Sentosa Cove, the high-end, ultra posh waterfront enclave, started out as a residential zone in 2006. The area has 2,160 homes - from high-rise condominiums to luxury bungalows with berthing facilities. It is the only enclave where foreigners can own landed property, subject to approval of course. Foreign buyers reportedly snapped up landed homes between 2009 and 2011, causing a spike in prices. Apparently, the super-rich find its ‘resort living lifestyle’ appealing.
Current prices at Sentosa Cove are now looking somewhat tempting - hovering at $1,394 per square foot (psf) for non-landed homes; 40% down from its 2010 peak; and not far from $1,176 psf seen in 2006.
Despite its falling prices, 77% of Sentosa Cove resale transactions were still profitable. Since Additional Buyer's Stamp Duty (ABSD) kicked in, on Dec 8, 2011, the number of profitable resale transactions has been halved. Profits ranged from $500K to almost $5 million (excluding stamp duties and taxes).
Losses and Gains
Property investment is a double edge sword. Investors walk a fine line. Some make money and some lost. But that is life.
A 4,822 sq ft unit at Seven Palms bought by a British owner at $16 million in 2010 was sold for $8,880,000. The Seven Palms owner decided to relocate back to his homeland and sold it at a monetary loss of $7.12M.
Relocation, default on bank loans, financial stress, unemployment are some of the reasons for negative property sale.
On the flip side, a Singaporean entrepreneur chalked up a capital gain of $18M when she sold her Sentosa Cove bungalow for $26M in June 2013.
SC Global Developments' Seven Palms set a record of $4,200 psf for a 99-year leasehold development when an Australian paid $57 million for two units In 2012.
The average holding period for a condo unit in Sentosa is 4.1 years and 3.6 years for a landed home
Sentosa is a very niche market. Sentosa Cove buyers come with deep pockets. They are generally less price-sensitive.