In Q3, the top gainers were still executive condos

In Q3, the top gainers were still executive condos

The price of executive condominiums in the suburbs and outside Central Region continued to rise in the third-quarter 2023. Some properties were sold for almost double the original value.

The majority of losses were attributed to prime properties, which lost between S$267.648 – S$700,000.

It was revealed that the number of private home resale losses in the landed as well as non-landed sectors had increased slightly to 3.2 percent in Q3, up from 2.8 percent in the preceding quarter.

Wong Xian Yang of Cushman & Wakefield, head research, says that this number may rise further in the next quarters.

Cushman & Wakefield real estate consultants crunched the data to produce The Business Times. Based on the results, the four top profit-making resale deal percentages in Q3 came from EC deals within the OCR.

Wong stated that the average seller held their property for nine years. This resulted in a “high profit of up to 98%).

The Tampines Trilliant, a 2121 sq ft (sq ft), EC unit was sold at S$2.4 million (S$1,141/psf) on July. The unit was originally sold for S$1.2million (S$578 per square foot) in December of 2012. A profit of 6.6% was achieved based on the 10.6 year holding period.

A unit measuring 495 sq ft at Sol Acres Choa Chu Kang, which was originally priced S$371,000 (S$749 psf) in August 2017, sold for S$720,000 in another EC in July. In August 2017, the price for this unit was S$371,000, or S$749 per square foot. This deal saw a 94-percent increase. On the basis of a holding time of 5,9 years, annualised profits reached 11,9%.

By both quantum and percentage, the most profitable deal of Q3 involved a 10,710 sf penthouse apartment at Goodwood Residence located in Bukit Tiamah. This unit sold for S$32,000,000 or S$2,988/sqft in September. It was sold for S$32 million or S$2,988 psf in September. Over a period of nine years, this equates to an annualised 8 percent profit.

The Myst showflat

Wong stated that these supersized apartments of over 10,000 square feet were a rarity. In addition, the number of supersized penthouses sold is extremely small. There were less than ten transactions between 2018 and 2019.

Wong noted that all five deals with the highest absolute gain in Q3 came from freeholds located in Core Central Region. The CCR is a prime area for investment due to its higher prices, larger unit size and relative high price.

During “varying phases of the market cycle”, units from the CCR accounted for both the highest loss-making transactions, in terms of percentage and quantity.

In terms of the percentage, a unit with 474 sq. ft. at 6 Derbyshire freehold condominium in Novena district 11 was the sale which spilled most red ink. This unit sold for S$920,000 in August or S$1,943 sq ft – 23 percent less than its November 2017 initial price of S$1.2 mn (S$2,508 sq ft). A holding period for 5.8 year resulted in an annualised loss of 4.3 %.

In terms of size, the largest loss-making property was a unit measuring 1,389 sq. ft. at Mon Jervois on 99-years leasehold located in district 10. This unit sold in August for S$2.6m, or S$1,872psf. In November 2017, the price had originally been S$3.3 million ($2,377 per sq ft). This is a 21-percent reduction. According to an estimated holding period (of 5.8 years), this translates into annualised losses at 4%.

Cushman & Wakefield analyzed caveats of non-landed residential homes, with a history of prior purchases between January 2012 and Sept 2023. These properties were sold in the Q3 2020. Cushman & Wakefield then calculated the percentage and value of profit and loss for each deal. It excluded taxes and transaction costs such as stamp duty for the seller and stamp duty on behalf of the buyer.

In the third quarter, caveats on landed or non-landed properties showed that prime CCR homes accounted for 52% of losses. RCR accounted 26 percent of the deals and OCR, 22 percent.

Wong explained that the demand for CCR property remains muted following the recent cooling measures. Buyers are taking a “wait-and watch” stance.

“While the CCR accounted for a higher share of losses, 81 percent of CCR matched transactions were profitable.”

Wong claims that, while there may be an increase in the amount of homes sold at a loss, overall losses are expected to remain low.

“While cautious, domestic private residential demand remains resilient. Owners’ holding power is supported a by a steady labour market and healthy family balance sheets.” Housing and Development Board’s resale rates continue to climb, supporting demand from upgraders, especially in RCR and OCR.

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