Top profit earners for Q3: Executive condo sellers

The third quarter of the year 2023 saw some homeowners who live in executive condominiums (EC) in the suburbs, or the Outside Central Region OCR (Outside Central Region), continue to see solid increases in their property prices.

Prime properties also suffered losses between S$267.648 to S$700,000. They accounted for most of the loss-making transactions.

In Q3, the percentage of home sales that resulted in a loss in the land and non-land sectors increased to 3.2%, from 2.8% the quarter before.

Wong Xian Yang said Cushman & Wakefield’s head of Research that the figure might continue to increase in future quarters due to a shift in sentiment in Singapore’s real estate.

Cushman & Wakefield’s real estate consulting firm crunched data for The Business Times and found that four of the five most profitable resale sales by percentage during Q3 involved EC transactions within the OCR.

Wong said that after having their unit for an average nine-year period, sellers pocketed “attractively large profits” of between 90 and 98 percent.

The Tampines Trilliant unit of 2,121 sq ft sold in July for S$2.4 mil or S$1,141 psf. In December 2012, the original unit price was S$1.2m ($578 sq ft). The seller made a profit of 98%. Annualised, the profit was 66% after a 10.6-year holding period.

Another EC transaction in July saw a Sol Acres unit of 495 square feet in Choa Chu Kang sell for S$720,000, or S$1,454 per sq ft. It was also 94 percent higher than it’s initial S$371,000 price (S$749/sq ft), which occurred in August 2017 The annualised profits were 11.9%, based upon a 5.9-year period.

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A 10,710 sq. ft. penthouse in BukitTimah, District 10 was the largest profit deal in Q3, both by percentage and quanta. The unit was sold in September for S$32m, or S$2,988psf. In June 2014 the seller had made S$15.6 million (1,457 S$ psf), which is slightly more than twice as much profit. It is an 8 per cent annualised gain over 9.3 years.

Wong said that such supersized penthouses with more than 10,000 sq. ft. are very rare. There have been fewer than 10 supersized Penthouse Transactions since 2018.

Wong stated that the freehold apartments in Core Central Region were the most profitable deals for Q3, due to the higher unit prices and the larger units.

The CCR units also made up the majority of losses, both in terms of quantity and percentage. These were bought at different times during the “market cycle”, according to him.

Sale that caused the biggest amount of red ink was a freehold unit measuring 474 square feet at 6 Derbyshire condo in Novena, District 11. In August, it was sold at S$920,000 (S$1,943/sq ft), a price 23 per cent less than the original S$1.2m ($2,508/sq ft) from November 2017. On the basis of holding for 5.8 years, this seller had annualised losses 4.3 percent.

The top deal in terms of quantum was a 1,389 square foot unit located at Mon Jervois, a 99-year-leasehold development situated in District 10 and leased for 99 years. The unit was bought for S$2.6 mil or S$1,872 sqft in August. The price was 21% lower than it had been originally, which was S$3.3m (S$2,377psf), in November 2017 On the basis of a 5-year holding period, that translates into an annualised loss of 4%.

Cushman & Wakefield conducted a study that examined caveats for private non-landed houses with a purchase history between September 2012 and January 2012. The homes were then transacted during Q3 2023. This study then determined the five most profitable and least profitable deals by both percent and amount. Analysis excluded transaction costs, taxes and fees such as seller and buyer stamp duty.

The caveats data for private homes, both landed and un-landed, also indicated that the prime CCR properties were responsible for 52 percent of all loss-making transactions in third quarter. These deals were accounted for by the RCR and OCR.

Wong noted that “after the most recent round of cooling, demand remains moderate as buyers take a watch-and wait stance.”

“However, although the CCR contributed a greater share of transactions that were loss-making, the majority, 81 percent, of CCR-matched purchases are profitable.”

Wong says that while the total number of transactions could increase, Wong expects it to stay low.

The domestic residential market is still resilient, even though cautious. Its owners have a strong holding power thanks to a healthy balance sheet and thriving labour market. Housing and Development Board resale price continue to increase, supporting upgrading demand in the RCR and OCR market.

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