In the exclusive residential enclave of Sentosa Cove in Singapore – considered the "most desirable address in the world" – the Cape Royale development stands out as one of the tallest buildings on the artificial island.
The luxury condo was one of the most recent additions to the prestigious beachfront retreat with unparalleled views of the South China Sea. There was a special guest appearance on last year's Hollywood blockbuster Crazy Rich Asians.
Underneath this shiny façade, however, there is another reality: none of the 302 units sold in the Cape Royale has been sold.
Developer Bee Bee Land and its partner IOI Properties decided to postpone the launch of the project a few years ago in view of the weak market sentiment at the time and rented the apartments instead. Even so, by April 2018, only about 80% of the units had been leased.
The empty rooms are a microcosm of the general malaise of Sentosa Cove. Nearly two decades since it was launched and announced as Singapore's response to Monte Carlo, the hype around Sentosa Cove has emptied. Real estate prices are mired in the crisis, while government ownership cooling measures and tougher immigration laws have detained buyers and investors.
So frustrated was the Singapore property tycoon, Kwek Leng Beng, who recently presented a new vision for Sentosa as a whole: to become the next Bali.
"Sentosa was announced when it started, for the rich and famous," said Kwek, who runs Singapore's second largest developer, City Developments (CDL). "Later, her parents just forgot about this young woman. I would like to suggest that they should reposition her as the new Bali."
Speaking at the company's fourth quarter earnings briefing in February, he said the non-residential part of Sentosa could be better used for meetings and conferences, while hotels – including several new and upcoming ones – could attract more visitors.
Kewk said: "You go to Bali now, it's very congested, there are volcanoes, weather problems, flood problems and traffic problems.
In the DOLDRUMS
For CDL, the need to inject new life into Sentosa – and Sentosa Cove – is urgent. The developer has entered into an agreement with the Blackstone Group and CIMB Bank in 2014 to raise additional capital from a residential, commercial and retail Sentosa Cove project that it had previously developed, known as the Wharf Collection.
The deal, which expires in December this year, was based on cash flow projections that assumed that residential units – many of which are not sold – would be landed at a price of at least $ 2,400 per square foot.
Average condominium sales in the area, however, were only S $ 1,560 per square foot in 2018, after a 33 percent decline from 2010 to 2015, according to data from List Sotheby's International Realty Singapore ).
CDL said the group is "working with its partners in a mutually supportive way to dismember the structure before its expiration in December 2019."
Sentosa Cove is the only place in Singapore where foreigners can buy and own a home, such as terraces and villas. Both demand and prices plummeted with nine rounds of cooling measures since 2009.
Similar to condominiums, Sentosa Cove bungalows have dropped in price by about 30% since the peak in 2013, with 11 homes worth $ 180.2 million in hands last year. Weak demand was exemplified by a series of high profile agreements.
In 2017, Lee Kian Soo, founder and chairman of insolvent oil services group Ezra Holdings, sold a privileged bungalow in Cove Grove after allegedly offered about $ 16 million or $ 1,390 per square foot – a significant reduction at the initial price of $ 26 million or $ 2,258 per square foot just a year earlier.
Pastor Kong Hee, who is now in jail for misappropriating millions in church funds, sold his Sentosa Cove coverage last September for $ 7.2 million after putting her on the market for three years, causing a loss of 2 million dollars.
It did not help that Sentosa Cove was a headline for the wrong reasons. In 2010, the naked body of a Chinese citizen was found in a pool of Sentosa Cove bungalows.
Seal fees for foreign buyers are 20%, which ensures another brake on demand, according to Steve Tay, a real estate agent for List SIR Singapore.
"Investment demand, in particular, has declined due to heavy taxes," he said. "People today buy Sentosa Cove properties primarily for their own use, or if they have a very strong business reason to be in Singapore, otherwise that just does not make sense."
Despite the slowdown, demand for property in Sentosa Cove has been recovering, especially in the past two years, with the return of interest to the market.
Tay pointed to the 11 bungalow agreements signed last year, which marked a significant improvement over the four sold in 2014.
In August, a one-story bungalow in Sentosa Cove sold for $ 33.3 million – making it the most expensive bungalow sold in the region since 2012, although this is largely due to its sizeable area of 18,557 feet squares.
"Price expectations between buyers and sellers have dropped. We are now at a point where potential buyers are finding it attractive to go in and look for good deals," Tay said. "And you'd be surprised – more than half the bungalows sold the last two years were bought by Singaporeans."
Eric Goh, an ERA Realty Network agent, also noted the gradual recovery.
"Two or three years ago, it was hard to sell anything in the luxury market – not just in Sentosa Cove, but across Singapore," Goh said.
"Many people were not interested in buying a property unless it had a big discount of 10% and 15% .But today people are buying, or at least exploring their options.You know that the cooling measures are here to stay and whether we like it or not, that's the price. "
For real estate owners Fiona Goh and her husband, Finian Tan, who moved to their penthouse on the Oceanfront about three years ago, the biggest draw of living in Sentosa Cove is the sea.
"It's like being on a small well-groomed island. There's no equivalent in Singapore," Goh said, adding that the couple had no intention of selling their property.
In fact, Tan had participated in planning the station, serving as chairman of Sentosa's steering committee and board member of Sentosa Cove during the 1990s.
"The vision was to provide a new lifestyle that was not previously available in Singapore," he said. "As we do not have mountains and lakes, we could at least provide a unique canal style near the sea, surrounded by vegetation. I believe that view has been widely achieved."
SIR's List Tay remains optimistic about the prospects of Sentosa Cove, citing developments that could reshape the entire island of Sentosa. A $ 200 million tunnel was recently opened in 2017, easing outbound traffic from Sentosa to the mainland while plans are underway to integrate Sentosa with a new seaside project and the adjacent Pulau Brani, serving as an extension of the District Business center.
"With all the investments going to Sentosa, things can improve in the next few years," he said.
This article was first published in the South China Morning Post.