Marina Bay private home prices fall nearly 40%: buying opportunity or bagholder trap?

Would you buy a private home in the city centre with an MRT station and a mall downstairs, steady rental demand and a price of just S$1,680 per square foot?

A Marina Gardens Lane site sold last week at a relatively low price after attracting just one bid, putting the area's private housing market back in the spotlight. Recent transactions at Marina One Residences have, in fact, fetched as little as S$1,680 per square foot — nearly 40% below the average launch price — which many buyers see as a chance to buy at the bottom.

Analysts interviewed agreed that prices in Marina Bay are expected to rise as the Urban Redevelopment Authority (URA) advances its development plans. But this transformation will take time. Buyers need to consider how long they can hold their properties, or what they see as a buying opportunity could turn into a bagholder trap. A bagholder is one who is holding on to a losing asset.

Last Monday (26 October), EL Development was awarded the Marina Gardens Lane site with a bid equivalent to S$1,243 per square foot per plot ratio. This was well below market expectations of S$1,400 to S$1,500, and about 11.3% lower than the price per square foot paid by Kingsford Development more than three years ago for the neighbouring Marina Gardens Drive site, now One Marina Gardens.

Buyer demand in Marina Bay has been relatively subdued. According to URA caveat data compiled by Lianhe Zaobao, about 72% of One Marina Gardens had been sold as of 26 October. However, its average price per square foot had edged up just 0.5%, from S$2,950 at its launch last year to S$2,965.

W Residences Marina View has sold only about 15 units so far, at a median price of S$2,660 per square foot.

In the resale market, transactions at Marina One Residences over the past year have ranged from S$1,680 to S$2,227 per square foot, well below its average launch price of about S$2,600 in 2014. In May this year, a 786 sq ft unit changed hands at S$1,680 per square foot, 35.4% below the average launch price.

Dr Lee Nai Jia, co-founder and co-head of Property Doctors, told Lianhe Zaobao, “The price of the Marina Gardens Lane site was below market expectations. In my view, developers are likely factoring in the possibility of a longer sales period, based on recent sales performance of some CBD projects.”

He also noted that a comparison of sales at Marina One Residences in 2014 and 2015 with subsequent resales showed that about 70% of transactions incurred losses, while only 30% were profitable. For investors who bought on the resale market in 2020 and 2021, the proportion making a loss could be as high as 89.7%.

Marina One Residences was developed by a joint venture between Temasek Holdings and Khazanah Nasional. Connected to a mall, offices and MRT stations, it saw strong sales when it launched in 2014, with prices at one point exceeding S$3,000 per square foot. Many buyers use it as a benchmark for private home price trends in the Marina area and the city centre.

Discussing demand for private homes in Marina Bay, Alan Cheong, executive director of research and consultancy at Savills, said the additional buyer's stamp duty (ABSD) of as much as 60% had sharply reduced foreign demand for private homes in prime locations. Local buyers, meanwhile, tend to prefer living within 1km of good schools and close to neighbourhood amenities, and are not accustomed to living in the city centre.

Mohan Sandrasegeran, head of research and data analytics at SRI, said demand for private homes in the Marina area was uneven, and should be assessed in the context of each project's positioning, pricing strategy and target buyers.

He cited an example: “More than 70% of One Marina Gardens has been sold. The healthy sales performance suggests that there remains a pool of buyers who recognise the potential of Marina South as a future residential and lifestyle precinct. Meanwhile, luxury developments such as W Residences Marina View may appeal to a more specialised segment of buyers, where purchasing decisions typically involve a more considered assessment of absolute purchase quantum.”

Looking ahead, all three analysts believe private homes in Marina Bay will become increasingly attractive as the URA's development plans progress, with prices expected to rise.

Mohan said, “We remain cautiously optimistic about the longer-term prospects of the Marina residential market, particularly as the area progressively develops into a more established residential and lifestyle precinct.”

However, Lee cautioned, “Marina Bay's transformation will take time. Buyers should weigh the area’s longer-term potential alongside its present-day liveability, comparable prices in the surrounding area, and their intended holding period when deciding whether to buy.”

Cheong also advised buyers looking to buy at low prices to ensure they had the financial resilience to weather economic cycles. If external factors affected their ability to service their mortgages, a buying opportunity could turn into a trap.