Nancy Hawkes, a property investor and resident at Sentosa Cove for the last five years, is also a real estate specialist there. Like most, she was caught off guard by the government’s latest property cooling measures that came into effect on Jan 14. She remembers the day vividly: “I had put in a cheque on Wednesday morning, just two days before the new measures came into place.” The cheque was for the down payment of her latest and third acquisition of a condominium unit at Sentosa Cove — a three-bedroom, 1,873 sq ft apartment at the 124-unit The Marina Collection by developer Lippo Group.

“I was sad for an entire day,” she confesses. “I didn’t want to be hit by the seller’s stamp duty. But after thinking it over, I decided to go ahead with the purchase.” She recently received the keys to her new apartment at The Marina Collection, and is now gushing about the sea views, spacious layout and proximity to One°15 Marina Club next door.

Hawkes: The 'Ang Moh' (Caucasian) expats love the waterfront lifestyle, so therental market is buoyant and prices should hold.

Hawkes is planning to furnish the apartment, complete with Bang & Olufsen sound system, magic mirror television and Italian designer furniture, which would allow her to command a monthly rental rate of $9,000 to $10,000. “I’ve already received an offer from an American couple, who requested that I just put in curtains and light fittings and lease it to them for $8,500 a month,” she says. “But I enjoy doing up my apartments, so I’m not prepared to lease it until I’ve completely furnished the unit.”

One of her other apartments at Sentosa Cove is a four-bedroom, 2,077 sq ft apartment at The Oceanfront purchased in June 2009 for $3.6 million. After spending more than $100,000 in renovations, she and her family moved in last July. Her first purchase was a 1,668 sq ft, three-bedroom apartment at The Berth by the Cove, where the Hawkes family had previously lived before “upgrading” to The Oceanfront. The unit at The Berth is currently leased out at $8,000 a month.
The Ang Moh factor

“You know why prices won’t drop?” asks Hawkes. “The ‘Ang Moh’ [Caucasian] expats love the waterfront lifestyle, so the rental market is buoyant and prices should hold.” Likewise, she’s convinced that Sentosa Cove prices are “underpriced, compared with similar condos in the traditional prime districts”.

Admittedly, Sentosa Cove is a unique product that appeals to those who enjoy sea views, yachting and a waterfront lifestyle, says Chua Chor Hoon, DTZ’s head of research for Southeast Asia. “However, many people still prefer the traditional prime districts on the mainland because of accessibility and more choices of luxury condos.”

Today, seafront apartments at Sentosa Cove, which are 99-year leasehold, are priced at $2,000 to $2,500 psf range, while high-rise apartments in the prime districts on the mainland are in the high $2,000 to $3,000 psf, says David Neubronner, head of residential project sales at Jones Lang LaSalle (JLL). With a limited number of residential units at Sentosa Cove — just 2,100 condo units — prices are also likely to hold up better, as there’s little fear of an oversupply.

The very success of Sentosa Cove as an exclusive waterfront residential enclave for the seriously wealthy from around the world has led to properties there setting record prices in more buoyant times. On the flipside, it has also made demand more susceptible to global market vagaries, compared with those on the mainland, which are supported by a larger base of local buying interest.

In 1Q2010, for example, there were 22 landed housing transactions (both new and resale) at Sentosa Cove. In 1Q2011, there were only three, notes Chua. There were 33 condo transactions (new, sub-sale and resale) at Sentosa Cove in 1Q2010, but only eight a year later (see table). The contraction in volume of transactions in 1Q2011 can partly be blamed on the lack of new launches. “However, market sentiment has also turned cautious, owing to the January cooling measures and, more recently, the Japan catastrophe and Middle East revolts, which have dampened the stock market,” she says.

JLL’s Neubronner, however, brushes aside the current tepid sales. “I wouldn’t lose any sleep over it. There is always seasonal buying in the residential market, particularly in the luxury segment. Traditionally, the New Year holiday is about the most unexciting period marked by low activity.”

The key, he points out, is market fundamentals. “A buoyant economy in Singapore and the region, a market flushed with money and low borrowing rates will continue to drive the market.”

But, even he has to admit that overall sentiment has been dented by recent global events. On the other hand, the current lull could also be “the best time to negotiate and cash in on investment opportunities in Sentosa Cove”, he says.

Reawakening of interest

The completion of new condos, such as the 72-unit Turquoise by Ho Bee Investment, the 151-unit Seascape by Ho Bee and IOI Properties and the 124-unit The Marina Collection, has reawakened buyer interest, say property agents on the ground. “There is usually more transaction activity when a project nears TOP [temporary occupation permit],” observes DTZ’s Chua. Some owners may be looking to sell to avoid having to pay 25% of the purchase price due upon TOP, she adds. Buyer interest is also heightened, as they can see the actual quality of the apartments and will either be able to move in themselves or lease out the properties immediately.

