Luxury apartment sales take a hit from ABSD rate hike

In 1H23, luxury apartments’ sales value dropped to $964.67m.
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The ABSD rate hike in April led to the sales slump in the luxury apartments market.

Data from CBRE showed that Luxury apartment unit sales fell in May and June following the rate hike’s implementation.

In 1H23, only 92 luxury apartment units changed hands, recording a total transaction value of $964.67m. The 1H23 is lower than the 106 units worth $1.085b transacted in H2 2022, and $1.097b in H1 2022. 

Prices of luxury apartments, however, held firm despite lower transaction volumes. 

Based on CBRE Research’s basket of freehold luxury projects, average luxury apartment prices rose 1.1% to $3,463 psf in 1H23  from $3,425 psf in 2H22.

Looking ahead, CBRE said cooling measures, elevated interest rates and the uncertain macroeconomic situation will likely take a  toll on the luxury residential market in 2H23.

“In the near term, transaction volumes could dwindle further as investors and foreign buyers are deterred by the increased ABSD rates in Apr 2023’s cooling measures. Prices are, however, unlikely to decline as rental yields have increased and there is limited new luxury supply pipeline,” CBRE said.

“In the longer term, growing wealth in the region and Singapore’s strong fundamentals as a business hub would continue to draw investors looking for a haven to park their wealth,” CBRE added.