Singapore’s Rich Chinese Cut Back on Ferraris and $75,000 Whisky

In Singapore’s boomtime, whisky dealer Manjit Gill used to sell at least a bottle every day to his wealthy Chinese customers, who occasionally splurged as much as S$100,000 ($75,000) in one go on single malt.

These days, three sales a week to them counts as a good run. Gone too are the most outlandish purchases. “They’re not in a relaxed mood,” Gill, whose company operates The Whisky Distillery chain of retail stores, said of his mainland Chinese clientele. “When they come, they’re in a rush.”

The new reality is typical for dealers to Asia’s ultra-rich in the financial hub, which is now suffering a hangover after the heady days of spending during the pandemic. At that time the big spenders — primarily Chinese tycoons — flocked to the country, helping to turn it into the world’s most expensive city for luxury goods.

Lately, demand has ebbed. Prices for high-end condominiums have declined since September, while sales of flashy cars like Bentleys and Ferraris have plunged. Big-ticket items from golf memberships to 30-year-old whiskys have also suffered price declines.

A myriad of factors have led to this, from high interest rates to tax hikes targeting foreign wealth. But increasingly, observers point to another reason: the rich are embracing more low-profile spending to avoid the attention that displays of opulence might attract. This comes after a major crackdown on money laundering in Singapore, and as resentment stirs among the local populace about rising costs of living.

“The Chinese are not buying the way they used to,” said Amrita Banta, managing director at Agility Research & Strategy, a luxury consulting firm. “There’s a broad cloud impacting the ways they spend money in Singapore,” she added, pointing to the recent S$3 billion laundering scandal and the impact of China’s weakened economy.

Over the past 12 months, wealthy individuals in Singapore seem to be favoring discreet over more overt expressions of wealth, according to a report by Julius Baer Group Ltd that was released in late June. The Swiss wealth manager said sales of watches, cars, apartments and other goods have dropped, even as the city continues to outrank London, New York and Hong Kong as the world’s most expensive for luxury spending.

Read More: Singapore, Hong Kong Are Costliest Cities for Luxury Spending

That’s raising new questions about how Singapore’s drive to become a major wealth hub has benefited the local economy. Hedge funds and banks have said few of their meetings with Chinese tycoons brought in business beyond basic custodian deals. The city-state has dialed up scrutiny of how recent rich arrivals made their money, and Hong Kong is already winning back some millionaires from the mainland.

Bubble Deflates

The new dynamic has been a reality check for the city’s luxury property owners and agents.

The 10 China-born individuals who were convicted of money laundering in Singapore, along with others who remain at large, purchased more than 200 properties, including homes on Singapore’s Sentosa resort island and other condominiums. Some also rented good class bungalows, which are mansions in prime locations with a land area of at least 1,400 square meters (15,069 square feet). In 2020, one of the money launderers paid S$150,000 a month to rent a villa with a rooftop pool and gym.

The group’s exit, and a 60% tax on residential properties purchased by foreigners, are already making a mark. An even bigger home is being offered in the prime River Valley area at just S$60,000 rent per month.

In May, a five-bedroom luxury penthouse at the St. Regis Residences sold for S$14 million, after its asking price was lowered multiple times over the past few months from S$18 million. On Sentosa, a high-end development sold units in April at discounts of more than 40% from their original offer price.

“Things got a little too vibrant” with some of the boom being artificially driven, said George Tan, the Singapore managing director for real estate broker Savills Plc’s high-end property service Livethere Residential. “Reality set in last year.”

It all marks a shift for Singapore, which was a safe harbor during the pandemic when much of Asia was hammered by the coronavirus. The number of single family offices in the city-state that were awarded tax incentives surged to around 1,400 at the end of 2023, more than triple the total at the end of 2020. Global banks including UBS Group AG expanded in the city to manage the massive influx of wealthy individuals and their assets.

More recently, some banks are tightening their know-your-customer checks and reviews, and rich Chinese in Singapore are under a microscope, private bankers familiar with the matter have said.

Read More: Singapore Ramps Up Scrutiny of Family Offices, Hedge Funds

To be sure, luxury prices globally have also taken a hit as businesses around the world grappled with the impact of higher interest rates.

Singapore’s political and economic stability also continues to attract more rich people. And with its prosperous base of homeowners who’ve made money from the financial hub’s real estate boom, it still ranks among the world’s wealthiest cities, according to migration consultant Henley & Partners.

Status Symbols

Most of all, status items have declined in value. Individual memberships at the 36-hole Sentosa Golf Club — which some of the convicted criminals owned — peaked at S$950,000 last year for foreigners. The cost for an expatriate to join has fallen to as low as S$750,000, according to brokerage Singolf Services Pte., though that’s still sharply higher than before the pandemic.

The market for super-luxury cars — which typically cost at least S$1 million — has slowed to a crawl. Across six of the most sought-after brands in the city-state, only 32 new cars were sold in the first quarter of 2024, down 74% from the same period last year.

“In the good old days, I think people would not bat an eyelid if you were to plunk down a whole lot of cash to buy a Bentley or a Rolls-Royce,” said Say Kwee Neng, managing partner of automotive consultancy ONE Strategic Consulting LLC. “These days, maybe there’ll be a little bit more inquiry into the source of funding,” he added.

With Chinese clients dealing with the sharp downturn in their own property market, Gill, who is Group Managing Director of The Whisky Trust Group, said he’s seeing more spending by customers from other parts of Asia including Vietnam, Cambodia and India.

Many still prefer to buy expensive liquor in the city-state to avoid being sold fakes in their home countries. His company’s vault includes a Laphroaig 40 years old from 1960, signed by King Charles III and Queen Camilla and valued at $2.6 million — making it the world’s most expensive bottle according to the Guinness World Records.

The market has softened over the past six months, Gill said. “We’ve seen that happen in a few cycles before, but I think this one is the more pronounced one.”