The island-state’s safe-haven status continues to keep it in the radar of HNW investors from all over the world. According to Knight Frank’s Asia-Pacific Outlook 2023 Report, Singapore ranks among the top 20 global destinations that Asian investors are interested in when it comes to purchasing a second home.

“The current pause in interest rate hikes has created an opportune moment for prospective buyers to secure their dream homes, and this trend is particularly noticeable in Singapore, where it has contributed to the upward price trends,” says Christine Li, head of research at Knight Frank Asia-Pacific.

Unlike other countries in the region, branded residences have not seen much success here as most luxury condos are very well designed, maintained and managed, says Lewis Cha, executive director at  List Sotheby’s International Realty Singapore. However, with the recent increase in additional buyer’s stamp duty (ABSD) by the Singapore government—its third round of cooling measures since the pandemic has impacted buying sentiments and reduced the demand for luxury condos, he adds.

With the ABSD for foreigners up at 60 per cent (from 30 per cent as previously set on September 30, 2022), Cha says that the demand for landed properties, which are predominantly freehold properties, has increased among local affluent families and newly minted citizens.

“With high liquidity across the market, local demand for prime residences of family-sized units continues to be intact,” agrees Li. On the same count, she adds that buyers are adopting a wait-and-see posture, due to the growing uncertainty due to geopolitical tensions and global economic challenges. “As a result, negotiations on deals are taking longer than they did 12 months ago.”

As safe-haven considerations prevail, Chinese investors are also turning to Japan for their investments in lieu of it being free of geopolitical tensions and the value depreciation of the Japanese Yen, according to Knight Frank. In Tokyo, the influx of foreign investments makes luxury condominiums attractive prospects for HNW local investors. A penthouse unit in the 64-storey tower in Azabudai Hills recently sold for around 20 billion yen (USD$140 million), the highest price ever recorded for a Japanese apartment, according to Savills.

The Japanese government’s active promotion of tourism in Kyoto is lending itself to high property prices there, according to Kenta Makishi, sales manager of the wealth management department in List Sotheby’s International Realty Japan. The demand is both from local and foreign investors. “The unique layout of the city with its narrow streets and limited land availability, make it difficult to build new hotels or expand existing ones,” explains Makishi. “This limited supply of accommodation options in the face of increasing demand leads to higher prices.”

Despite the demand, candidate properties are still low in number owing to its strict bylaws, which require new constructions to adhere to city planning, and safety and sustainability standards which also dictate the building height and floor area. This makes it difficult for new developments, says Makishi. “In fact, the number of condominiums is low.”

Traditional-style townhouses unique to Kyoto called kyomachiya, which are popular with foreigners, are also scarce and originally few in number, driving up the price. List Sotheby’s International Realty Japan also expects growth in the Osaka area, where an integrated resort is planned to be developed. The expected future vibrancy in Osaka could have an impact on neighbouring Kyoto.

The demand for branded residences is equally high in Japan with the highest potential in the Niseko area—it has been gaining popularity since the pandemic as a destination that caters to buyers all year round. 

Among Southeast Asian countries, the luxury residential market in Thailand in beach destinations has proven to be very resilient and continues to be very strong in the foreseeable future, says Tamthai. Tanyatip Chearavanont, chief executive officer of real estate development company Eden Estate Corporation, sees the shift in the definition of luxury to be especially prominent in the Thai market.  “Traditionally, a luxury development is explicitly focused on the location and design. However, in today’s market, luxury developments include elements of service, collaboration with brands, and possibly a mixed-use component.” This shift is pushing developers’ limits when it comes to keeping up with the competition.  

While buyers from mainland China, followed by Europeans have historically been interested in investments in the Thai property market, particularly in Bangkok, Kenichi Tamamura, chief operating officer at List Sotheby’s International Realty Thailand points to a new emerging group of buyers from Myanmar. “With individuals from Myanmar looking to Thailand as a new country to reside in. This diversification of buyers reflects the attractiveness and appeal of Thailand's real estate market to a wide range of international investors and individuals seeking new opportunities,” he adds.

Thailand also continues to be a popular choice for Hong Kong buyers for branded residences, says Kevin Coppel, managing director, Knight Frank Asia-Pacific. “Examples of renowned hotel chains that are part of branded residences globally include Ritz-Carlton, Four Seasons, St. Regis and Kempinski.” 

Here too, the tendency of buyers to gravitate towards familiar spaces such as the capital and beachfront havens such as Phuket, is seeing change in favour of developments that have reliable brand affiliations, says Fahmi. Tamamura also foresees a strong rise in local demand for luxury homes—those prices are 50 million baht (approximately USD$1.43 million) and above. This trend, while a continuation of the growing need for space and customisation could potentially shape the real estate market in Thailand in the coming year.

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