In a pan, combine sugar and water and swirl the pan over medium heat until thick and dark amber in color.
Line cupcake liners with a thin layer of caramel sauce. Set aside to harden.
In a large bowl, beat butter and sugar until pale yellow.
Beat in eggs yolks. Add condensed milk, coconut milk, cornstarch, salt, and vanilla extract then mix for a few more minutes, until well combined.
Divide the batter into two and place desiccated coconut in the other half of the batter.
Place smooth batter in cupcake molds with the cupcake liners about halfway full.
Bake in a preheated oven at 100 degrees Celsius for about 15 to 20 minutes until almost set.
Fill the top half of the cupcake liners with coconut batter and bake for about 15 to 20 minutes until set. Cool and serve.