Unit at Double Bay Residences sells for $821 psf

It may be three years before Double Bay Residences is completed, but some buyers of the sold-out, 646-unit condominium at Simei Street 4 have already cashed out for a profit.

The 99-year leasehold project was launched in March last year amid much uncertainty in the property market. Units went for as low as $409 psf, with the average selling price in the $600 to $650 psf range. With the property market recovering in 2H2009 and the first four months of this year, prices have escalated, hitting a high of $981 psf in March, when a 538 sq ft unit on the seventh floor was disposed of for $528,000.

The condo, developed jointly by UOL Group and Kheng Leong (a private property arm of banking magnate Wee Cho Yaw and his family), comprises nine 12-storey blocks and five 13-storey blocks. It is just a short walking distance to the Simei MRT station, and Eastpoint Mall is near schools like Changkat Changi Secondary School and ITE College East.

Noelle Lim of PropNex says new developments in the area like the upcoming university and new offices at Changi Business Park yield and capital appreciation. There is also a lot of interest from HDB upgraders who are looking for something affordable.”

With another upcoming private condo launch in the pipeline, homebuyers are expecting prices in the neighbourhood to receive another boost. Last month, the tender for a 99-year leasehold government land parcel of 126,940 sq ft site at Simei Street 3 attracted a record number of 18 bids. Chip Eng Seng Corp won the site with a bid of $152.7 million, or $523 psf per plot ratio (psf ppr), based on a maximum gross floor area of 291,963 sq ft. The proposed development will be a 280-unit condo, and based on the price psf ppr, property consultants expect the breakeven price to be $860 to $900 psf, and the selling price of the project to be around $1,000 psf when it is launched in 1H2011.

At Double Bay Residences, there were three transactions ranging from $812 to $821 psf from May 25 to June 1, according to caveats lodged with URA Realis. A 936 sq ft two bedroom unit on the ninth floor was sold for $760,000, or $812 psf. That’s a 20% gain in slightly over a year for the original owner, who bought it for $630,867, or $674 psf, from the developer last April.

In another block, a 1,001 sq ft two-bedroom apartment on the seventh floor went for $820,000, or $819 psf. The owner had purchased it for $690,378, or $690 psf, in March last year, reaping an 18.8% gain in over a year.

In the same block, another 1,001 sq ft unit on the 12th floor was sold for $821,888, or $821 psf. This represents a 14% gain for the seller, who purchased it for $717,683, or $717 psf, in April last year.

Double Bay Residences’ launch has also lifted the prices of other 99-year leasehold condos in the neighbourhood, with some hitting new highs. Located next door is Simei Green, an 11-year-old executive condo developed by NTUC Choice Homes. A high of $692 psf was achieved in May there, when a 968 sq ft unit on the eighth floor was sold for $670,000. The 602-unit executive condo was completed in 1999. Under HDB rules, executive condos can only be sold to a Singaporean five years after completion, but they can be traded like private condos (allowed to be sold to locals and foreigners) after 10 years.

Further up along Simei Street 4 is another Choice Homes development —the 242-unit private condo Tropical Spring. A 1,335 sq ft unit in one of the blocks was sold for $940,000 ($704 psf), according to a May 3 caveat. The property last changed hands a decade ago for $775,218 ($581 psf). Meanwhile, a 1,926 sq ft unit on the first floor went for $1.5 million, or $779 psf, in April. The property was last transacted at $860,000 ($446 psf) in December 2006, hence the owner saw a 74.4% gain in less than 3½ years.

Another 99-year leasehold project on Simei Street 4 is Modena, a 230-unit private condo developed and completed by OUB Centre nine years ago. The most recent transaction there was for a 1,561 sq ft, eighth-floor unit that was sold for $1.1 million ($705 psf). The previous owner had purchased the unit in 2002 for $$770,000 ($493 psf), hence seeing a 43% appreciation in the last eight years. The highest price achieved to date in terms of price was $752 psf for a 957 sq ft unit on the seventh floor.

Suburban condos located near MRT stations like Double Bay Residences are seeing strong homebuyer interest even though the market has become more subdued in the past month. Property consultants expect prices to hold for now.

Subsales become big money-spinners in 2010

A higher proportion of them are profitable and the gains have shot up, too

(SINGAPORE) Subsales are becoming more and more profitable.

At the low point of the market in the first quarter of 2009, only 67.5 per cent of the subsales of private apartments and condos yielded a profit.

That proportion grew to 95.1 per cent in Q1 this year and 96.1 per cent in April, according to Savills Singapore's analysis of URA Realis caveats data.

It attributes the trend to improving sentiment and prices in the first four months of this year.

Meanwhile, the average gain per unit from profitable subsales of non-landed private homes increased from $105,663 in Q1 last year to $284,764 in Q1 this year and $363,465 in April.

In terms of percentage return, the average gain from profitable subsales has risen from 13.1 per cent in Q1 2009 to 22.4 per cent in the first four months of 2010.

Subsales, often used as a proxy of speculative activity, refer to secondary-market transactions in projects that have yet to receive Certificate of Statutory Completion. This can take place three to 12 months after Temporary Occupation Permit (TOP).

