The doubling of the Additional Buyer's Stamp Duty (ABSD) for foreign buyers purchasing homes in Singapore, from 30 per cent to 60 per cent, has hit sales of luxury private homes in exclusive enclaves such as Sentosa Cove. The measure came into effect on 27 April.

"Based on the BBSD data provided by the Urban Renewal Authority (URA), we observed that transactions of non-landed homes and detached townhouses in Sentosa Cove were quite active in the first three months of the year. However, transactions slowed down in April, and the pullback was further exacerbated in May, June and July." So said Han Hwan Mi, director of research at List Sotheby's International Realty.

Thirteen no-sale orders were placed on condominiums in Sentosa Cove in February, while two detached townhouses were also recorded as sold. This was followed by 11 non-landed transactions and three standalone houses changing hands in March.

However, a subconscious reaction emerged after April's property cooling measures, with condominium transactions falling to eight in April and then four in May. Similarly, only one landed purchase deal was put on hold in April and one in May.

Han Huanmi said, "This weakening of sales momentum may be partly, if not entirely, attributable to the rise in ABSD."

Sentosa Cove is the only place in Singapore where foreigners are eligible to buy landed homes. In addition, Sentosa Cove has a wide range of beachfront properties and waterfront-facing homes and condominiums. It is arguably the only central location in Singapore that offers this lifestyle environment.

"We expect buying sentiment for Sentosa Cove townhomes to remain subdued for the rest of 2023. To close any deals, sellers may have to tone down their price expectations to help ease the burden of ABSD tax rates that buyers will have to bear, especially if they are selling to foreigners."

However, Han Hwanmi noted that some foreign buyers may have sensed in recent weeks that Sentosa Cove has a chance to set the market abuzz with home purchases. She noted that three foreigners bought three condominiums in June, while four Singapore permanent residents purchased four condominiums in July.

The average price gap between Sentosa Cove townhomes and premium townhomes has narrowed from around S$11.65 million in 2021 to S$8.2 million in 2022, as prices of landed and luxury condominiums on the main island have risen in recent years. According to a study by Sotheby's International Realty, prohibited sale order transactions in the first seven months of 2023 indicate that the price gap between premium townhouses and Sentosa Cove townhouses on the main island narrowed further this year to S$5.37 million.

"Considering that all Sentosa Cove townhouses are 99-year leasehold properties, while almost all premium townhouses are freehold, the former are usually priced lower than premium townhouses. However, there is also a premium for the type of sea view that can only be enjoyed by townhouses in Sentosa Cove. These are the two main factors that attract investors to Sentosa Cove,"

She expects sales at Sentosa Cove to pick up next year, thanks to new permanent residents and citizens who are eager to restart their previously interrupted home-buying programmes. "Prices in 2024 should be comparable to this year, with the exception of townhomes with land areas of more than 18,000 square feet. There will be high demand for these spacious homes and of course prices will rise accordingly." .