Deferred losses for recent sellers at OUE Twin Peaks

/ EdgeProp Singapore
December 20, 2019 10:00 AM SGT
OUE Twin Peaks was the first development to offer fully-furnished apartments with timeless furniture pieces by famous designers such as Hans Wegner, Charles & Ray Eames, Tim Dixon and Matthew Hilton (Photo: Samuel Isaac Chua/EdgeProp Singapore)
At OUE Twin Peaks on Leonie Hill Road, 10 units changed hands in 2018 and 2019. Of the 10, eight registered losses ranging from 2.3% to 21.7%. One transaction saw a gain of 21.8%, while another didn’t have a prior recorded transaction, based on URA Realis caveats downloaded as at Dec 18 (See Table).
The latest transaction was for a 549 sq ft, one-bedroom unit that changed hands for $1.34 million ($2,441 psf), based on a caveat lodged at the end of November. The unit was purchased for $1.71 million ($3,117 psf) in March 2013 at the peak of the market.
Four of the eight transactions were for units purchased between April to June 2016, when the high-end, newly completed condo was relaunched with the option of a deferred payment scheme (DPS). These losses ranged from 2.3% to 8.1%.
“These sellers are likely to be those who took up the three-year DPS package and probably could not secure a mortgage at the end of the period,” says a property consultant who declined to be named. “They were therefore forced to sell their units at a lower price in a relatively weak market.”
Relaunched in April 2016, all 462 units at OUE Twin Peaks were fully sold by October 2017 (Photo: Samuel Isaac Chua/EdgeProp Singapore)
The most recent sale of such a unit was in August when a 1,399 sq ft, three-bedroom unit on the 15th floor went for $3.25 million ($2,323 psf). That unit was purchased in May 2016 for $3.5 million ($2,501 psf). Before this, another similar-sized unit on the 26th floor sold for $3.3 million ($2,358 psf) in May this year. That unit was purchased for $3.59 million ($2,566 psf) in May 2016.
The third most recent recorded deal was also in May: This 571 sq ft studio apartment on the 20th floor was sold for $1.57 million ($2,752 psf). It was first purchased for close to $1.607 million ($2,817 psf) in April 2016.
In February, a 1,604 sq ft three-bedroom unit on the 27th floor was also sold for $4.15 million ($2,588 psf). It was purchased for $4.25 million ($2,650 psf) in May 2016.
It should be noted that the gross losses reflected in the table have not taken into consideration the seller’s stamp duty (SSD) as these sales were done within the first three years of purchase.
Master bedroom with view unblocked view of prime Orchard Road (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Losses offset by rental gains

However, Propnex Realty’s head of luxury team Dominic Lee reckons that some of these losses may have been offset by the rental gains made if the units were rented out during the three-year period.
According to Lee, monthly rental rates for the three-bedroom units ranged from $7,500 to $8,500 while the one-bedroom units command rates of about $3,000. Some were even leased out for as high as $3,700, he notes, as they were fully furnished.
OUE Twin Peaks was the first development to offer fully-furnished apartments with timeless furniture pieces by famous designers such as Hans Wegner, Charles & Ray Eames, Tim Dixon and Matthew Hilton. Landscape design was by acclaimed architect and landscape designer Bill Bensley.
Developed by Singapore-listed property group, OUE Ltd, OUE Twin Peaks obtained its temporary occupation permit (TOP) in February 2015. It has two identical 35-storey towers sitting on a site area of 130,983 sq ft with total gross floor area of 436,168 sq ft. The 99-year leasehold condo in prime District 9 has a total of 462 units, with a mix of one-, two- and three-bedroom apartments sized from 549 to 1,604 sq ft.
It was relaunched in November 2015, but sales really took off in early April 2016 when the developer dangled a DPS offer to buyers – the first for a completed condominium development.
Between 2002 and 2005, developers had offered DPS when the residential market was still in the doldrums. They continued to offer such schemes for their new project launches that were under construction until September 2009 when the government scrapped it. That marked the first of nine rounds of property cooling measures in the past decade.
Master bathroom with a view (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Novelty of DPS for completed condos

While only about half the buyers took up the DPS offered at OUE Twin Peaks, it sparked buyer interest and all 462 units were sold by October 2017. This led other developers with unsold units in completed condominiums to follow suit with their own DPS offerings, with varying degrees of success.
In early April 2016, Tower 2 of OUE Twin Peaks was launched, where prices started from $2,200 psf or $1.25 million for a 570 sq ft one-bedroom unit. When the tower with 231 units was substantially sold at the end of July that year, Tower 1 was launched where units were sold at high prices starting from $2,450 psf or $1.4 million for a 570 sq ft one-bedroom unit.
Both towers were launched with the DPS, but they came with strings attached and also a 3% price premium over units sold under the normal payment scheme. There were also two different alternatives. Originally the DPS were for two years but were extended to three years.
In the first DPS package, a 10% booking fee was paid upfront followed by another 10% (to be paid a fortnight later) when the option to purchase was signed. A further $1,000 was due upon receiving vacant possession of the unit. The new owner could either move in or rent out the unit immediately. The balance 80% was deferred for two- or three-years later when the option was exercised.
In the second DPS option, a 20% down payment was due upon signing the option to purchase. Exercising the option to purchase was deferred until December 30, 2016. Upon exercising the option to purchase, an additional $1,000 was payable to obtain vacant possession of the unit. The balance 80% would be due two- or three- years later.
If buyers could not complete their purchase by the end of the two- or three-year period, their 20% down payment and $1,000 would be forfeited.
Landscaping at OUE Twin Peaks is by acclaimed architect and landscape designer, Bill Bensley (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Initial buyers

But it’s not just those who purchased under the DPS who suffered losses. Those who purchased units when OUE Twin Peaks was first launched in late 2010 to 2011 at prices ranging from $2,702 to over $3,000 psf also took a hit when they offloaded their units in the resale market recently.
These sales made up the remaining three of the eight loss-making deals registered in the 2018-2019 period (See Table). For instance, a 571 sq ft, one-bedroom unit on the 18th floor was sold in April for $1.53 million ($2,682 psf). It was purchased for $1.66 million ($2,910 psf) in September 2010.
Another 571 sq ft unit was sold for $1.608 million ($2,819 psf) in July 2018. It was purchased for $1.68 million ($2,945 psf) in Jan 2011. Meanwhile, a neighbouring 571 sq ft unit changed hands for $1.54 million ($2,699 psf) three months earlier in April 2018. It was also purchased for $1.68 million ($2,945 psf) in Jan 2011.
“The initial launch prices were at a premium because the project has a prime District 9 address, the units are fully furnished, and the project was well executed,” says Lighthouse Property Consultants managing director Samuel Eyo. “When the project was first launched in late 2010-2011, property cooling measures such as the higher ABSD [additional buyer’s stamp duty], tighter borrowing limits for home loans and the TDSR [total debt servicing ratio] loan framework weren’t introduced yet,” he continues.
Owners in the resale market are also facing stiff competition from new launches in the prime districts, ranging from 99-year leasehold projects such as Martin Modern, Riviere and Cuscaden Reserve to the freehold ones like 120 Grange, 8 St Thomas and 3 Cuscaden. “In a buyer’s market, these individual sellers do not have the same price advantage that developers have,” says Eyo.
For price trends, recent transactions, other project info, check out these projects' research page: OUE Twin Peaks, Martin Modern, Riviere, Cuscaden Reserve, 120 Grange, 8 St Thomas, 3 Cuscaden
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