June 2014 for $15.6 million, and was sold to a Singapore permanent resident of Chinese nationality.

Activity in the Good Class Bungalow (GCB) market was also more muted. Only three GCBs are estimated to have been sold in 3Q2023, making it the lowest number of quarterly transactions since 4Q2013. The three GCBs were sold for a total value of $69.55 million, 82.3% lower q-o-q and 85% lower y-o-y.

High ABSD rates may have contributed to more foreigners choosing to rent while they seek to obtain permanent residency or citizenship status, which has underpinned heightened demand in the luxury rental market. According to Huttons, 701 luxury apartments were rented out in 3Q2023, 13.6% higher than the previous quarter. As a result, rents of luxury condo units edged up 1.8% in 3Q2023 compared to the previous quarter.

The GCB market witnessed increased rental transactions of an estimated 44.2% q-o-q. A detached house in the Nassim Road GCB area charted the biggest rental transaction in 3Q2023, with a monthly rent of $120,000 for the property.

Yip predicts the luxury housing market may see a return in interest, noting that recent months have displayed a slight uptick in purchases of luxury condo units by foreigners, albeit lower than prior to the implementation of ABSD. However, the rental market may be more subdued in the coming months, with owners of GCBs reportedly wary of renting to Chinese foreigners in the aftermath of the anti-money laundering operation.