Housing measures and other factors have opened a new window of opportunity for home buyers.
Considered a playground for wealthy Singaporeans and foreigners, the exclusive residential enclave of Sentosa Cove has lost some of its lustre from its heyday; due mainly to the 2008 global financial crisis and the onslaught of the government’s property cooling measures, revealed a new white paper from Colliers International.
Nonetheless, a window of opportunity may have opened in this high-end market, offering sound investment fundamentals in the long term.
Home to several prime property developments, Sentosa Cove saw owner-occupiers and investors eagerly snapping up its first few condominium projects, including The Berth by the Cove, The Azure, The Oceanfront@Sentosa Cove and The Coast at Sentosa Cove.
From Q4 2004 to Q1 2008, condominium prices in Sentosa shot up 213.8 percent compared to the 124.2 percent median price growth of those on the mainland.
After almost a decade since new homes were launched in Sentosa Cove, the residential enclave fell off the radar of investors and owner-occupiers as the global financial crisis, which started to take hold towards the end of 2008, affected the condominium market in the area.
Its impact was further aggravated by the introduction of property measures and saw median prices of condominiums fall 44.2 percent in two consecutive quarters to hit S$1,646 psf by end-September 2013, or 1.5 percent down from prices of their mainland counterparts.
The about turn offers home buyers the opportunity for value investment and the ability to own a dream home.
Notably, the S$1,646 psf median price of condominium units in Sentosa Cove is only 25.6 percent higher than the S$1,311 psf median price of 99-year leasehold mass-market condominiums in the Outside Central Region (OCR) during Q3 2013. In addition, “the entry-level price band of S$1.7 to S$2.0 million is comparable and in some instances, more favourable than the prices of some popular new mass-market homes on the mainland”, noted Colliers.
Aside from that, there is also “potential for the net rental yields of 2.8 percent as of September 2013 to return or even exceed the historical high of 5.4 percent achieved in Q4 2008 in the long run, when the major economies emerge from their doldrums”.