Sentosa Cove’s condos won’t perform well unless something changes.
Families looking to splurge can stay at Shangri-La Rasa Sentosa. Capella Singapore is located in Sentosa and has been a favourite with celebrities. In 2018, it hosted a summit meeting between the then US President Donald Trump, and North Korean dictator Kim Jong Un.
Imagine living on a resort-island? It’s not clear that locals are interested in this idea, given the high prices for apartments in Sentosa Cove. This is located in Core Central Region on Sentosa Island, east coast.
A unit within the City Developments Ltd group :C09 0% recently sold 65 houses at The Residences in W Singapore Sentosa Cove with an average price per square foot of S$1,780. This low-rise, Ocean Way-based condominium was completed in 2011, and it sits on 99 year leasehold land.
Game changer
Non-landed homes on Bukit Timah Rd. continue to sell well in CCR because they appeal to Singaporeans looking to buy a home for owner occupancy.
Singapore citizens or PRs who buy their first home pay ABSD rates of 0% and 5 %, respectively.
At the private preview for freehold Watten House on Bukit Timah road in November 20, 2023, developers UOL Group, U14 0%, and Singapore Land Group, U06 0% saw strong sales, with a price average of S$3,230/sqft.
Would increasing the appeal for locals to purchase non-landed houses in Sentosa Cove help improve their fortunes and increase the number of buyers?
Sentosa has a bad reputation among some delivery staff. Sentosa may not be the only location in Singapore that has better transportation connectivity.
Sentosa’s isolation is far from complete. It has good connectivity with Singapore’s main land via road, cablecar, pedestrian boardwalk, and monorail.
Sentosa Cove probably needs an MRT, as locals love to buy homes close to MRTs.
Sentosa is a possible location for a primary or secondary school, depending on the feasibility study. Sentosa’s quiet nooks may make a great alternative location for a secondary or primary school compared to mainland Singapore. Sentosa Cove’s homes could see a dramatic increase in value if a popular Sentosa school is built.
Unperformance
Prices of S$1,780/sqft are substantially lower than many suburban private houses – new condos may sell at over S$2,100/sqft.
The Hill @ One North is located in Slim Barracks Rise and sold its units on the first day of bookings for an average price around S$2,595/sqft.
The average psf value achieved in the recent sales at The Residences at W are about 36 per cent lower than that of S$2,793.00 for 20 transaction during Q2 2010. This was around the same time as the project launched.
Shortly put, initial buyers could suffer a big mark-tomarket.
The Residences at W design might not be the most current and the development could suffer some wear and tears.
A property with a long-term lease will also lose value as the years left on the lease contract decrease.
A land parcel with 81-years remaining on its lease is valued at around 4.8% lower than one with 99-years left.
Although the price of homes has been rising since Q2 2010, initial buyers have done poorly in comparison with other homebuyers who bought at the same moment.
According to Urban Redevelopment Authority’s price indexes, prices for non-landed private houses in CCR have increased 19% between Q2 of 2010 and Q1 of 2024.
The CCR underperformed because of the rise in additional buyer’s stamp duty (ABSD) for foreigners that are not permanent residences (PRs) or investors
Today, an overseas buyer who is not a PR pays 60 percent ABSD. Singaporeans are required to pay ABSD in the amount of 20% when buying a secondary home and 30% if they purchase a third home.
Bukit Timah Road, with its prestigious primary schools and institutions of higher learning, is a popular area for local buyers.
There are plenty of locals that are single, married and without children. Such locals would prefer to purchase homes in areas where local families with children are common. The former want a home which is attractive to rent and easy to sell in the future.
Sentosa’s attraction as a holiday destination will increase with continued investments, such as RWS’s expansion.
Sentosa Cove condos might not perform as well if the island’s popularity is attributed to the high-spending tourists.
The number of new private housing developments and launches is increasing
Both tenants and buyers have more choices. Could Sentosa Cove Condos’ relative performance compared to other locations become worse?
It is possible that even the landed homes of Sentosa Cove will not find a buyer. While there have been high-profile purchases of bungalows recently in District 10, last week’s auction of 69 Ocean Drive – which belonged one of 10 foreigners who were arrested for money laundering in the S$3billion case – failed to bring in a buyer. A single bid of S$20,000,000 – far below the S$27.1,000,000 estimate – was submitted.
Sentosa Cove Condos may need to change their game if ABSD does not make any changes. This will encourage more locals to purchase the condos. For many Singaporeans, living in a waterfront residential community does not hold enough appeal.
Should Sentosa be the location of a primary school?
Sentosa’s island resort, located off Singapore’s southern coastline, is a top tourist destination. Resorts World Sentosa’s (RWS) key attractions include the Universal Studios Singapore park, Adventure Cove Waterpark & Sea Aquarium.
Sentosa features a large number of hotels and restaurants, shops and convention centres, plus beaches, world-class golf courses, historical sights, and many other amenities.
