Sentosa Cove's strength becomes its weakness as cooling measures bite – report

PETALING JAYA (Sept 20): Sentosa Cove – Singapore's luxury waterfront enclave which recently appeared in the box-office hit 'Crazy Rich Asians' – was dealt another blow by higher stamp duty on foreign purchasers, further hurting the prospects of its already slow-moving real estate market, reported Bloomberg.

Higher stamp duties on property sales – 20% for foreigners compared with 3% for foreigners – which took effect July 5 have exerted more pressure on the cove, which stood out for being the only place where non-citizens can buy landed homes.

The latest cooling measure, combined with uncertainties arising from higher interest rates and a brewing trade war, will dampen investor appetites, said Cushman & Wakefield's head of research in Singapore Christine Li.

Wealthy foreign investors are playing a waiting game, said Li. Meanwhile, Singaporeans favour freehold properties on the mainland over Sentosa's leasehold homes.

CBRE head of research for Singapore Desmond Sim said while the rise in stamp duty rates will hit the entire market, Sentosa Cove will lose more of its lustre thanks to these curbs.

Already, sellers have swallowed losses of up to 40%, though Li observed that prices have dropped to a level where further downsides would be limited.

One loss-making transaction was brokered by Cosmopolitan Real Estate Pte – a S$11 million (RM33.26 million) property sold by a businessman from the Middle East.

While his losses from the sale were around S$3 million, managing director Chandran V R said he had a willing buyer and was “realistic about the situation”.

Chandran also observed that some bungalows in Sentosa Cove have been on the market for four to five years.

A penthouse on The Oceanfront finally sold for S$7.2 million in April – three years after it was put up for sale, reported the Straits Times. The property was previously transacted for S$9.33 million in 2007.

Meanwhile, a 4,822 sq ft apartment at Seven Palms is going for S$12 million, less than its S$16 million price tag in 2010.

More recent transactions that took place after the higher stamp duty rates were introduced were not concluded at a loss, but owners are still planning to sell their properties, according to Cushman.