Business Times: Thu, Jun 07
WING Tai's head honcho has questioned why a wide gap exists in high-end home prices between Singapore and other cities such as Hong Kong and London, despite the Republic becoming a lot more vibrant and cosmopolitan in recent years.
Historically, London and Hong Kong have always had a premium in upmarket home prices over Singapore because they were perceived as being a lot more cosmopolitan.
"But this gap has narrowed a lot in the past few years due to government policies that have made the city a lot more vibrant. So why are high-end property prices here (priced at) only half of London?" Wing Tai chairman Cheng Wai Keung said in an interview with BT.
Based on Knight Frank's Prime International Residential Index, the average prime apartment price in Q4 2011 was US$2,400 per square foot here, compared with US$2,600 psf for Hong Kong. Prime London apartments and houses averaged US$4,500 psf.
Mr Cheng, a Singaporean hailing from Hong Kong and whose family is involved in the Hong Kong, China, Singapore and Malaysia property markets, estimates that high-end homes in Singapore are priced at about S$3,000 psf and above, while those in Hong Kong are at the equivalent of around S$6,000 psf and above.
"The (Singapore) government has spent so much money and we have been so successful in the last few years; not only have we caught up but in fact we're better than some of the first-tier cities in terms of entertainment, culture, arts . . . Why are we - at the expense of creating a social problem - having casinos? Because it is part and parcel of the total package that has created a buzz that is necessary for a first-tier city. We are also attracting good business into Singapore . . . (and) very high-paying jobs that create economic value.
"So why has the price gap instead of narrowing become wider?"
Some market watchers wonder if there has been a shift in the Singapore government's thinking such that it may prefer to attract high net worth individuals (HNWIs) who come here and generate economic activity rather than having too many HNWIs who buy a holiday home in Singapore that they live in for just a few weeks in a year.
International Property Advisor CEO Ku Swee Yong notes that Singapore was a much more open market during the previous high-end residential property boom in 2006-2007.
"Now the 10 per cent ABSD (additional buyer's stamp duty) on foreign buyers has been deterring some from entering the local market," he says.
"In this segment, we don't have to worry that it is Singaporeans' hard-earned money that will be caught up in a property bubble. If a foreigner gets his fingers burnt investing in a luxury condo, he can probably stomach it; he would have been advised by his wealth managers."
Mr Cheng suggests that the big difference in high-end home prices between Singapore and other cities such as Hong Kong and London, despite Singapore being more vibrant today, implies that luxury homes here are undervalued.
"Given the attractiveness of living in Singapore, we are underpriced."
Wing Tai is developing Le Nouvel Ardmore and Nouvel 18 (both in the posh Ardmore Park area), Ascentia Sky near Redhill MRT Station and Foresque Residences at Petir Road in the Upper Bukit Timah area. Its past developments include mass-market projects such as Kovan Melody and Casa Merah...
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Martin Koh/ Sherry Tang
Martin Koh/ Sherry Tang