The top three profit-making executive condos remain in Q3

In the third quarter 2023, some executive condominium owners in suburbs and Outside Central Region (OCR), who own properties in suburban areas or outside the Central Region, continued to make solid gains. Their property values increased by nearly two times their initial value.

Some prime properties suffered the largest losses, losing value between S$267.648 and S$700,000. These are the most common deals that result in losses.

The proportion of resale homes that were unable to make a profit in both the landed and the non-landed sector increased marginally from 2.8% in the prior quarter, up to 3.2% in the third quarter.

Wong Xian Yang is the head of Cushman & Wakefield’s research. He said that this figure could continue to rise in coming quarters, as a cautious attitude settles on Singapore’s real estate market.

According to data crunched by Cushman & Wakefield for the Business Times, four out of five top-profiting resale transactions by percentage were EC deals in the OCR.

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Wong noted that sellers made “attractive high profits” of 90% to 98% after owning their properties for a median of nine years.
In July, a 2,121-square-foot (sq ft), EC apartment at The Tampines Trilliant sold for S$2.4m or S$1,141 psf. A 98 percent profit was made by the seller over its original S$1.2m (S$578psf) price in December 2012 The annualised profit was 6.6% based on a holding period of 10,6 years.

A 495 sq ft apartment at Sol Acres, Choa Chu Kang sold in July for S$720,000 (S$1,454 psf). The price was 94% higher than the initial S$371,000 ($749 per sq ft) set in August 2017. Based on a 5-year holding period, the annualised profit was 11.9%.

In Q3, the biggest deal in terms of profit – both in percentage and in dollar value – was for a penthouse at Goodwood Residence, located in Bukittimah District 10, measuring 10,710 square feet. In September, it was sold at S$32m or S$2,988 per square foot. Seller made a profit of slightly over double the original unit price in June 2014, which was S$15.6m (S$1,457psf). The annualised profit is 8 percent over the holding period of 9 years.

Wong noted that super-sized penthouses larger than 10,000 square feet are rare. The transaction levels have also been extremely low, with less that 10 supersized penthouses transactions in 2018.

Wong said that, in terms of absolute profits, the five biggest deals of Q3 involved freehold properties located in the Core Central Region. This is due to their higher prices and bigger unit sizes.

He said that units in the CCR were also the most expensive deals at “various times of the cycle” both by volume and percent.

A 474 sq ft condo at the freehold condo 6, Derbyshire, in Novena District 11, was sold for S$920,000 or S$1,943 psf in August. This is 23 per cent less than its initial price of $2,508 psf in November 2017. The unit was sold in August for S$920,000, or S$1,943 per square foot – a 23 percent reduction from its original price of S$1.2million (S$2,508 per sqft) in November 2017. Based on an average holding period of 5,8 years, the seller experienced annualised losses of 4.3%.

Quantitatively, the biggest loss-making transaction was for a 1 389 sq ft apartment at Mon Jervois 99-year leasehold in District 10. In August, it was sold for S$2.6m or S$1,872 per sq ft. It was sold for S$2.6 million or S$1,872 psf in August. This price is 21 percent lower than the original S$3.3million (S$2,377psf), which it originally costed back in November 2017. This translates to a loss of 4 percent per year based on an average holding period of 5,8 years.

Cushman and Wakefield’s study examined caveats on non-landed homes that had a previous purchase history from January 2012 to September 2023 and were purchased in Q3 of 2023. The top five deals that made money and those that lost money were ranked by both percentages and dollar amounts. This analysis did not include transaction costs or taxes such as stamp duties for both the buyer and seller.

Data on caveats for landed homes and private non-landed houses also revealed that 52 percent of the deals with loss in the third-quarter were prime CCR property. In the third quarter, RCR (the rest of Central Region) and OCR (the other Central Region) were responsible for 26% of these deals.

Wong stated that “after the latest round cooling measures, buyers are adopting a wait-and-see attitude as they watch and wait.”

The majority of CCR-matched transaction are profitable, at 81%.

Wong believes that the overall level of losses in transactions will likely remain low, despite an increase in private home sales.

He said that the domestic private residential market, although cautious, is resilient. Owners’ holding power, he added, was supported by stable employment and strong household balance sheets. Housing and Development Board (HDB) resale values continue to rise, which is supporting the upgrader demand for RCR and OCR.

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