Is it a Good Deal?: This District 10 condo sold for a $900k loss
By Elizabeth Choong
/ EdgeProp Singapore |
The conserved clubhouse and infinity pool in Draycott Eight (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Singapore (EDGEPROP) – We used our analytics tool 'Is it a Good Deal?' to examine a sale transaction of Draycott Eight that took place on March, 12. The four-bedroom unit was sold for $6.28 million ($2,169 psf), resulting in a loss of approximately $900,000. The seller purchased the 2,896-sq ft unit in December 2012 for $2,480 psf.
More about Draycott Eight
Draycott Eight is a 99-year leasehold condo located along Draycott Park in District 10. The 136-unit development obtained its temporary occupation permit (TOP) in 2005. The Tanglin Club, The American Club, Goodwood Park Hotel, Pacific Plaza, and Far East Plaza are a short walk away.
Draycott Eight is also located within a 1km radius of Anglo-Chinese School (Primary), but the reputable school is slated to move from its current location along Barker Road to Tengah in 2030. Other amenities within a 1km radius include Newton and Orchard MRT Stations, Newton Food Centre, Scotts Square, Tang Plaza, The Paragon, Ngee Ann City, Ion Orchard, and Wisma Atria.
Summary of results
After inputting the aforementioned sales information into our 'Is it a Good Deal?' tool, we discovered that the sale price of $6.28 million ($2,169 psf) is 6.7% above the average price of Draycott Eight and 5.2% above the average price for the district. The result is interesting because the seller still experienced a loss despite selling their property at a price that is higher than the average price for the condo and the district. At the same time, our tool calculated that the price paid is lower than the average prices of nine nearby condos.
Average price for Draycott Eight surpassed District 10
The graph provided by the tool clearly shows that during this quarter, the average price for Draycott Eight surpassed the average price for District 10 condo units that are above 1,200 sq ft. Prior to this quarter, the average price for Draycott Eight had trended below its counterparts in the same district. The average price for Draycott Eight ($2,169 psf) is $108 psf higher than the average price for larger condo units in the same district ($2,061 psf).
Since 1Q2020, the average price for Draycott Eight has risen by 12.2%. In contrast, the average price for District 10 condo units measuring above 1,200 sq ft declined by 0.3% over the same timeframe. This is a good indication of the resilience of Draycott Eight’s average price, which could be attributed to its prime location. Draycott Eight also has a variety of common facilities, including a conserved two-storey black-and-white clubhouse and an Olympic-size infinity pool.
More affordable than neighbouring condos
A quick scan of nearby condos indicates that Draycott Eight has the lowest average price, which could be due to its leasehold tenure, unlike its freehold neighbours. In contrast, freehold Ardmore Park outperformed its neighbours with an average price of $4,473 psf. The 330-unit development obtained its TOP in 2001.
Goodwood Gardens is the least expensive neighbour with an average price of $2,203 psf. Goodwood Gardens is a freehold development along Balmoral Crescent. The development features 29 units and obtained its TOP in 2004. Due to the limited number of units in the development, Goodwood Gardens had only one sale transaction in the last 12 months. The transaction took place in August last year for a three-bedroom unit that measures 1,884 sq ft.
A closer examination of the three condos indicates that the average prices for Draycott Eight and Goodwood Gardens trend in close tandem despite their different tenures. In contrast, the average price for Ardmore Park consistently trends above the other two developments. Ardmore Park and Goodwood Gardens are within a 500m radius of Draycott Eight.
Moreover, stronger price growth was observed for Ardmore Park. From 2014 to last year, the average price for Ardmore Park surged by 57.4%, while average prices for Draycott Eight and Goodwood Gardens increased by 2.2% and 11.6%, respectively.
Is it really a Good Deal for the buyer?
The $900,000 loss for Draycott Eight certainly reinforces our analysis that a 'huat' name for a condo does not guarantee profits. However, does the loss for the seller really translate to a good deal for the buyer?
The transacted price is lower than the average prices of neighbouring condos. This could be attributed to Draycott Eight’s leasehold tenure compared to the freehold tenures of its neighbours. In an earlier article, we had observed that it is not advantageous to own a unit in a leasehold condo that is surrounded by freehold developments. Furthermore, Draycott Eight has only 72 years remaining in its 99-year tenure because its land lease started in 1997. Lease decay will mitigate future price growth.
As such, the buyer may not have gotten a good deal if he is an investor because lease decay will put a damper on potential capital gains. However, an owner-occupier buyer would have achieved their objective if they want to live in a prime district at a lower price than neighbouring condos.
To learn more about this transaction, and whether it is a good deal, click here.
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