Caveat matches that Savills traced up to May 12 this year show that the number of subsales that yielded gains exceeding $1 million shot up from seven transactions in Q4 last year to 32 in January-April 2010. Twentyfive of these lucrative deals this year were for properties in Districts 1 (which covers Marina Bay), 9 and 10 (in Singapore's traditional prime districts).

The highest subsale gain this year, of about $3.3 million, was reaped on a 30th-floor unit at Marina Bay Residences; it had been bought (also in the subsale market) in January 2007 for $4.97 million and divested in April this year for $8.29 million.

The next most profitable subsale this year involved a 13th-floor unit at The Oceanfront @ Sentosa Cove. The unit was bought from City Developments in July 2006 for $7.02 million and sold for $10.08 million in March 2010 - a gain of $3.06 million.

The Oceanfront recorded six subsales this year with gains of more than $1 million each. All these units were bought in 2006, before the big push in luxury home prices in 2007. Recent launches in the location - The Residences at W Singapore Sentosa Cove and Seascape - could have encouraged the Oceanfront subsales, said Savills Singapore director of prestige homes and investment Steven Ming.

Oceanfront received TOP in March this year, and it is often around this time that a flurry of subsale activity occurs as projects then have added appeal to buyers seeking properties that they can move into or rent out soon.

This year, up to April, One Amber in Katong had the most subsale transactions (51 deals), followed by The Parc Condominium in West Coast (41 deals) and Marina Bay Residences (MBR) with 39 subsales. One Amber and MBR received TOP in April; The Parc Condominium's TOP is expected in Q3.

Those who bought units on the old deferred payment scheme may also find it opportune to cash out of their investment instead of paying the bulk of the purchase price to the developer at TOP and having to find a bank loan and, possibly, a tenant.

Savills calculated profit or loss as the difference between sale and purchase prices, without factoring in other expenses such as agent fees and stamp duty.

It found 919 subsale caveats for non-landed private homes in Q1 this year, as reflected in URA's Realis system as at May 12. Of these, it found previous caveat records for 86.1 per cent or 791 units. It then compared the latest subsale price with the earlier price. Out of 203 subsale caveats for April, it found earlier caveat matches for 87.7 per cent.

Less than 5 per cent of subsales in January-April 2010 incurred a loss. On average, the loss was $215,802, down from $343,982 in Q1 2009.

The biggest subsale loss this year was for a unit at Leonie Parc View that sold in February for $5 million, or $1.24 million below the $6.24 million it had previously transacted at in July 2007. The seller had bought his unit from the developer.

The 919 subsale caveats in Q1 this year reflect a pick-up from 749 deals in Q4 2009. Savills' Mr Ming attributes this to spillover from strong buying sentiment in the primary market in Q1.

'We believe new launches, which are usually at higher prices, could also have fuelled subsales in projects launched earlier in the vicinity,' says Mr Ming.

Knight Frank managing director (residential services) Peter Ow predicts subsale volumes are likely to soften over the next six months amid worries about the fallout from Europe's economic woes. At home, there are concerns about an increase in private housing supply from the bumper state land sales scheduled for H2 2010.

The proportion of profitable subsale deals as well as profit margins could ease as prices enter a period of 'stabilisation', Mr Ow says.

Much will also depend on the entry point of these specuvestors. 'If they bought in 2008 or early 2009, it may still be possible to walk away with gains.'

Source: Business Times, 4 Jun 2010

Property speculative activity declined in Q3: DTZ

Source : Channel NewsAsia – 24 Nov 2009

Property consultant DTZ said on Tuesday there was less speculative activity in the third quarter this year.

In a report, it said the proportion of sub-sales declined from 16 per cent in the second quarter to just 13 per cent in the third quarter.

Sub-sales, which refer to re-sales that occurred before the completion of a project, are usually used as an indicator of speculative activities.

Another finding by DTZ is that the price hikes in the private property market since the second quarter has resulted in the diminishing purchasing power of public housing upgraders.

The proportion of private home purchasers with HDB addresses declined to 37 per cent in the third quarter – down from the recent peak of 56 per cent in the first quarter this year.

But the figure is still higher than the 22 per cent seen in the last property boom in 2007.

According to DTZ, most purchasers with HDB addresses bought mass market projects like The Gale and Trevista.

Going forward, DTZ expects low sales activity for the rest of the year and even early next year due to the hike in prices and the government’s cooling measures.

Some ‘flippers’ took big hit in sub-sale deals

Source : Straits Times – 23 Sep 2009

They were caught out earlier this year when prices fell as awarding of projects’ TOP neared

PROPERTY speculators have been in the firing line of late, but the hefty losses some suffered earlier this year suggest they might be deserving of some sympathy.

A number seem to have been caught out when prices fell as the awarding of a project’s temporary occupation permit (TOP) neared.

Instead of flipping the property for a gain, some speculators were caught out and took a hit when they offloaded some of the popular sub-sale projects, according to Savills Singapore.

While the data showed that sub-sale deals typically rise in projects nearing completion, sellers may not always gain.

Take Casa Merah in Tanah Merah. There were 71 sub-sale deals done this year with 16 resulting in losses averaging $30,601. One seller suffered a loss of $142,790.

Most sellers made gains at Rivergate, which was completed in the first quarter of the year, but 10 suffered hefty losses. One ‘flipper’ took a massive hit of $985,000, with the average loser suffering red ink to the tune of $371,355.

