On a balmy Sunday evening at a well-appointed bungalow on Ocean Drive, in one of the most exclusive districts on Singapore’s Sentosa island, the head of one of the world’s biggest cryptocurrency exchanges is holding court. Surrounding him at the outdoor dining area facing the ocean are some of the biggest names in the cryptocurrency space, a veritable who’s who in an otherwise pseudonymous realm enjoys glasses of champagne and cognac while discussing developments in NFTs and decentralised finance. These “crypto-salons” as they have come to be known to insiders are not uncommon, and more often than not, they take place on one of the many luxurious mansions on the southern tip of Singapore’s Sentosa Island.

Bitcoin’s price is the benchmark of the health of the crypto market globally. Image: Bitcoin.

An Island’s Gated Community

As the only place in the city-state that permits foreigners to own so-called “landed property,” the spotlessly clean walkways and carefully manicured gardens of Sentosa’s exclusive gated communities feel like a world away from the hustle and bustle of Singapore’s mainland.

Just a stone’s throw away from Singapore’s central business district, Sentosa has seen a revival of sorts thanks in no small part to the pandemic.

As recently as 2019, real estate prices in Sentosa Cover dropped to a record low, with a condominium unit at a development called Seascape sold at a 50 per cent loss — a far cry from when properties on the exclusive resort island were commanding premiums over mainland equivalents.

The 2,336-square-foot luxury three-bedroom apartment had been purchased for a whopping S$6.27 million in 2010, only to be sold in May of 2019 at S$3.1 million, a loss of S$3.17 million, based on information from Singapore’s Urban Redevelopment Authority.

Sentosa – living on an island with theme parks and beaches. Image: Sentosa.

But while the record-setting Sentosa loss may have garnered headlines, it was hardly alone as data from real estate consultancy Cushman & Wakefield showed that the median resale price for Sentosa Cove non-landed properties fell to S$1,367 per square foot in 2019, a record low since luxury homes were first launched on the island in November in 2004. By way of comparison, the median price for non-landed properties in Sentosa Cove was S$2,200 in 2010. Yet, barely a year later, investors who had purchased Sentosa properties in 2019 were laughing their way to the bank.

Bigger appetite for real estate

An economically crippling global pandemic and nationwide lockdowns fuelled demand for larger homes amidst settings outside the cramped confines of the city. Suddenly rentals at Sentosa properties were snapped up in short order and prices of real estate on the island made a remarkable comeback as the well-heeled scoured the world for pandemic safe havens to tide out the coronavirus storm. One of those safe havens turned out to be Singapore and Sentosa Island in particular. With work from home becoming the new-normal, investors and foreigners clamoured for Sentosa properties, with waterfront real estate snapped up. Being the only address that offered seafront living on a resort island, with the lush and tranquil surroundings affording residents the luxury of open expanses of space, serenity, and security, Sentosa Island suddenly started to teem with prospective buyers both local and foreign. And amongst this new jet-set, were the nouveau crypto-rich. As central banks globally poured copious amounts of money to prop up their ailing economies wracked by the pandemic, cryptocurrencies saw an unprecedented bull run, that almost overnight turned a handful of early investors into millionaires and billionaires yet again.

Crypto kings eyeing Sentosa properties

After the debilitating “crypto winter of 2018″, the legions of crypto-rich that call Singapore home were rents now suddenly flushed with cash and looking for a place to stay — that place turned out to be Sentosa. As an open and progressive economy with well-developed capital markets and a solid reputation as a global financial centre, Singapore has long embraced cryptocurrencies and fintech innovation. Ethereum co-founder Vitalik Buterin calls Singapore home, as does the world’s largest cryptocurrency exchange by market volume Changpeng Zhao, who’s better known as “CZ.”

But big names aside, more cryptocurrency companies are putting down roots in Singapore, attracted by the clear and pragmatic regulations governing the nascent digital asset space such as the Payment Services Act.

Sentosa is all about island living – sun, sea, sand, and plenty of fun. Image: Sentosa.

Last month, Independent Reserve, a regulated Australian cryptocurrency exchange, received its Payment Services license, to deal in digital payment tokens, along with a slew of other applicants. Gemini, the cryptocurrency exchange founded by the Winklevoss twins of Facebook and “The Social Network” fame, also decided to headquarter their operations in Singapore, and digital asset brokerage OSL, a subsidiary of Hong Kong Stock Exchange-listed BC Technology Group is also expanding its footprint and headcount in the city-state. And these cryptocurrency companies, flush with cash from the rally in digital asset prices are paying top dollar for talent, both from the traditional financial services market as well as for developers, programmers, UI/UX designers, smart contract specialists, marketing and legal professionals and the like.

Riding on rental demand

Given the significant salaries of these new hires and the on-again, off-again pandemic restrictions in many parts of the world, many have opted to rent opulent properties on Sentosa Island. For now, at least, this demand has driven up rents but has not translated into price increases on the ground on Sentosa Island. Average per square foot prices for landed developments in Sentosa in March of this year was around S$1,724, only marginally higher than the S$1,717 per square foot that such developments attracted in 2019, but that average may have been dragged down by the state of disrepair on some of the more neglected properties on the island resort. Prospects for condominiums on Sentosa on the other hand, have improved. Seascape, where one property investor lost 50 per cent in 2019, has since seen a resurgence in per square foot price to S$2,103 earlier this year, with the sale of not one, but two 2,852-square-foot, four-bedroom apartments that sold for S$6 million each. Bargains can however still be had on the island, with some apartments going for as little as S$2 million for a 1,200-square-foot unit. The crypto jet-set also has demonstrated a preference to rent instead of buy, and many who work in the industry are expatriates, having not fully decided whether they want to lay down roots in Singapore, let alone on Sentosa Island. But that may change once the pandemic eventually clears up and people are free to travel again, perhaps real estate developers can start considering accepting payment in Bitcoin?  

Patrick Tan

PATRICK TAN, CEO & GENERAL COUNSEL OF NOVUM ALPHA
Novum Alpha is the quantitative digital asset trading arm of the Novum Group, a vertically integrated group of blockchain development and digital asset companies. For more information about Novum Alpha and its products, please go to www.novumalpha.com or email: ask@novum.global

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