WHEN The Sail@Marina Bay was launched in 2004 at an average per square foot (psf) price of $900 to $950, analysts said it was crazy to pay so much for a 99-year leasehold condominium.
Now it would appear that that was a bargain.
Last Wednesday, the preview sale of the adjacent Marina Bay Residences set a new record for a 99-year leasehold property: $2,700 psf.
A day later, it made history again, with two single-level 4,400 sq ft penthouses going for $3,400 psf - or $15 million each.
This smashed the record even for 999-year units, which are usually more expensive. The previous high was $3,030 psf, set at the 999-year St Regis Residences.
About 60 per cent of the Marina Bay Residences buyers are Singaporean while the rest come from Indonesia, Hong Kong, India, the Middle East and China.
Faced with the skyrocketing prices and intense demand - all 428 Marina Bay Residences units were snapped up during the three-day preview sale - analysts are scratching their heads over the question: How high is too high?
Said Chesterton International research and consultancy director Colin Tan: 'The market is working beyond logic. People are buying on the hope that the upcoming developments in Marina Bay will lead to good rental or capital gains.
'The integrated resort has not been built, but the high rollers are already here and the gambling has started.'
Analysts credited the Marina Bay apartments' record prices to their unique location, adding that the surge is unlikely to filter down to 'mass market' 99-year condos in other areas, which usually fetch around $500 psf.
The Marina Bay neighbourhood, billed as the new Downtown, will have an IR boasting world-class food and beverage and retail outlets, a business and financial centre, a waterfront garden, the world's highest observation wheel, a golf course and a reservoir for water sports.
The prices will be sustainable as long as the economy is doing well, said Mrs Ong Choon Fah, an executive director of consultancy DTZ Debenham Tie Leung, one of the two sales agents of Marina Bay Residences.
One analyst ventured that $3,400 psf is relatively cheap.
'If you look at the property prices in Hong Kong, the rates here have the potential to go higher,' said Savills Singapore marketing and business development director Ku Swee Yong.
High-end condos in Hong Kong, where most homes sit on short leases of 50 years, are selling at about $5,000 psf, he said.
Mr Ku estimates top-end freehold condos here could cross the $4,000 psf mark by the year 2010.
However, some analysts sounded a word of caution.
They viewed the Government's recent announcement that buyers can no longer defer paying stamp duty - about 3 per cent of a property's price - as discouraging speculation in luxury homes.
Prices could also take a hit if the Government steps in with anti-speculative measures, as it did in 1996.
For now, the onus is on the new Marina Bay downtown to deliver the dream that many investors have bought into.
As Chesterton International's Mr Tan put it: 'What we have now are projections and hope. We will only know for sure if the high prices are justified when the condo projects and the surrounding developments are completed.' ngsls@sph.com.sg
'The integrated resort has not been built, but the high rollers are already here and the gambling has started.'
- MR COLIN TAN, director of research and consultancy at Chesterton International
