{"id":69907,"date":"2023-10-16T18:04:52","date_gmt":"2023-10-16T10:04:52","guid":{"rendered":"https:\/\/www.99.co\/singapore\/insider\/?p=69907"},"modified":"2023-10-18T10:47:42","modified_gmt":"2023-10-18T02:47:42","slug":"luxury-property-investment","status":"publish","type":"post","link":"https:\/\/www.99.co\/singapore\/insider\/luxury-property-investment\/","title":{"rendered":"Luxury property investment reality & risks – why high-end homes don\u2019t always equal high returns"},"content":{"rendered":"
<\/div>\r\n

When it comes to the world of real estate, luxury properties hold a certain allure. For many, they symbolise the pinnacle of success, the dream house we drool over in glossy magazines, and the ‘I-made-it’ moment we all aspire to achieve. It’s no wonder that investors often set their sights on luxury property investment, expecting substantial returns in this glamorous arena. However, the glittering facade of luxury property investment often conceals a stark reality \u2013 especially when it comes to freehold properties.\u00a0<\/span><\/p>\r\n\r\n\r\n\r\n

In this article, we delve into the lesser-known drawbacks of luxury property investment as well as its future in Singapore\u2019s ever-changing market.\u00a0<\/span><\/p>\r\n\r\n\r\n\r\n

The lesser-known risks of luxury property investment<\/strong><\/h2>\r\n\r\n\r\n\r\n

Contrary to the popular belief that luxury property investment always equals to high returns, the reality is far more complex. Let’s take a look at the hidden pitfalls of luxury property investments:<\/span><\/p>\r\n\r\n\r\n\r\n

\"lack<\/a><\/figure>\r\n\r\n\r\n\r\n

Lack of first-mover advantage<\/strong><\/h3>\r\n\r\n\r\n\r\n

In the world of luxury homes, being the first to invest doesn’t always guarantee big profits.<\/span><\/p>\r\n\r\n\r\n\r\n

You see, luxury homes are usually built in areas already known for their wealth, like Districts 10<\/a> and 15<\/a>. These places are like fancy orchestras, with each house adding to the high prices. People have wanted to live here for a long time, so prices are already very high. So, unlike new areas where prices can skyrocket, these established places don’t leave much room for big price increases.<\/span><\/p>\r\n\r\n\r\n\r\n

This lack of potential for big price increases makes it hard for investors to make a lot of money. Even experienced investors struggle to make huge profits in these areas.\u00a0<\/span><\/p>\r\n\r\n\r\n\r\n

\"Freehold<\/a><\/figure>\r\n\r\n\r\n\r\n

Freehold status: Not a strong selling point in prime areas<\/strong><\/h3>\r\n\r\n\r\n\r\n

In the posh areas of Orchard<\/a> and Marine Parade<\/a>, the allure of owning a “freehold” property has lost its sparkle. Why? Well, the majority of homes in these places are already freehold. <\/span><\/p>\r\n\r\n\r\n\r\n

This means that owning a freehold property isn’t as special because almost everyone here already has one. The feeling of exclusivity that comes with owning a freehold property is not as strong anymore.<\/span><\/p>\r\n\r\n\r\n\r\n

Moreover, high-net-worth buyers usually prefer freehold properties with land, like big houses, over freehold condos. These properties are rare, and it’s quite hard to buy them. Because of this, buyers with deeper pockets tend to choose these landed properties over luxury condos. This choice is making the demand for freehold luxury condos to decline. <\/span><\/p>\r\n\r\n\r\n\r\n

In the future, it might become even harder to make money by investing in these types of condos because they won’t be as popular anymore.<\/span><\/p>\r\n\r\n\r\n\r\n

Read also:<\/strong>\u00a0Freehold vs 999\/99-year leasehold condos \u2014 Which is the better choice?<\/a><\/p>\r\n\r\n\r\n\r\n

\"Luxury<\/a>Limited pool of buyers<\/strong><\/h3>\r\n\r\n\r\n\r\n

Another obstacle that plagues the luxury property market is the limited pool of potential buyers.\u00a0<\/span><\/p>\r\n\r\n\r\n\r\n

High-value luxury properties come with a hefty price tag, making them inaccessible to the average homebuyer. Even with significant discounts, serious inquiries take time to materialise, resulting in prolonged listing periods and slower sales.\u00a0<\/span><\/p>\r\n\r\n\r\n\r\n

The exclusive nature of these properties often means that finding the right buyer who can afford such a luxurious lifestyle is a time-consuming and challenging endeavour.<\/span><\/p>\r\n

Read also:\u00a0<\/strong>Property investments: When high risks meet high rises!<\/a><\/p>\r\n\r\n\r\n\r\n

\"Luxury<\/a><\/figure>\r\n\r\n\r\n\r\n

Luxury market vulnerability to cooling measures<\/strong><\/h3>\r\n\r\n\r\n\r\n

One of the significant challenges faced by the luxury property market is its vulnerability to cooling measures imposed by regulatory authorities. <\/span><\/p>\r\n\r\n\r\n\r\n

Luxury properties are often the first to be impacted, especially when it comes to foreign buyers facing high Additional Buyer’s Stamp Duty (ABSD) rates (current rates stand at 60%).<\/span><\/p>\r\n\r\n\r\n\r\n

The constant revisions of ABSD rates create a downward pressure on the luxury segment, making it a less attractive option for investors seeking stable and profitable returns.<\/span><\/p>\r\n\r\n\r\n\r\n

Read also:<\/strong>\u00a0Additional Buyer\u2019s Stamp Duty (ABSD) in Singapore, explained (2023)<\/a><\/p>\r\n\r\n\r\n\r\n