At popular projects like The Sail @ Marina Bay, eight out of 19 sub-sale deals this year were done at an average loss of $949,343.

Regardless of market condition, prices may rise near completion time because people looking for immediate occupation will typically prefer to buy a brand-new home while tenants usually like to move into a new property, said Savills Residential director Phylicia Ang.

She added that this ‘TOP effect’ is more obvious in a rising market, and especially if the completed development turns out to be better than expected. But these factors did not apply earlier this year as the market was very weak, she said.

‘Some people were selling earlier this year because they panicked. No one knew how the market would turn out,’ said Cushman & Wakefield managing director Donald Han.

‘They wanted to sell before the project was completed so that they did not have to take up a loan.’

There was considerable fear around the market then – which coincided with the global meltdown in share markets – with speculators concerned that they would not be able to find loans to match the high prices they bought at during 2007, he said.

In the first quarter, high-end home prices were down 35 per cent from prices at the peak of the market early last year, while mid-tier and mass-market homes were down 25 per cent and 15 per cent respectively.

Buyers were looking at steep discounts with the result that some of the lowest prices seen recently were in the first three months of the year, said experts.

The market has moved up from those dark days, so sub-sale deals since then would have closed in positive territory.

It was the case with the new launches this year. Savills Singapore found that the sub-sale deals for the major and most popular projects launched this year nearly all closed at a profit.

The six sub-sale deals done at Alexis in Alexandra Road this year had average gains of $62,833.

Prices of most mass-market homes now are nearly hitting the peak seen in the first quarter of last year. The mid-tier market is about 10 to 12 per cent below that high point, while the high-end market is about 20 per cent away, said Mr Han.

‘Whoever comes into the market now would be looking into a medium-term window of two to three years,’ he said.

Those looking to flip within a year may have it tough, as the window of making a quick killing has closed because of the Government’s recent introduction of measures to cool the market, he added.

Whopping $5m subsale loss for St Regis unit

Source : Business Times – 22 Sep 2009

A UNIT at St Regis Residences chalked up the biggest subsale loss in the first eight months of this year: a massive $5 million.

But on the flip side, it was also a unit at the same 999-year leasehold development which raked in the biggest gain of $1.39 million. The fifth floor unit was transacted in July at $9.5 million – up from the $8.1 million original purchase price. The seller had bought the unit direct from the developer in June 2006.

The loss-incurring unit, on the sixth floor, was sold in May. The transacted price was $7.98 million, compared to the nearly $13 million at which the apartment previously changed hands in July 2007, during the peak of the luxury housing market.

Interestingly, the $7.98 million subsale price for the property in May is not far off the $8.16 million that the apartment had been originally sold by the project’s developer in June 2006.

Another St Regis apartment, this time on the 11th floor, was transacted at $7.8 million in June – $2.7 million lower than the $10.5 million the developer had sold the unit for in April 2007.

All three transactions were picked up in Savills Singapore’s analysis of URA Realis caveats as at Aug 28.

Overall, in percentage terms, the most profitable subsale transaction this year yielded a 103 per cent gain.

It involved the sale of a 34th level unit at Southbank, located at North Bridge Road, for $1.64 million ($1,250 per square foot). The transaction last month is nearly double the $807,600 or $615 psf that the developer sold the unit for in July 2006.

The largest percentage loss of 41 per cent accrued to the seller of a unit on the 55th level of The Sail @ Marina Bay. The unit sold for about $1.89 million or $1,600 psf in January – lower than the nearly $3.2 million or $2,700 psf it was previously transacted at in June 2007.

A look at the leaders of subsale market this year

Source : Business Times – 22 Sep 2009

Centris has the most profitable subsales; Montebleu tops in loss-making deals

THE Centris in Jurong West has the highest number of profitable subsale transactions so far this year.

Savills Singapore found that 69 units in the development have changed hands in the subsale market since the start of the year at higher prices than previously for the same units.

One Amber in Katong has the second highest number of profitable subsales at 63, followed by 58 at The Metropolitan Condo in Alexandra Road, 55 at Casa Merah, 44 for The Quartz in the Buangkok area, and 41 for Carabelle at West Coast Way.

In all these projects, there were more profitable subsale deals than loss-making ones this year. In fact, Carabelle did not have any loss-making subsale transactions this year.

Savills’ analysis was based on URA Realis caveats information as at Aug 28 this year.

However, some projects saw more loss-making subsale deals than profitable ones during the study period. Examples include Montebleu in the Balestier area, which had 27 subsale losses against six subsale gains; The Coast at Sentosa Cove (12 losses versus 10 gainers); The Parc Condo at West Coast Walk (12 losses versus three gainers); and St Regis Residences (nine losses versus two gainers).

For Montebleu, most of those who divested in the subsale market this year had bought their units from the project’s developer in 2007. For the 27 owners who sold their units in the project at a loss this year, the average loss per unit was about $115,600 or 10.1 per cent.

Over at Sentosa Cove, for the dozen loss-making subsales at The Coast, the average loss was about $601,500 or 14 per cent. The sellers had bought their units in the 2006-2007 period, some from the developer and some from the subsale market.

In the Central Business District, The Sail @ Marina Bay saw eight subsale losses and the average loss per unit was about $949,000 or 31.2 per cent. There were 11 subsale gain cases in the development, and their average profit per unit was $214,700 or 22 per cent.

