Price gap between GCBs and Sentosa Cove bungalows narrows further

The sales volume of luxury private homes in the exclusive city of Sentosa Cove have taken a toll, as the additional buyer’s stamp duty (ABSD) rose from 30% to 60% for foreign buyers purchasing residential property in Singapore. This measure, which came into effect on April 27, resulted in a knee-jerk reaction from its citizens, with the sales of condos falling from eight transactions in April to four in May. “This reduced sales momentum could be attributed to — partly, if not entirely — to the hike in ABSD,” says Han Huan Mei, director of research at List Sotheby’s International Realty.

Sentosa Cove is the only location in Singapore where foreigners are eligible to purchase landed properties such as beachfront properties or marina-facing homes and apartments. This particularity, combined with the premium attached to the types of sea views the bungalows at Sentosa Cove get to enjoy, draw investors to the location.

Furthermore, since Lumina Grand EC is located in Singapore’s western region, residents can expect to experience true convenience. With plenty of amenities nearby for leisure and dining, coupled with the nearness to shopping malls, this pipeline development provides an ideal residential haven.

However, the purchase of three apartments by three foreigners in June, and four Singapore permanent residents in July suggest that there may be an opportunity to scoop up deals on the market. Research conducted by List Sotheby’s International Realty indicate that the price gap between mainland Good Class Bungalows (GCBs) and Sentosa Cove bungalows has narrowed from approximately $11.65 million in 2021 to $5.37 million this year.

Han foresees a pick-up in sales next year at Sentosa Cove, spurred by newly minted permanent residents and citizens keen to restart their acquisition plans. “It is likely that in 2024, prices will be similar to this year with the exception of bungalows with land areas of more than 18,000 sq ft. Demand for these spacious homes will be high and they are likely to fetch higher prices,” she says.

The purchase of luxury private homes in exclusive enclaves such as Sentosa Cove took a hit following the Singapore government’s April 27 implementation of the additional buyer’s stamp duty (ABSD) for foreign buyers, which doubled from 30% to 60%. According to List Sotheby’s International Realty’s Han Huan Mei, the sales of condos fell from 13 in February to eight in April, and then to four in May. This was mirrored by the sale of three detached houses in March, dropping to one each in April and May.

Sentosa Cove is the only Singaporean location that offers the opportunity to purchase a landed home, and its premium sea views attract foreign buyers. However, the installment of ABSD may have shifted the outlook as buyers may be deterred by the increased burden, with sellers having to adjust their expectations.

Han believes that activity in Sentosa Cove will increase in 2024 due to the fresh intake of permanent residents and citizens eager to restart their property acquisition plans, and the demand for homes with land areas of more than 18,000 sq ft. will likely fetch higher prices. Nevertheless, she expects the buying mood for its bungalows to remain muted for the remainder of 2023.