Deal swoon in prime residential segment

By Feily Sofian and Esther Hoon / The Edge Property | July 8, 2016 12:10 PM SGT
The proportion of unprofitable deals in the high-end segment continued to climb. One in three sellers, or 33% of the segment, incurred losses in 2Q2016, up from 30% in 1Q2016. In the city fringe, however, the proportion declined from 16% in 1Q2016 to 13% in 2Q2016.
A majority of the unprofitable deals in the high-end segment were traced to units bought in 2007 and 2010. They were sold in 2Q2016 at an average loss of $1 million (24%) for units purchased in 2007, and $263,000 (10%) for those bought in 2010.
The proportion of unprofitable deals and their loss margins underscore deep value buying opportunities in the prime residential segment. A couple of them were sold through auctions.
The top loss in 2Q2016, which amounted to $2.8 million, accrued to a 1,679 sq ft unit at Paterson Suites. The buyer, a Singapore citizen, picked up the unit at just $2,156 psf, or a 30% discount on the average 2007 price of $3,074 psf. The seller is believed to be an Indone sian family.
Such deals cannot be inferred from the URA price index, which puts today’s prices for high-end non-landed homes at 2% above 4Q2007 prices.
Besides the unit at Paterson Suites, a seller at Turquoise in Sentosa Cove also took a huge loss in May amounting to $2.5 million. The seller, a Singapore citizen, had bought the unit in 2007. The buyer, meanwhile, paid an attractive price of $1,521 psf for the 2,433 sq ft unit, which is on a par with, or just a tad higher than, several city-fringe projects.
Another buyer got a steal when he picked up a 2,282 sq ft unit in Orchard Scotts in June for just $1,468 psf. The seller, however, sustained a loss of $2.4 million, having purchased the unit in 2007 at $2,520 psf.
One buyer got a steal when he picked up an Orchard Scotts unit at $1,468 psf. The seller sustained $2.4 million loss, having bought the unit at $2,520 psf
The list goes on. At Cuscaden Royale, two units changed hands in May at an average...