V ON SHENTON market analysis

Singapore downtown is an established metropolitan city of global standards for many years. It is and always will be the most important CBD in Singapore where many multi-national corporations (MNCs), banks, government offices, tech companies, entertainment and F&B outlets are based in. As part of the expansion and enhancement to the core CBD area with the on-going development in the Marina South area and the recently announced Greater Southern Waterfront City development, Singapore is looking to further cement itself as one of the most important financial services centre in the world.

The current pricing in Singapore CBD is easily a discount of between 30-50% compared to its price during a good market. This is not a true reflection of property value in a global city like Singapore as this is mainly due to the various cooling measures that were implemented by the Singapore government several years ago to engineer a “soft landing” and to prevent the property bubble from bursting. Prime Singapore properties are currently attracting a lot of foreign buyers as the prices are artificially suppressed by these cooling measures, including the 15% ABSD levied on these foreign buyers. Nevertheless foreign buyers see tremendous value in Singapore’s prime properties as well as the potential upside that the market offers as prices normalize in the future with the easing of these cooling measures.

As Singapore is a global city and one of the key financial centres of the world, it is constantly being compared to other global cities in terms of housing price. The table below compares prime Singapore property market prices with other global cities like Hong Kong, New York and London.

Location Current Average Price (psf) Difference compared to Singapore
Singapore, District 1 Around SGD2,100 0%
Hong Kong, Central Around HKD18,900 (SGD3,500) 67%
Hong Kong, Mid-Levels Around HKD17,230 (SGD3,190) 52%
New York, Tribeca Around USD2,050 (SGD2,870) 37%
New York, Central Park South Median, USD2500 (SGD3,500) 67%
London, Mayfair & SOHO Around £1,700 (SGD2,890) 37%
London, Covent Garden Around £1,670 (SGD2,839) 35%

From the table above we can summarize that Singapore’s prime CBD properties are priced at a discount of between 35-67% as compared to other major financial centres of the world. Given Singapore’s ease of doing business, good governance and transparency; coupled with a scarcity in land and the expected increase of population to 6.9m, prices will only go up over the long term. As with all property cycles, there are bound to be ups and downs along the way; however with data all the way back to 1995 shown in the chart below, it can be seen that the trend of the market is up with higher highs and higher lows along the way. The price slump in the prime property market may be over and is currently well on its way to recovery.

In conclusion, the current market represents the best opportunity for investors to buy prime residential properties in Singapore’s CBD as prices have recovered off their low in end 2015 as shown in the chart below; and those who are investing or have invested are poised to reap the benefits from the next wave of property bull market.