Subsales refer to secondary market transactions in projects that have yet to receive Certificate of Statutory Completion. This can take place three to 12 months after Temporary Occupation Permit (TOP).

A flurry of subsale activity often sets into developments around the time they receive TOP, when projects have the added appeal to buyers looking for properties that they can move into or rent out soon. Casa Merah, The Centris, The Metropolitan Condo, The Quartz, Rivergate and Carabelle are examples of projects that have received TOP this year.

‘Another trigger for subsale activity can be the launch of newer projects nearby,’ notes Savills Residential director Phylicia Ang.

Agreeing, Knight Frank executive director Peter Ow says: ‘A new launch can help push up the value of projects launched a few years ago in the area. Those who bought units at the earlier development at lower prices may find it opportune to cash out.’

For instance, Casa Merah received TOP in July, around the same time that Optima nearby was released. Ferraria Park, another popular project in the subsale market this year which has just received TOP, is located near The Gale, which sold like hot cakes at its preview in July.

A developer said that the level of speculative activity a project attracts would usually be in tandem with primary market buying momentum.

‘If a developer is selling the project well, the project will tend to draw speculators as there’s a higher chance of them being able to flip their units in the secondary market once the developer finishes selling the development.’

Another factor is the product itself. A project in the suburbs with a bigger proportion of larger, family-sized units may be less appealing to speculators than one in town with mostly smallish units.

‘Potential speculators have to look at the next person they can flip their unit to and ask themselves: ‘why would the next person want to buy this unit from me?’ Perhaps there’s further capital upside or the unit is easy to rent out,’ the developer added.

Sub-sales triple in second quarter

Source : Sunday Times – 30 Aug 2009

Mass-market and mid-tier projects are hot, but it is taking longer to sell investment properties

The upbeat sentiment in the new private home market has lured out the sellers in the sub-sale market.

Sub-sales – the sale of uncompleted homes by their buyers – of non-landed private properties tripled to 1,200 units in the second quarter, according to a DTZ quarterly report.

This time, though, it is mainly the mass-market and mid-tier projects that are popular sub-sales. In 2007, it was the higher-end projects that found favour with buyers.

Also, the sellers are taking longer to sell their investment properties.

The DTZ study found that a few mass-market projects made their way to the Top 10 list of projects with the most sub-sales. These included Casa Merah, located near the Tanah Merah MRT Station, The Centris in Jurong West and The Quartz in Compassvale.

For instance, there were 54 sub-sales in Casa Merah in the second quarter, and the median sub-sale price rose from $658 psf in the first quarter to $734 psf in July and August.

The most popular sub-sale project in the second quarter was Rivergate, located at Robertson Quay.

The median price of its sub-sale units rose from $1,200 psf to $1,400 psf, and 105 of its 545 units changed hands in the second quarter alone. Prices have since risen further – deals done in July and August ranged from $1,400 to $1,880 psf, according to caveats lodged.

Two perennial favourites are The Sail @ Marina Bay and Icon, prime projects in the central locations of Marina Bay and Tanjong Pagar respectively.

Despite being launched between 2003 and 2005, they still remain popular in the sub-sale market. Their median prices rose 27 per cent and 17 per cent respectively from the last quarter.

Sub-sale buyers tend to be true investors, said HSR Property Group executive director Eric Cheng.

Upgraders, he said, prefer not to buy sub-sales as they do not wish to pay a premium. Those who do, however, find mass- to mid-tier market projects more affordable.

Analysts say that the higher number of sub-sales could be due to the many units that were completed this year.

Ms Chua Chor Hoon, DTZ’s head of South-east Asia research, says there is normally a high level of sub-sales for a project when it is nearing, or just after, completion.

‘In 2006, 6,250 units were completed. This year, 11,367 units are expected to be completed,’ she said.

Mr Cheng pointed out that projects sell out very quickly in today’s market, and some buyers who missed out on the chance of buying a unit do not mind paying a small premium to get a unit if the price is not too far away from the launch price.

These buyers often have compelling reasons, said Mr Cheng. They might have family living nearby, or even on the same unit level.

Despite the higher number of sub-sales now, the number of properties bought and sold within a short span of time is not as high as during 1996 or 2007, said Ms Chua.

‘The number and percentage of units bought and sold within a six-month period in the first half of the year is a lot less than those in 2007 and 1996,’ she said.

Citing data from Realis, she said 88 units were ‘flipped’ in the first half of this year, compared to 517 in 1996 and 835 in 2007.

Flipping occurs when someone buys a property and resells it quickly for a profit.

‘Buyers now tend not to buy another unit so quickly because they often have a choice of other surrounding units that are being sold as well,’ said Mr Cheng.

‘There are a lot of short-term investors who would like to resell for a profit, but might not be able to because they ask for too much. There are also a lot of launches coming up.

‘Market fundamentals are not that strong even though market sentiment is, and we might see a pull-back effect,’ he said

Median non-landed subsale price rises 18%

Source : Business Times – 27 Aug 2009

THE median subsale price of non-landed private residential properties increased 18.1 per cent from $813 psf in Q1 this year to $960 psf in Q2, an analysis of caveats by DTZ shows. It attributed the increase to more higher-end properties transacted in Q2 as well as price appreciation in the quarter.

