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AsiaOne
a day ago
- Business
- AsiaOne
The biggest misconceptions about buying property in Singapore's CCR in 2025, Money News
Singapore's Core Central Region (CCR) is as straightforward as HDB eligibility rules. Everyone thinks they have a good idea of how it works, until questions are asked and they look deeper. Then suddenly there are 50 exceptions to every rule, a dozen gaps in the online information, and a stunning realisation that you've been wrong all your life about something. This is pretty much how it works with CCR properties: on the surface, you think you know the region: it's that place with all the rich expats, tech moguls, and one old uncle who has holes in his singlet but owns a GCB in Tanglin. But with the Singapore property market pivoting more toward this mysterious region (and I assure you, the CCR is a mystery,) it's time to take a more nuanced look; and to realise that quite often, much of the "property knowledge" you've been told about the CCR is wrong, or grossly oversimplified: For those not in the know: What is the CCR? The CCR is the region that houses Singapore's most expensive real estate options, like The Sail, Marina One, Ardmore Park, and various other condos that are basically a property agent's retirement fund. Historically, this is an area favoured by high-net-worth individuals, foreign buyers, and investors, and it's not necessarily about money either. Investors may also buy "cultural capital" or clout, by owning prestige properties here. Projects here are usually freehold or 999-year leasehold. Districts include: District 1: Raffles Place, Marina Bay, Cecil District 2: Chinatown, Tanjong Pagar District 6: City Hall, Clarke Quay District 9: Orchard, Cairnhill, River Valley District 10: Tanglin, Holland, Bukit Timah District 11: Newton, Novena Sentosa: Not geographically central, but it's lumped into the CCR due to its high-end positioning. Why should we regular folks be paying attention to the CCR in 2025? I've linked the relevant article in the intro, but to quickly recap: around 22 launches remain for the year of 2025, and of these, around 14 will be in the CCR. If you missed out on the non-central launches like Parktown Residence, Emerald of Katong, ELTA, etc., then consider me the bearer of luxury news: your next new launch option is likely going to be in Singapore's high-end CCR. Even before this happened, back in 2023, I'd pointed out that Rest of Central Region (RCR) prices were narrowing with CCR prices. This was partly due to the 60 per cent Additional Buyers Stamp Duty (ABSD), which removed a good number of wealthy foreign buyers from the CCR market. Moving forward to today, the price gap between the CCR and RCR is at an all-time low of 4.5 per cent. Given that over half the upcoming new launches are going to be in the CCR, consider this early preparation of the sales pitch: we're going to hear, over and over again, that this is a "big opportunity" to own a CCR property; especially if you already have a Rest of Central Region (RCR) property to upgrade from. So here are the oversimplified beliefs to address about the CCR, before we're neck-deep in it this year: The CCR is the most prime region, you won't go wrong here CCR properties are all top luxury properties Freehold status makes CCR properties better The best amenities are in the CCR 1. The CCR is the most prime region, you won't go wrong here This has the same energy as "WeWork is so huge it can't fail at this point." The glamour and high quantum properties packed into the CCR do give the impression that everything there is infallible, but in reality, it's quite the opposite. I feel it's the cheaper Outside of Central Region (OCR) where it's often harder to make a mistake, as you're starting with lower initial costs. The CCR isn't just high quantum, it's possibly the most volatile of the three regions — and you need to be more careful when buying here, not less. The CCR isn't rock-solid and infallible: we saw this just last year. At year-end 2024, I pointed out that the CCR saw an 11.8 per cent price decline, as opposed to a 9.8 per cent increase in the OCR. And yes, this was due to the ABSD hike as mentioned above, but that demonstrates the point: Why didn't other regions see a big stumble from the ABSD hike? Because the OCR — and to a smaller extent the RCR — have their values tied to everyday Singaporean homeowners. The CCR is packed with investors, wealthy foreigners, and a more exotic demographic. Buyer and seller behaviours here are not as predictable as those of regular HDB upgraders. This also goes for rental: as of Q1 2025, the vacancy