Singapore home prices to lag behind Hong Kong on building boom

SINGAPORE: A bungalow on Singapore’s Ocean Drive, a stretch of luxury homes lined with Bentleys and Ferraris, sold for a record S$30 million (RM72.6 million) in October. In Hong Kong, a duplex a third the size went for almost three times as much the same month.

Singapore’s luxury-home prices won’t match Hong Kong’s because an increase in building ahead of two casino projects in the city-state will see nine times the number of new apartments going up over the next three years than in Hong Kong, according to real estate broker Savills plc. Singapore’s high-end home prices rose 4% in 2009, while Chinese buyers fueled a 45% jump in Hong Kong, Savills said.

“Hong Kong has some unique factors which drive the super luxury market, particularly mainland buyers who have been very aggressive,” said Simon Smith, Savills’s Hong Kong-based head of research and consulting. “We will always see some dramatic prices in Hong Kong you wouldn’t necessarily see in Singapore.”

Luxury property prices in Singapore are about 19% below their 2007 peak, according to a Goldman Sachs Group Inc report published Jan 13. They may rise about 15% this year, though still remain 7% below their highs by end-2010, Goldman said. Hong Kong luxury prices, which have surpassed their mid-2008 peak, will rise 15% in the next six months, Colliers International Ltd forecast in January.

Two resorts are being built in Singapore -- the city-state across the Johor Strait from Malaysia -- with casinos, hotels, restaurants and attractions that the government hopes will help lure 17 million visitors and triple annual tourism revenue to S$30 billion by 2015.

Genting Singapore plc unit Resorts World Sentosa opened part of its US$4.5 billion (RM15.3 billion) project on southern Sentosa island last month, while Las Vegas Sands Corp said it may open the Marina Bay Sands, in downtown, in April after construction delays.

To make the economy less dependent on electronics manufacturing, the Singapore government in April 2005 overturned a ban on casinos that had been in place since independence in 1965. Resorts World and Marina Bay are the only two casino developments approved and the government has said there will be only two gaming operators for 10 years.

“The integrated resort is a stale story by now,” Tay Huey Ying, a Singapore-based director of research and consulting at Colliers, said at a property seminar on Jan. 13. “I do not foresee a great impact. We will need another growth story to bring the foreigners back to Singapore.” – Bloomberg LP

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