Are landed properties in Sentosa good opportunities in this Covid-19 crisis?

Sentosa Cove was launched with much fanfare in 2005. Back then it was positioned as a destination for the rich and famous, and property prices were mind-blowingly high. To give you an idea of how high prices were, the most expensive landed unit in Sentosa was transacted at $39m in February 2012 for a 148sqm detached house along Cove Drive. In terms of highest $psf, the highest that was transacted was at $3,214psf in Oct 2012 for a 939sqm detached house along Ocean Drive. Clearly, the days of such astronomical prices are far behind us.

The question then is this – are properties in Sentosa good opportunities, especially during the Covid-19 crisis when prices are expected to drop further?

Sentosa landed prices have already been on a downward trend before this…

Firstly, it should come as no surprise that prices in Sentosa have been on a downward trend since 2017. From 2005 to 2016, there were 282 landed transactions in Sentosa, and only 35 transactions from 2017 to 2019. When these transactions are plotted together, we can see that the $psf prices of recent deals (as indicated by the red colour dots) is nowhere near the peak price range of $3,000psf.

Figure 1: Comparing Sentosa landed transactions between 2017 to 2019 (red dots) and 2005 to 2016 (yellow dots)

Note: Vertical Axis indicates $psf and horizontal axis indicates size in sqm

With most of the recent transactions falling within the $1,500psf and $2,000psf price range, it seems to suggest that an investment case could be made when it comes to investing in landed properties in Sentosa. However, the follow-up question then is, how do Sentosa landed units compare against landed transactions in mainland Singapore?

To answer that question, transaction prices for landed units from 2017 to 2019 in Sentosa were compared against 3 other regions: (1) Bukit Timah, (2) River Valley & Tanglin and (3) Newton & Novena. Based on Figure 2, we can see that when it comes to landed units that are around the size of between 200sqm (2,152sqft) and 300sqm (3228sqft), units in Sentosa are comparably priced against the popular landed locations in Singapore.

When it comes to larger landed units of between 650sqm (6,994sqft) and 900sqm (9,684sqft), Sentosa properties appear to command a premium as compared to similar sized units in mainland Singapore. At those sizes, the price ceiling for Sentosa units is at $2,500psf, whereas the price ceiling for mainland units is at $2,000psf. A possible reason behind the difference is that the larger units in Sentosa tend to be waterfront units. Given the uniqueness and scarcity of waterfront units, a price premium is not unexpected.

Figure 2: Comparing Sentosa landed transactions against the other landed regions in mainland Singapore (from 2017 to 2019)

In conclusion, landed units in Sentosa have been on a downward trend. Even before the Covid-19 crisis, unit prices have largely been between $1,500psf and $2,000psf. With the pandemic ravaging the global markets and the specter of a global recession looming at the horizon, more opportunities are expected to emerge in the coming weeks. If you are lucky enough to come across units that are going for less than $1,500psf and have the resources to invest, it may be worth taking advantage of this, once in a lifetime opportunity. In the meantime, stay healthy, positive and take comfort in the fact that no matter how bad the pandemic gets, there will come a point when things will eventually return to normal.