Value St Regis Residences buys at $2,100 to $2,200 psf?

By Tay Hock Meng / The Edge Property | August 14, 2015 9:00 AM SGT
In the latest transaction recorded at St Regis Residences at end-June, a 2,142 sq ft, four-bedroom unit on the 11th floor was sold for $4.5million ($2,100 psf), just 11% below the $5.04million ($2,353 psf) it was purchased for in November 2006.
A 1,959 sq ft, four-bedroom unit in the same block was also sold in June. It fetched $4.225 million ($2,157 psf), or 14% below the seller’s purchase price of $4.9 million ($2,501 psf) in September 2009. The original owner paid $4.608 million ($2,353 psf) for the unit in June 2006, when St Regis Residences was launched.
Both transactions bring the total resale deals at the 173-unit luxury condo to nine so far this year. Eight of them registered a double-digit loss for the respective sellers.
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“The good news is that rich investors appear to think that St Regis Residences looks like a good buy at $2,000 to $2,200 psf levels,” observes Ku Swee Yong, CEO of Century 21. “My concern is that, with so many ultra-high-net-worth investors willing to offload their luxury property investments at a loss, it could affect Singapore’s reputation as an investment hub for the rich.”
The most spectacular drop was experienced bya 6,017 sq ft duplex penthouse, which saw its price plunge from $28 million ($4,653 psf) at its peak in May 2007 to $12.2 million ($2,028 psf) in March this year, although no caveat was lodged for the latest sale. The penthouse set the record price for St Regis Residences — in terms of both absolute and psf prices — when it changed hands in a sub-sale eight years ago.
“St Regis Residences achieved several firsts when it was launched,” says Ku. “It was the first project where prices crossed the $3,000 psf threshold and also the first to smash the $4,000 psf barrier.”
Jerry Low, senior marketing director of ERA Realty, reckons there could be more transactions that are at least 5% to 10% below the current market price of $2,100 to $2,200 psf. Most of these sellers are people who are cashing out, as they have multiple properties and face refinancing issues as a result of the total debt servicing ratio (TDSR), he explains.
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St Regis Residences is located in twin 23-storey towers located behind the 299-room St Regis Hotel on Tanglin Road. The joint developers for the hotel and luxury residences are Hong Leong Holdings, City Developments and TID Pte Ltd (a joint venture between Hong Leong and Mitsui Fudosan). The 999-year leasehold project was completed in 2008, at the onset of the global financial crisis.
So far, the developer is still holding on to 12 unsold units. Nine are currently leased, and the remaining three are available for sale. The three units are believed to be four-bedroom apartments, and ERA’s Low is currently marketing one of them at a price tag of $6.4 million, or about $3,000 psf.
The developer’s asking price is well above current market resale prices. Low says, “The developer has high holding power. It is willing to entertain any offers by serious buyers and negotiate on the final price.”
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Rents have also been weakening, with the Core Central Region experiencing the sharpest contraction, at 1.9% q-o-q in 1Q2015, according to CBRE in a report on May 25. “Increased stock in the CCR [is] the main reason for the sharp rental decline,” Joseph Tan, executive director of residential at CBRE, comments in the report. “The CCR, which traditionally has the highest supply of rental stock, was hit by the shrinking budget of expatriates and the availability of newer accommodation at more attractive rents.” CCR covers the traditional prime districts of 9, 10 and 11, as well as the new prime districts of Marina Bay and Sentosa Cove. Rents at St Regis Residences have likewise been on a downward trend. Leland Yong, associate branch director at PropNex Realty, says: “Asking monthly rental rates of four-bedroom units are now at $10,000 to $12,000 compared with the peak from 2010 to 2013, when asking rents ranged from $12,000 to $15,000.”
Most of the interest in the four-bedroom units at St Regis is coming from European expatriates. Jason Loke, associate director of OrangeTee.com, says, “I’m not too concerned with competition from neighbouring developments, as St Regis is a reputable brand and the only hotel-branded residences in the neighbourhood.” Four-bedroom units on the high floors are still posting asking rents of $12,000 to $13,000 a month.
This article appeared in the City & Country of Issue 686 (July 20) of The Edge Singapore.