Luxury Resale Condo Market Stalls in 2024 as Foreign Buyer Demand Declines

Singapore’s luxury condominium market faced a significant slowdown in 2024, with property agents reporting fewer buyers despite a high number of listings. The decline in foreign buyer interest, driven by increased stamp duties and limited new supply, has left the market stagnant. In this article, we’ll explore the factors behind this trend and what it means for the future of luxury real estate in Singapore.

Decline in Luxury Condo Transactions

In 2024, only 21 luxury condo units in Singapore’s Core Central Region (CCR) were sold for over $10 million, a sharp drop from 36 units in 2023 and 56 units in 2022. This decline is attributed to the 60% Additional Buyer’s Stamp Duty (ABSD) imposed on foreign buyers in April 2023, which has significantly reduced demand.

According to the Urban Redevelopment Authority’s (URA) Realis caveat database, the priciest resale transaction in 2024 was a 5,801 sq ft unit at Eden Residences Capitol, which sold for $19.75 million. This pales in comparison to 2023’s top transaction—a $32 million penthouse at Goodwood Residence.

Impact of ABSD on Foreign Buyers

Foreign buyers, who traditionally dominated the luxury condo market, have been deterred by the hefty 60% ABSD. Permanent Residents (PRs) pay 5% ABSD on their first property, while Singaporean citizens face 20% ABSD only on their second property. This disparity has shifted the market dynamics, with fewer foreign investors entering the luxury segment.

Ms. Christine Sun, Senior Vice-President of Research and Analytics at OrangeTee & Tie, noted, “The decrease in transactions can primarily be attributed to a decline in demand from foreign buyers, who have been significantly affected by the 60% ABSD.”

Limited New Supply

Another factor contributing to the market’s stagnation is the limited supply of new luxury homes. In 2024, few new luxury projects were launched in the CCR, reducing options for potential buyers. Ms. Sun explained, “The scarcity of launches in the CCR has further reduced transaction volumes.”

Challenges for Property Agents

Property agents have reported difficulties in selling luxury condos, with many high-value listings remaining on the market for months. Ms. Nicole Teo, Deputy Branch Associate Director of OrangeTee & Tie, highlighted that foreign buyers were once the primary purchasers of luxury condos. However, the high ABSD has shifted their focus to other investments.

Ms. Stefanie Wong of Singapore Realtors Inc. added, “Arranging viewings can take weeks or even months, especially with tenants in place. It’s a challenging market for luxury properties.”

Bright Spots in the Market

Despite the slowdown, there are some positive signs. Median rents for non-landed properties in the CCR saw a slight increase in late 2024, rising from $5.50 to $5.57 per sq ft per month. This improvement may attract investors looking for rental income opportunities.

Ms. Sun noted, “Some investors may continue to buy properties for rental investment as the rental recovery could continue this year.”

Future Outlook

While the luxury resale condo market faces challenges, experts believe that the market will eventually stabilize. The limited pool of high-net-worth buyers and the high ABSD remain significant hurdles, but the slight recovery in rental yields offers a glimmer of hope for investors.

What Does This Mean for Buyers?

If you’re considering investing in luxury properties, here are a few tips:

• Evaluate Rental Potential: With rents showing slight improvements, consider properties with strong rental demand, such as River Green, Newport Residences and One Marina Gardens.
• Explore Alternative Locations: Look beyond the CCR to areas like Sentosa Cove, where foreign buyers are exempt from ABSD.
• Work with Experts: Partner with experienced agents who understand the luxury market and can help you navigate the current challenges.

Interested in exploring luxury properties in Singapore? Whether you’re buying or selling, I’m here to help. Contact me today to discuss your real estate goals!