Resale prices of luxury projects which is popular among foreign buyers took a hit last year, prompting concerns about foreigners exiting Singapore's real estate market en mass.
Several high-end apartments in the hotly sought after Orchard Road area and the exclusive enclave of Sentosa Cove sell at hefty losses last year.
The top losing transaction was a four-bedder at the Turquoise@Sentosa. Originally bought for $7.1 million in November 2007, it was sold at $3.9 million in July 2014, according to Maybank’s data.
Four of the top 10 loss-making sales in 2014 were from Sentosa and four in the Orchard Road area, which have historically attracted higher foreign interest, than the other parts of the city.
A study of 30 top projects with the highest level of foreigner ownership analyzed shows valuations to be largely resilient, such as Rivergate, City Square Residences and Costa Del Sol, according to Ng Wee Siang, head of research at Maybank.
Though there have been more fire sales for whatever reasons, he is of the view that these luxurious home sales are sporadic and isolated to selective projects and therefore, do not of itself conclude that foreigners are walking away.
Overall, prices of private residential property in the city dipped 4 percent in 2014, according to a flash estimate by the Urban Redevelopment Authority (URA).
Generally, buyers are required to top up their loans when property valuations decline. But some choose not to and so exit their investments. Without a global economic collapse, the risk of mass withdrawal of foreign cash seems unlikely. Foreigners won't bail simply because of a fall in resale values.
The past 10 years showed the wealthy and the rich flocking to the city state as it becomes a wealth and private banking hub. Likewise over the last decade, foreigners from around the region have flocked to buy property in Singapore because of its stable economy and superior quality of life.
At the peak, in the fourth quarter of 2011, overseas buyers accounted for over 20 percent of non-landed property transactions in Singapore, according to Maybank.
Though the proportion of foreign buyers has declined to roughly 10 percent of home sales in the third quarter of 2014, they still play a key role in the market.
The strength of the Singapore dollar vis-à-vis regional currencies and the relative stability of its market will keep foreign investors from heading for the exit.