Luxury residential sales plunge in 3Q2023; leasing demand rises: Huttons Asia

Sentiment in the luxury homes market took a downward turn in the third quarter of 2023 after a high-profile money laundering crackdown occurred in August. Huttons Asiareported that luxury condo transactions were estimated to be at 37 deals, 50.9% lower than the preceding quarter. The total value of these deals amounted to $295.8 million from January to September, with a 25% drop in comparison to the same period of 2022.

Mark Yip, CEO of Huttons Asia, attests that the money laundering investigation has damaged the market, in addition to the ABSD rates that doubled for foreign buyers in April. He predicts the luxury housing market may still show improvement, however, as foreign buying has slightly increased in recent months.

The biggest luxury condo transaction in the quarter was a penthouse at Goodwood Residence for $32 million, with the seller making a gross profit of $16.4 million. The activity in the Good Class Bungalow (GCB) market, on the other hand, was the slowest to be recorded since 2013, with three GCBs sold for a sum of $69.55 million.

Meanwhile, the luxury rental market has seen a rise in demand due to foreign buyers leasing property as they attempt to acquire permanent residency. Rental transactions jumped by an estimated 44.2% quarter-on-quarter, with the highest recorded rental for a GCB at $120,000 per month. Luxury condo rental prices increased 1.8% to $36,063 per month, while 9-month totals amounted to $15,894 per month.

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Yip notes that the arrests of money laundering suspects in GCBs have made more owners hesitant to rent out their property to foreign nationals, leading to predictions of a more subdued rental market in the coming months.