Selected balance units at The Residences at W Singapore Sentosa Cove released at discounted prices after 14 years

With buyer interest in luxury private homes at Sentosa Cove recently picking up, 99-year leasehold development The Residences at W Singapore Sentosa Cove has been relaunched on the market after a 14-year hiatus, with prices roughly 40% lower than its initial 2010 launch price.

The project comprises 228 units, of which only 25 were sold when it was first launched in 2010. The remaining 203 units are held by Cityview Place Holdings, an associate firm of City Developments Limited (CDL). Out of these unsold units, 58 have been released to the market, previewing from 10 to 14 April, with official sales starting on 15 April.

In recent months, Sentosa Cove properties have witnessed increased buyer interest and transaction activity.

The newly released units comprise two- to four-bedroom layouts. Two-bedroom units, spanning 1,227 sq ft, are priced from $2.118 million ($1,726 psf); three-bedroom units, measuring 1,625 sq ft, start from $2.678 million ($1,648 psf); and four-bedroom units, at 2,067 sq ft, start from $3.488 million ($1,687 psf).

When first launched in 2010, the project was priced between $2,500 and $3,000 psf. Comparing the peak psf prices then and now represents a price cut of more than 40%.

Unsold units leased out upon project completion

The units are not brand new. After obtaining its Certificate of Statutory Completion (CSC) in 2011, the development's unsold units were put onto the leasing market under a "rent first, sell later" approach.

In late 2014, CDL also raised $1.5 billion through a hybrid debt-equity instrument known as Profit Participating Securities (PPS) and bank borrowings for The Quayside Collection, an integrated development that encompasses The Residences at W Singapore Sentosa Cove, W Singapore - Sentosa Cove, and the Quayside Isle retail mall.

Under the structure, CDL guaranteed institutional investors a 5% fixed annual payout for five years along with cash flows generated by the properties, with investors entitled to share in the sales proceeds from property disposals after the five-year term.

Some units sold with tenancy; not the first "rent-first, sell-later" Sentosa Cove development

According to corporate disclosures, CDL bought back the hotel and retail components for $393 million in 2019, leaving only the residential component in the structure. Last year, Blackstone sold its equity stake to BlackRock at a reported price of between $1,200 and $1,300 psf.

Among the newly released units, some are currently tenanted under the aforementioned PPS arrangement and will be sold with tenancy.

The Residences at W Singapore Sentosa Cove is not the only Sentosa Cove private residential development to adopt a "rent-then-sell" strategy. Following the completion of Cape Royale—another luxury residential project on Sentosa—in 2013 by IOI Properties and Ho Bee Land, the developers chose to lease out the 302 units amid property cooling measures. It was only nine years later, in June 2022, that units were put up for sale at an average of $2,200 psf.

Notably, the Additional Buyer's Stamp Duty (ABSD) rule requiring developers to sell all units within five years of acquiring a site applies only to residential land parcels bought after late 2011. Since the land for The Residences at W Singapore Sentosa Cove was acquired prior to that and the title was not held directly by the developer, the owners have had the flexibility to take their time to sell.

Despite the steep price cut of over 40% at The Residences at W Singapore Sentosa Cove, for prospective buyers seeking capital appreciation, Sentosa Cove's relatively lower transport connectivity means a major catalyst may be needed to drive home prices up once again.

Over the past decade, approximately 41% of Sentosa Cove residential transactions were profitable upon resale, with 54% of landed homes recording gains, compared to only 38% for non-landed private homes.

According to the research, average psf prices for non-landed private homes in the enclave peaked in 2010, bottomed out during the COVID-19 pandemic in 2020, subsequently rebounded, and softened slightly in the first two months of this year.