The most popular subsale project in the April to June 2009 period was Rivergate, with 105 units changing hands – or nearly a fifth of the total 545 units in the freehold project located in the Robertson Quay area. The project obtained Temporary Occupation Permit in Q1.

Rivergate’s median subsale price increased from $1,200 psf in Q1 2009 to $1,400 psf in Q2. Caveats for subsales in July and August are starting to stream in and the deals have been done at prices ranging from $1,400 to $1,775 psf, or a median price of $1,600 psf.

The next most popular subsale project in Q2 was City Square Residences at Kitchener Road – with 57 deals done at a median price of $893 psf, up 13 per cent from the $791 psf median price on 43 units transacted in the first quarter. In July to August, three units at the freehold condominium were sold, at prices ranging from $1,000 psf to $1,104 psf.

Median subsale price at Casa Merah, a 99-year leasehold condo near Tanah Merah MRT Station, has gone up from $658 psf in Q1 to $691 psf in Q2 to $734 psf in July to August. The latest price is 11.6 per cent above the Q1 level. Twenty subsales were done in the project in July to August – probably helped by the sellout preview of Optima @ Tanah Merah nearby a few weeks ago.

Over in the Buangkok MRT vicinity, 11 units were sold at The Quartz in the subsale market in July to August at a median price of $699 psf, 15.7 per cent higher than the Q1 median subsale price of $604 psf.

In the Katong area, the median subsale price for One Amber rose from $830 psf in Q1 to $1,015 psf in July to August – or a 22.3 per cent price gain. In the same period, the median subsale price for Icon in the Tanjong Pagar area appreciated 26.2 per cent from $1,144 psf to $1,444 psf.

Subsales are secondary market deals in projects that have yet to obtain Certificate of Statutory Completion.

Median non-landed subsale price rises 18%

Source : Business Times – 27 Aug 2009

THE median subsale price of non-landed private residential properties increased 18.1 per cent from $813 psf in Q1 this year to $960 psf in Q2, an analysis of caveats by DTZ shows. It attributed the increase to more higher-end properties transacted in Q2 as well as price appreciation in the quarter.

The most popular subsale project in the April to June 2009 period was Rivergate, with 105 units changing hands – or nearly a fifth of the total 545 units in the freehold project located in the Robertson Quay area. The project obtained Temporary Occupation Permit in Q1.

Rivergate’s median subsale price increased from $1,200 psf in Q1 2009 to $1,400 psf in Q2. Caveats for subsales in July and August are starting to stream in and the deals have been done at prices ranging from $1,400 to $1,775 psf, or a median price of $1,600 psf.

The next most popular subsale project in Q2 was City Square Residences at Kitchener Road – with 57 deals done at a median price of $893 psf, up 13 per cent from the $791 psf median price on 43 units transacted in the first quarter. In July to August, three units at the freehold condominium were sold, at prices ranging from $1,000 psf to $1,104 psf.

Median subsale price at Casa Merah, a 99-year leasehold condo near Tanah Merah MRT Station, has gone up from $658 psf in Q1 to $691 psf in Q2 to $734 psf in July to August. The latest price is 11.6 per cent above the Q1 level. Twenty subsales were done in the project in July to August – probably helped by the sellout preview of Optima @ Tanah Merah nearby a few weeks ago.

Over in the Buangkok MRT vicinity, 11 units were sold at The Quartz in the subsale market in July to August at a median price of $699 psf, 15.7 per cent higher than the Q1 median subsale price of $604 psf.

In the Katong area, the median subsale price for One Amber rose from $830 psf in Q1 to $1,015 psf in July to August – or a 22.3 per cent price gain. In the same period, the median subsale price for Icon in the Tanjong Pagar area appreciated 26.2 per cent from $1,144 psf to $1,444 psf.

Subsales are secondary market deals in projects that have yet to obtain Certificate of Statutory Completion.

Homes from sold-out projects back on market

Source : Business Times – 7 Aug 2009

Speculators a minority as they shoot for small flipping gains

Some buyers who managed to lay their hands on units at projects sold out recently are trying to get lucky for the second time – by selling what they snapped up, for a profit.

This brings to mind the government’s warning last week – that some element of speculation is back in the property market. Industry watchers say, however, that subsales are common for fully sold projects and speculation still remains mild.

Advertisements for subsales at Optima@Tanah Merah have surfaced in the last few days – with owners seeking prices which are at least 5 per cent more than what they paid.

This comes less than a week after all 297 units at the 99-year-leasehold project were taken up in just three days.

Developer TID sold the units at an average price of about $810 per square foot (psf). It had to conduct two rounds of balloting as home seekers descended upon the showflat in droves.

There are also offers for subsales at 8@Woodleigh. Frasers Centrepoint sold all 330 units at the 99-year-leasehold project over a few weeks in June.

According to industry watchers, sellers in the subsale market need to charge a premium of at least 5 per cent to break even. This would cover stamp duty, legal fees and any agent’s commission. To earn more, some may set prices which are up to 10 per cent more than what they paid.

But given the market today, those flipping properties would be glad to come out of the deal with $50,000 to $80,000, said ERA Asia Pacific associate director Eugene Lim.

He pointed out, though, that speculation today is ‘not excessive’. Every new project will attract a small number of speculators but most buyers today are ready to keep and lease out the property, he explained.

