The drivers for ultra-luxury condominiums look strong.
Firstly, Singapore is a haven for the wealthy in Asia and elsewhere. Political stability, rule of law, transparency, social cohesion and a strong currency attract wealthy people to buy physical property here.
While some foreigners will buy non-residential properties, others will buy houses because they have access to them.
Foreigners can buy private non-landed homes here, but will have to pay an additional buyer's stamp duty (ABSD) of 30% on top of the buyer's stamp duty.
Secondly, Singapore is located in a region where wealth creation is strong. As the Chinese economy matures and population growth stagnates or turns negative, the Chinese economy may no longer grow at near double-digit annual rates. Nevertheless, the world's second largest economy will still generate significant wealth.
At the same time, the economies of populous countries such as India and Indonesia are likely to grow rapidly in the coming years, thereby contributing to wealth creation.
The emergence of more multimillionaires and billionaires in the region will help drive demand for luxury properties here.
Thirdly, Singapore is growing strongly as a wealth management hub. Many wealthy foreign nationals are setting up family offices here.
Under the Global Investor Programme (GIP), qualified global investors who wish to drive business and investment growth in Singapore can obtain Permanent Resident (PR) status.
Through the GIP, about 200 people will become permanent residents from 2020 to 2022. However, it will become more difficult to obtain PR status through this route - from 15 March, new applicants will need to invest more to become permanent residents.
Generally speaking, a PR cannot purchase a landed home in Singapore. A PR pays 5% ABSD for the purchase of his first home. Since Singapore offers a good lifestyle for the wealthy, wealthy permanent residents can be expected to buy homes here - thus driving demand for luxury condominiums.
Fourth, top talent in different fields is likely to flourish in the coming years. Economics explains this phenomenon. With digitalisation and ease of travel, sports stars, chefs and entertainers, among others, can build a global audience and profit from their global reach.
Expect wealth creators from different sectors to pursue lifestyle and investment needs for luxury properties in global cities. Singapore's top condominiums are likely to be high on such shopping lists.
Fifthly, premium condominiums possess scarcity value. These are likely to be found mainly in a few streets around the western end of Orchard Road. Within these streets, wealthy buyers are likely to be looking at first-class developments.
Les Maisons Nassim could provide a template for developers targeting the super-rich. The developments are large in size, starting at just over 6,000 square feet. More property developers are likely to plan products aimed at the very wealthy.
The freehold Newport Residences, soon to open in Tanjong Pagar, has a 13,000 sq ft super penthouse with a private infinity pool that may appeal to the super-rich. With the right product, more wealthy people will be attracted to buy homes here.