Prices are likely to hold because developers are not prepared to sell at discounted prices upon completion, preferring instead to rent out available units. A classic example is City Developments Ltd’s 228-unit The Residences at W Singapore. As at end-February, 21 of 56 units released had been sold at prices ranging from $2,521 to $2,968 psf. “I have holding power, I will keep [the units] as an investment, and later on, when there’s good demand, I will release [them] and move on,” says executive chairman Kwek Leng Beng at the company’s results briefing at end-February, referring to unsold units. “No other condo [at Sentosa Cove] has a shopping arcade.” The Residences at W is next to the upcoming 240-room W Singapore Sentosa Cove Hotel, which is linked to an 86,000 sq ft commercial space for restaurants and shops.

It’s the same story with Turquoise, which is also newly completed. Instead of selling, the developer has put available units on the market for rent. According to marketing agents, 3+1 bedroom units ranging from 2,088 to 2,411 sq ft are asking for monthly rental rates of $10,000. Savills is the joint leasing agent for the units.

Lippo Group is also leasing out a limited number of units at The Marina Collection. Most recently, it rented out a 3,369 sq ft penthouse for $16,000 a month. The development has 31 penthouses, with the lar­gest sized at 4,693 sq ft and priced at $12.5 million.

The Marina Collection was launched in Jakarta for sale over the weekend of March 26 and 27 by joint marketing agents JLL and Savills. The response, according to JLL’s Neubronner, “was encouraging”, with five parties keen on coming to Sentosa Cove to see the act­ual development and the new show apartment. In the pipeline are more road shows around the region, including Hong Kong. “We are confident buying interest will return to Sentosa Cove soon, given its global positioning and lifestyle concept,” he says.  “Whether it is Monte Carlo or Florida, the rich and famous want a piece of the sea-front lifestyle.”

As such, the marketing agents will also be showcasing The Marina Collection at the upcoming Singapore Yacht Show at One°15 Marina Club from April 8 to 10, according to Phylicia Ang, executive director of residential services at Savills. “That’s where all the boating enthusiasts from the yachting community around the world will be congregating, and it’s an ideal platform to showcase The Marina Collection right next door.”

Homebuyers of The Marina Collection will also receive a membership at One°15 Marina Club to enjoy its facilities, which include a hotel, restaurants and tennis courts. There are also berths reserved for the boats of The Marina Collection residents.

To date, 44 units at The Marina Collection have been sold, with 80 units still available. Transaction pri­ces have ranged from $2,200 psf to a high of $2,917 psf when units first previewed in December 2007. The average selling price of the new phase will be $2,600 psf.

Meanwhile, at Seascape, which obtained TOP at end-February, 37 of the 40 units released have been sold, at $2,585 to $3,146 psf. The most recent transaction was in January, when a 3,380 sq ft unit on the eighth floor was sold for $9.6 million ($2,840 psf). The developer’s asking price today is closer to $2,800 psf.

Holding on to asking prices

Homeowners and investors are also holding on to their asking prices for now. At Sentosa Cove’s first landmark condo, CDL’s fully sold 264-unit The Oceanfront that was completed last year, the most recent transaction was in January, when a 2,077 sq ft sea-facing eighth-floor unit changed hands in the resale market for $2,455 psf, or $5.1 million.
A larger, four-bedroom 3,025 sq ft unit on the same floor, which commands panoramic 270-degree sea views, was recently leased for $18,000 a month. An identical unit on the floor above is asking for the same rental rate and is available for sale with an asking price of $8.9 million ($2,950 psf).

Likewise, a 4,930 sq ft sky suite on the 14th level of The Oceanfront is on the market, both for sale and lease, at $14.5 million ($2,941 psf) and $28,000, respectively. The apartment also boasts 270-degree views and has a separate guest suite. The marketing agent of the sky suite is Samuel Eyo, associate director of Prestige Homes at Savills Singapore.

Eyo is also marketing a 2,024 sq ft, three-bedroom apartment at the 249-unit The Coast, which was completed by Ho Bee in 2009. The asking rental rate is $8,000 a month. The unit, which has amazing pool and sea views, is also on sale at around $2,300 psf, or $4.66 million.
While the supply of condo units at Sentosa Cove is limited, the deluge of new units entering the leasing market around the same time is likely to put pressure on rents over the next few months, says a marketing agent who declined to be named. “We recently renewed the lease on an apartment at Sentosa Cove for 20% less than the previous tenancy,” says the agent.

The rental market has revived in the past few weeks, especially with enquiries from expatriates relocating from Japan, notes Angela Ang, business director of boutique realtor Nixon Real Estate, which specialises in residential properties in the prime districts of Orchard Road, Marina Bay and Sentosa Cove. There has also been renewed buying interest from mainland Chinese buyers, notes Ang. “These are mainly owner-occupiers buying for their own stay.”

Foreign buyers are not coming back in a big way like in 2007, other than those from mainland China, says DTZ’s Chua. As such, she predicts prices of luxury homes to remain relatively flat in the coming quarters.

A 270-degree view of the sea and the newly completed 124-unit Marina Collection condo from a 14th-storey sky suite at The Oceanfront in Sentosa Cove.