It is when the project is sold out that these buyers may change their minds, he added. ‘While some people buy with a medium-term view, because the project is sold out, it presents an opportunity for them to make a quick gain.’

Savills Residential director Phylicia Ang also believes that most buyers do not plan to ‘flip’ their properties initially. But she noted that if there is profit to be made, some are willing to hear out the offer and may sell later.

She also suggested that not all advertisements may be placed by owners – some property agents may take the initiative to promote units, test market interest and ‘gather more leads’.

Both Mr Lim and Ms Ang highlighted that speculation is nowhere as feverish as it was some two years ago. According to Mr Lim, buyers in the subsale market today are more particular – probably looking out for specific units they could not get during the launch.

Rising optimism in the property market seems to be benefiting older projects as well. Casa Merah – which is near Optima and will receive Temporary Occupation Permit soon – has seen prices at its units rise in the last few months. While caveats lodged for units there in February reflected prices of $631-$665 psf, those in July showed prices of $699-$751 psf.

Meanwhile, new launches continue to do well. The 70-unit Airstream at St Michael’s Road, for instance, was fully sold through balloting on Wednesday. Previews for Keppel Land’s 56-unit Madison Residences have begun, while previews for Allgreen’s Viva in Novena will start this weekend.

Housing market shows classic recovery signs

Source : Business Times – 23 Jul 2009

Subsales and foreigner purchases up in Q2; HDB upgraders’ share falls

Three classic signs of a recovery have emerged in the Singapore housing market. Subsales and foreign buying have accelerated while the share of HDB upgraders in the private home buying pie has declined.

The number of subsale deals for private homes has more than doubled from 414 in Q1 this year to 1,041 in Q2 and the median subsale price has also risen 18.1 per cent over the same period to $959 psf, based on Jones Lang LaSalle’s analysis of caveats lodged for private homes captured by URA’s Realis system as at July 17.

HDB upgraders’ share of total caveats, which had been increasing for six consecutive quarters since Q4 2007, slipped in Q2 this year as purchases by those with private addresses rose at a faster clip. This could be because Q2 saw more mid and mid-upper projects launched, compared with predominantly mass-market launches catering to upgraders in Q1, says Knight Frank chairman Tan Tiong Cheng.

The number of caveats for private homes lodged by foreigners, including PRs, nearly tripled – from 496 in Q1 to 1,418 in Q2. The increase outpaced a 103.9 per cent rise in Singaporean buying. As a result, foreigners’ share of private home buying rose from 15.5 per cent in Q1 to 20.5 per cent in Q2. The most popular districts among these buyers were Districts 9, 10 and 15 while the more sought-after projects included Rivergate and Martin Place Residences (district 9), The Arte (district 11), The Lakeshore in Jurong and Mi Casa in Choa Chu Kang.

‘Singapore properties are more affordable today than they were during the peak. Foreigners, like local buyers, are finding value in the local property market and looking at the upside potential,’ says JLL’s head of South-east Asia and Singapore research Chua Yang Liang, adding that the positive economic growth in China, India and Indonesia had nudged their citizens into investing here. He also observed a rise in purchases by Myanmar buyers.

Malaysians were the top buyers of homes in Singapore in Q2, making up 29.3 per cent of total caveats lodged by foreigners, followed by Indonesians (20.3 per cent share), mainland Chinese (14.9 per cent) and Indians (12.1 per cent).

Foreigners were drawn to prime district projects like Martin Place Residences in the primary market and Rivergate and Seaview in the secondary market in Q2, said CB Richard Ellis executive director (residential) Joseph Tan.

JLL’s head of residential Jacqueline Wong has seen more high networth individuals from India, Hong Kong and China looking to make their maiden property investments here. ‘They are not PRs and are looking at apartments 3,000 sq ft and above in the Orchard Road belt. They’re drawn by value; prices in the luxury sector are today about 15 to 25 per cent below the 2007 peak levels,’ she said.

Going ahead, foreign buying is expected to gain momentum, if the property recovery and regional economic upturn continue.

In the subsale market, the most popular projects transacted in Q2 were Rivergate (95 units), The Centris (46 units) and City Square Residences (45 units). Rivergate and Phase 2 of City Square Residences obtained Temporary Occupation Permit (TOP) in March, and Centris, this month.

The median subsale price in Rivergate has risen from $1,200 psf in Q1 to $1,400 psf in Q2 and that for The Centris increased from $587.50 psf to $625 psf. City Square Residences’ median subsale price rose from $791 psf to $893 psf and that for The Sail @ Marina Bay, from $1,321 to $1,623 psf.

Subsales are secondary market deals in projects that have yet to obtain Certificate of Statutory Completion. This could be three to 12 months after the project gets TOP. Market watchers note that there’s typically more sales activity around the time that projects receive TOP.

‘There are buyers who like to have the finished product because it’s ready for immediate occupation or renting out,’ says Knight Frank chairman Tan Tiong Cheng. Sellers who bought for investment, especially on Deferred Payment Scheme, can also cash out.

Analysts reckon that with a significant number of private homes heading for completion in the next 18 months, more subsale transactions can be expected.

Buyers with HDB addresses accounted for 44 per cent of total caveats lodged for private homes in Q2, down from the 56 per cent share in the preceding quarter.