rate for completed private residential units in the CCR stood at 10.3 per cent, higher than the RCR's 6.6 per cent and the OCR's 4.7 per cent. For the first nine months of last year (2024), median rent for condos in the CCR declined by a chunky 3.5 per cent, unlike a small 1.4 per cent in the OCR, and a 0.4 per cent increase in the RCR. Why? Because when the wider economy is in turmoil, companies like to trim the number of pricey expats they hire, or shrink housing allowances. In the OCR, where expats or landlords are fewer in number, the effect is more muted. The RCR may even see a small boost, as expats move from the CCR into the city fringe as the next alternative. It's the CCR that's most subject to fluctuations in the wider economy. This doesn't mean the CCR isn't investment-worthy, but it does mean that you need to pick your properties with even greater care than elsewhere. So the opposite of the saying is true: a low-cost OCR property is usually where you can afford to make a mistake, but still recover. The CCR is much more punishing toward bad choices, and you absolutely can go wrong. 2. CCR properties are all top luxury properties For the newer properties in the CCR, sure. But for resale… Look, I say this with all respect, and I don't want to disparage any properties, but let's accept that age and time have somewhat changed the definition of "top luxury." How many of you have seen, say, The Claymore, Orchard Court, Lien Towers, or any one of the many older properties in the CCR? Even the ones near highly prestigious areas like Orchard Road? These projects can still be expensive because of their location, freehold status, and large floor plates. But if you were to compare facilities, there are 10-year-old condos in the OCR that make some of these "prime freehold" properties look like budget office buildings. This is a real problem that parts of the CCR — especially Districts 9 and 10 — will face over the coming years. At some point, buyers are going to look at the peeling walls of 1980s squash courts, then back at the price, and start wondering why Treasure at Tampines or some OCR mega-development won't be better. Simply put, "CCR = luxury" is a misconception. You might find mass-market, OCR projects today that are both cheaper and better for your lifestyle. 3. Freehold status makes CCR properties better Let's put it this way: no one on a pro-basketball team talks about their height much. Because when everyone else has that quality, it's far less special. In the same vein, freehold status can matter when it's rare in an area, such as one freehold condo amidst leasehold counterparts. But freehold is the norm in the CCR, and a freehold condo surrounded by others is little more than the baseline. So this shouldn't be a particularly big selling point, even on the brochures. 4. The best amenities are in the CCR A bit of personal opinion here: from the 1980s when I was growing up, through to around the mid-2000s, the CCR was truly the centre of Singapore. The malls here had brands you couldn't find in heartland malls, there were restaurants and eateries we'd travel all the way just to visit, and HMV was a big deal because we needed to fill half our room with physical CDs. This died around 2009, when Uniqlo opened its flagship store in Tampines instead of somewhere in Orchard. URA's aggressive decentralisation has created multiple hubs of amenities, and the CCR is no longer the centre of our universe. Ask around: most Singaporeans will tell you that whatever they can find in Orchard, they can find in their neighbourhood mall, be it NEX, Clementi Mall, JEM, etc. Now, there are parts of the CCR which are still arguably unique, like the Holland V identity node. But as Singapore decentralises further, we may one day reach a point where "superior amenities" are no longer a defining trait of many CCR neighbourhoods. It's worth thinking about, for long-term investors. So if you're looking at CCR properties in 2025, remember: prestige doesn't pay your mortgage, and clout doesn't cover vacancy. The only thing worse than overpaying for a "prime" unit is realising too late that you were buying into the idea more than an actual, viable asset. Again, this isn't to shut down the CCR as an investment prospect or a home; it's worked for many people. My intent is just to point out that, thanks to years of conditioning and sales pitches, we may have dangerously oversimplified a very complex region, going through some very big changes. [[nid:718515]] This article was first published in Stackedhomes .
Business Times
12-05-2025
- Business
- Business Times
ABSD rates could be lowered if FOMO in new condo market vanishes.
