Some luxury homes nearing completion in Singapore’s prime Orchard Road area have been re-sold at a loss, the Singapore Business Times has reported.Nine units bought in 2007 were sold for a loss in 2010 in the sub-sale market, according to a Savills analysis of caveats captured by the Singapore Democrats
Urban Redevelopment Authority’s Real Estate Information System (Realis). But 78 out of the 87 homes in the analysis bought from 2006 to 2009 were sold for profit.
Of the units that were sold for a loss, three were in Scotts Square development, two in Parkview Eclat, and one each in Grange Infinite, Leonie Parc View, Orion, and Paterson Linc. Eight of the nine units were bought from developers and size was not a factor as the units ranged from 818 to 3,250 sq ft.
The two biggest losses were at Parkview Eclat, where two units were sold for S$1.75 million (US$1.35 million) and S$1.72 million (US$1.32 million) less than the original buying price.
Steven Ming, executive director for prestige homes at Savills Singapore, said that the luxury market still has not recovered from the peak years of 2007 and 2008 and that homes are selling at discounts of 10-15 per cent. He said the fact that all nine units sold for a loss were bought in 2007 may be due to the high prices of the peak market during that year. Units from the analysis bought in 2006, 2008, and 2009 were all sold at a profit. Mr Ming also noted that more owners suffered losses in the second and third quarters of this year than in the first.
Ku Swee Yong, chief executive of International Property Advisor, said that some owners could tired of holding on to their properties as tenants have become harder to find after an outflow of expats in 2009.
“If you were a tenant with a monthly budget of S$9,000-12,000 (US$6,927-9,236), there will be many vacant brand new properties to choose from – Ardmore II, CityVista, BelleVue, St Thomas Suites and Latitude, just to name a few – and these new projects will be competing with older, more established and larger-sized units such as those in Ardmore Park and Grange Residences,” said Ku.
Savills’ Ming noted that the number of units selling at a loss is still very low, with 90 per cent of sub-sale transactions in 2010 making profits.
In the future, owners of luxury property in Singapore could be more interested in selling – even at losses – as oversupply is a concern with many new projects in the pipeline in prime districts 9 and 10.
“The wave of construction that began in 2007 and 2008 means we are seeing significant completions of luxury properties from 2010 to 2012,” said Mr Ku. “Coming soon are The Marq on Paterson Hill, Cliveden at Grange, Nassim Park Residences, Helios, Hilltops, The Orange Grove and Ritz Carlton Residences, among others.”
For its analysis, Savills only compared sub-sale transactions for which there were caveats of previous transactions. The amount of profit or loss was calculated as the difference between sale and purchase prices and does not take into account stamp duty and other expenses. Based on caveats downloaded on Oct 19, Savills found that 108 units in 16 projects in the Orchard Road vicinity were sold in the sub-sale market in 2010. Of these units, the firm managed to match 87 units with their previous transactions. It found that nine units were re-sold for losses in the sub-sale market. Sub-sales – which refer to secondary market transactions involving projects that have yet to receive a Certificate of Statutory Completion – are tracked as a gauge of property speculation.