The fall in proportion of purchases by HDB ugpraders was due to a bigger Q-on-Q jump of 174 per cent in Q2 in caveats lodged by those with private addresses, compared with a 70.8 per cent increase in caveats lodged by those with HDB addresses.

The most popular projects among HDB upgraders in Q2 were Mi Casa, with 145 caveats at a median price of $630 psf, followed by Double Bay Residences (106 units changed hands at a median price of $665 psf) and The Arte, (87 units transacted at $899 psf median price).

The share of HDB upgraders may slip further in coming months as the proportion of mass-market developments among project launches lessens as developers release more upper-end condos.

The Sail generates top gains in subsale deals

Source : Business Times - 19 Mar 2009

Largest windfall of $6.7m achieved for a unit above the 60th floor

TRANSACTIONS at The Sail @ Marina Bay last year topped the subsales deals that generated the highest gains, both in absolute as well as in percentage terms, a caveats analysis by Savills Singapore shows.

The Sail @ Marina Bay: In all, there were 74 instances of gains generated from subsale transactions at The Sail in 2008

In absolute dollar terms, the biggest gain of $6.66 million was achieved for a unit above the 60th floor of the 99-year leasehold project. It was bought for $8.8 million or $1,508 psf in November 2005 from the project’s developer, and sold in the subsale market for $15.5 million or $2,650 psf in August last year.

The top percentage gain of 178 per cent was generated by a 49th floor unit at The Sail that was sold for $1.42 million or $2,400 psf in the subsale market in May last year. The seller had picked up the unit for $510,400 or $862 psf from the developer (a joint venture between City Developments and AIG) in December 2004.

Two other units at The Sail also yielded subsale profits of 176 per cent and 175 per cent; the sellers had bought their units from the developer.

In all, there were 74 instances of gains generated from subsale transactions at The Sail in 2008. Market watchers noted that this was because the project’s launch in two phases in 2004 and 2005 was ‘perfectly timed’ before residential property prices shot up in 2006 onwards.

As for subsale deals that produced losses last year, the biggest loss in absolute quantum, $1.03 million, was suffered for a unit around the 20th floor at Scotts Square. It was sold in November last year for $3.7 million or $3,050 psf; the seller had bought it up in the primary market in August 2007 for nearly $4.8 million or $3,890 psf.

The largest percentage loss (36 per cent) was incurred by the owner of a 26th floor unit at Tribeca on Kim Seng Road who had paid the developer $885,800 or $1,553 psf in February 2007 and sold his unit at $570,000 or $999 psf in December last year.

Looking ahead, Savills Singapore director Steven Ming said: ‘It’s reasonable to expect that subsale losses may increase this year, unless macro and global economic problems are ironed out and financing eases,’ he added.

Knight Frank executive director (residential) Peter Ow notes that what would usually make an investor cut losses in the subsale market is when it is time to pay up the developer. ‘An investor exposed to a few properties he has bought on deferred payment scheme may want to cut losses on the first one or two to improve his cashflow, so that when it is time to pay up for the third one, he can afford it,’ he added.

In the event that a buyer has difficulty getting a bank loan and footing the bill for a chunk of the purchase price to the developer when the project receives Temporary Occupation Permit (TOP), some developers may be prepared to repudiate the sale and purchase agreement and forfeit the 20 per cent initial payment collected from the buyer and proceed to resell the unit.

But other developers may sue the buyers and force them to complete the sale and purchase agreement at the contracted price. ‘Most buyers wouldn’t want to take the risk of defaulting because they don’t know the position of the developer and risk being sued and even bankrupted,’ Mr Ow said.

For projects completing in 2011/2012, most investors will tend to hold their units as there is a possibility of a property market recovery, he predicts. ‘But for projects receiving TOP, say, this year, investors will have to weigh risks of whether they have the financial means to pay up. If not, it may be better to cut loss,’ Mr Ow said.

Mr Ow estimates that most investors would be prepared to cut a loss of up to 20 per cent on their purchase price (assuming they have already paid an initial 20 per cent to the developer) since they will then not have to take a further hit.

However, if they subsell the property at, say, 70 per cent of their purchase price, they would have to fork out a further 10 per cent to the developer before the developer agrees to transfer the title to the new buyer.

Some bleed from subsales but most come out ahead

Source : Business Times - 19 Mar 2009

Deals that run up a loss double in H2 as market worsened

In a tough property year, an overwhelming 95 per cent of those who sold private apartments and condos in the subsale market last year had managed to turn a profit.

But the number of subsales that chalked up losses more than doubled from 24 in first-half last year to 52 in H2, reflecting the deteriorating market conditions, especially in the fourth quarter.

For those who took a loss, the average loss per unit also rose, from about $138,000 or 7 per cent in H1 2008 to $188,000 or 12 per cent in H2 2008.

But there were happy stories. One owner at The Sail, for instance, chalked up a gain of some $6.7 million after having held on to the property for about three years.

Savills Singapore’s analysis of caveats showed that the number of loss cases rose as 2008 rolled along, from six in Q1, increasing to 18 in Q2, and stabilising somewhat at 20 in Q3, before jumping to 32 in Q4.

‘There were more owners cutting losses in the subsale market in H2 2008, especially in Q4, following the Lehman fallout and the global meltdown. Sales trickled and more people sold at losses,’ said Savills director (investment) Steven Ming.