[SINGAPORE] Generally, private homes here are seen as good long-term investments. Key drivers of capital appreciation include Singapore's ability to transform its economy, steady increase in housing supply, policies that support a stable market, good urban planning, constant public infrastructure upgrading, the city's attractiveness to the wealthy and political stability. Moreover, many people aspire to own private homes here and the desire for high-quality abodes is seen to remain intact regardless of technological changes that could disrupt other property asset types. Still, while the long-term outlook for private homes is positive, the US hiking trade tariffs and the US-China trade war can hurt the new condo market. Private new home sales were robust in the fourth quarter of 2024 and the first quarter of 2025, helped by strong sales at major new condo launches. Parktown Residence in Tampines sold over 87 per cent of its 1,193 homes at its launch weekend in February. At its launch in November 2024, Emerald of Katong saw a take-up rate of about 99 per cent for its 846 units. However, take-up rates were more moderate at condo launches in April, post the US imposing sweeping tariffs on Apr 2. During the launch weekend, One Marina Gardens sold 38 per cent of its 937 units and Bloomsbury Residences in Media Circle sold 25 per cent of its 358 homes. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Many new condo buyers are locals buying for owner occupation, who own an Housing and Development Board (HDB) home. Might HDB homeowners pause condo upgrading plans should economic uncertainties caused by trade tensions heighten worries over job security and dampen pay packages? Buying a new private home, which is a 'nice to have', represents a major financial commitment. A 900 square feet three-bedder suburban new condo unit can cost about S$2 million. If the domestic economy weakens, new condo demand could wane as buyers may hesitate to take on large financial commitments and choose more affordable housing options such as HDB resale flats. Less urgency to buy What will likely weigh heavily on the new condo market is the diminishing of the fear of missing out or Fomo among potential buyers. When Fomo prevails among buyers, resistance to high prices weakens and people rush to commit to buy for fear that if they do not purchase soon, prices may get increasingly out of reach. In turn, Fomo drives momentum in the new condo market as reports of strong take-up at a major condo launch increase the sense of urgency among potential buyers. As a weaker economy looms, Fomo among potential new condo buyers could vanish and be replaced by fence sitting, which will create its own momentum. If take-up rates at major new condo launches moderate, potential buyers may feel less urgency to buy and instead take their time to carefully evaluate competing projects. Perhaps, slower take-up rates at new condo launches should be welcomed given prices have rallied strongly post Covid-pandemic. Still, a significant slowdown in the sales take-up of new condo launches will be worrying, especially against a backdrop of a slower economy. The livelihoods of property agents could be affected. Importantly, developers building homes and buyers upgrading homes contribute to economic growth and supporting jobs. Furthermore, when new private housing demand is strong, developers are more bullish in buying housing sites from state land tenders or the en bloc market, thus ensuring ample housing supply over the longer term. On the other hand, if new condo buying sentiment weakens, bidding for state tenders of housing sites may be subdued. In Singapore, the proceeds from selling state land accrue to past reserves. The state tender of the Media Circle (Parcel B), which is zoned residential with commercial at first storey and can yield about 500 private homes, drew no bids when the tender closed on Apr 29. A silver lining? However, with trade tariffs possibly tempering new condo demand, could developers see a silver lining by way of lower Additional Buyer's Stamp Duty (ABSD) rates? A potential slow down in take-up of new condo launches due to a softer economy coming post the conclusion of the general election here may offer a good window to reduce ABSD rates. Depending on the buyer's profile, liable home buyers pay ABSD on top of Buyer's Stamp Duty (BSD). ABSD and BSD are computed on the purchase price or the market value of the property, whichever is the higher amount. Perhaps, ABSD rates can be lowered for Singapore citizens and permanent residents (PRs) buying multiple homes and non-PR foreigners buying any home. Today, a Singapore citizen pays 20 per cent ABSD for buying a second home and 30 per cent for buying a third and subsequent home. A PR pays 30 per cent ABSD on a second home and 35 per cent on a third and subsequent home. A non-PR foreigner buying any home pays 60 per cent ABSD. Reducing ABSD rates on the above buyer profiles could still mean the above buyer profiles pay meaningful sums in ABSD and will not detract from Singapore citizens buying their first home enjoying priority as ABSD does not apply to such buyers. Meanwhile, if more non-owner-occupiers buy new condo units, this could help ensure adequate future private rental housing supply. And having some pick-up in home buying by non-PR foreigners can be particularly helpful to condo demand in prime districts. Invariably, lowering ABSD rates may create backlash among people who view such a move as being friendly to developers and the rich, and possibly cause a spike in private home prices thus making such homes more unaffordable. Nevertheless, there may be greater room, with a slowing economy and the ruling party recently receiving a strong electoral mandate, for the government to manage perceptions surrounding relaxing ABSD. While the situation with US trade tariffs is fluid, chances are that US trade policies could potentially sour new condo home buying sentiment here but pave the way for the possible lowering of ABSD rates.
