“People usually talk about the Orchard and Nassim areas when it comes to luxury homes, but District 2 could be the next up-and-coming district where people are paying top dollar,” said head of research and consultancy Christine Sun.

Non-landed new home prices in the two districts – which also take in Shenton Way, Boat Quay and Chinatown – hit a historical high at S$2,653 psf in Q1 2018, five per cent higher than the S$2,526 psf recorded in the fourth quarter of 2017.

Subsales prices rose to a record S$2,319 psf, 18 per cent higher than the S$1,963 psf in Q4 2017. Resale prices held steady at S$1,875 psf. Across the nation, the second and third priciest homes transacted in Q1 2018 by dollar psf are at Wallich Residence – an 89 sq m unit sold at S$3,894 psf and a 160 sq m unit sold at S$3,832 psf.

On a volume basis, 89 caveats were launched in the quarter in the two districts, above the five-year average of 85 units. In 2017, 493 caveats were lodged compared to 195 units in 2016 – despite the increases in average prices, OrangeTee & Tie noted.

Ms Sun told The Business Times that demand for District 1 and District 2 have risen ever since the launch of Icon by Far East Organisation. The completion of the Marina Bay Waterfront Promenade, Marina Bay Sands, Gardens by the Bay and The Promontory @ Marina Bay have helped attract buyers especially expatriate singles and young couples.

“The continuous route along the waterfront that links up the necklace of attractions at the Marina Centre, Collyer Quay and Bayfront offers buyers both the paranomic views of the promenade as well as direct access to connecting malls like Marina Bay Sands, Marina Square and Suntec City,” said Ms Sun. “These are important attributes as the lack of such facilities in the past have turned buyers, especially foreigners, in pursuit of luxury homes in the Orchard and Newton areas.”

The completion of offices such as the Marina Bay Financial Centre, Ocean Financial Centre and Asia Square Tower, have drawn expatriates to rent homes in the two districts as well, she added.

CBRE Research’s head of Singapore and South-east Asia Desmond Sim said: “Prior to the Marina Bay concept, the traditional Central Business District (CBD) was predominantly commercial but when Marina Bay first opened up, the strong emphasis on ‘work, live and play’ brought more residential units into this market.”

The introduction of white sites via Marina Bay plots has allowed developers to establish a residential enclave in the CBD, while some conversions from commercial use to residential use were allowed in the mid-2000s, he said.

Examples include the conversion of Natwest Centre to The Clift condominium, and Robina House to One Shenton. OrangeTee & Tieexpects prices of non-landed homes in the two districts to rise by about 8 to 12 per cent this year as more units from Marina One Residences and Wallich Residence are released in later phases.

Ms Sun said she expects volumes in Districts 1 and 2 to continue to trend above the five-year average. “The take-up is quite healthy, compared to the period of lull for the luxury market in 2015 and 2016 for Districts 1 and 2,” she said.