And while there was an increase in the number who suffered losses on their subsale deals, the number of subsales that produced profits fell 16.8 per cent from 757 in H1 to 630 in H2. The average subsale gain per unit shrank steadily through the year, sliding from $425,000 or 37 per cent in H1 to $288,000 or 28 per cent in H2.

On the whole, the finding was that it is more rewarding to hold one’s property for a longer period. On average, the biggest gains of $785,000 per unit were pocketed by those who bought in 2004 and sold in H2 last year, followed by those who had picked up their properties in 2005 and divested them in H1 last year, collecting an average gain of nearly $666,000.

The largest average loss of $210,000 was incurred by those who had bought in 2006 and sold in H1 2008.

Around 90 per cent of the 76 investors who suffered a loss in the subsale market for the whole of last year had bought their units in 2007 during the market peak.

Knight Frank executive director (residential) Peter Ow notes that usually an investor would cut losses in the subsale market when it is time to pay the developer. ‘An investor exposed to a few properties bought on deferred payment scheme (DPS) may want to cut losses on the first one or two to improve his cashflow so when it is time to pay up for the third one, he can afford it,’ he said.

Mr Ming points out that in addition to multiple property owners who may find it difficult to get sufficient bank loans to complete their acquisitions, those taking a hit in the subsale market may include ’savvy investors seeking to diversify their investments and allocating a part of the exposure to other undervalued asset classes’.

Savills calculated profit or loss as the difference between sale and purchase prices and did not take into account agent fees and other expenses. The analysis was based on a total 1,761 subsale deals of non-landed private homes captured in the URA Realis system as of March 9, 2009. Of these, it could trace and match previous caveat records for 1,463 units. Savills then compared the latest subsale price of each unit with the earlier price paid by the seller to work out the profit or loss.

Subsales, often seen as a gauge of speculative activity, are secondary market deals in projects that have yet to receive their Certificates of Statutory Completion. This may be anywhere from three to 12 months after the project receives Temporary Occupation Permit (TOP).

Savills’s analysis also showed that the proportion of subsales done below $1 million per unit rose from 38.3 per cent in H1 last year to 45.9 per cent in H2, as affordability became important.

Projects with the highest number of subsale transactions for 2008 were The Sail @ Marina Bay (78 units), Citylights (77 subsales), Varsity Park Condo (59 units), City Square Residences (57 units), The Sea View (52 units), The Esta (49 units) and Park Infinia at Wee Nam (48 units).

Some of these projects also saw the most number of subsale losses for the whole of 2008, for instance City Square Residences (six units), Citylights (four units) and The Sail (four units). In addition, The Cosmopolitan and Watermark Robertson Quay each had four subsale loss cases last year.

In H1 2008, Citylights saw the most subsales, at 60. In H2, The Sail was the top subsale project, with 40 units changing hands.

‘Anecdotally, there appears to be a higher number of subsales that take place for projects that were approaching TOP. For example, the 1,761 subsale transactions in 2008 included 52 projects that received TOP in the same year,’ Mr Ming said. Projects that obtained TOP in 2008 included The Sail, part of City Square Residences, The Sea View and The Cosmopolitan. Icon, City Lights and The Calrose were among the projects that received TOP in 2007.

Mr Ming said that with 10,000 homes expected to get TOP this year, ‘we expect subsale transactions to remain active and the sell pressure will keep up this year, unless debt markets open up and financing for investors eases’.

Subsale deals pick up as investors bail out

Source : Business Times - 9 Mar 2009

Private condominium and apartment subsales are on the rise as project completions put pressure on investors with weak holding power to exit the market.

The trend is expected to continue this year with official estimates projecting that some 10,448 private homes under construction (comprising both landed and non-landed units) will be completed.

Property firm DTZ’s analysis of caveats captured by the Urban Redevelopment Authority’s Realis system shows that the total volume of private residential property transactions (including both primary and secondary markets) plunged in 2008, but subsales as a proportion of total transactions is up.

DTZ said 12,988 private homes changed hands last year, down 65 per cent from 36,745 units in 2007. Total subsale transactions fell 64 per cent to 1,732 units last year, in line with the general slump in housing sales.

But subsales as a proportion of total sales of private non-landed residential property is on the increase.

Subsales accounted for 18 per cent of total condominium and apartment purchases in the October to December 2008 period, up from 14 per cent in the preceding quarter.

For the full year, subsale transactions’ share of total condo/apartment purchases was 16 per cent - up from 15 per cent in 2007 and 6 per cent in 2006. This is also the highest level since the 23 per cent seen in 1996.

Subsales are secondary market deals in projects that have yet to receive their Certificates of Statutory Completion. This may be anywhere from three to 12 months after the project gets its TOP.

DTZ’s senior director Chua Chor Hoon has an explanation for the trend: ‘Many of those who had bought on the deferred payment scheme (DPS), particularly if they’re not planning to occupy the properties themselves, can be expected to offload their units to avoid incurring additional financial commitment when the projects receive TOP.’

When a project is given a temporary occupation permit (TOP), the DPS expires and that is when buyers must pay up the bulk of their purchase price to developers.

‘Specuvestors’, or investors who are open to taking a quick profit if the opportunity presents itself, may be under pressure to offload their properties if they are under the deferred payment scheme and have yet to secure financing for their units. DPS, where buyers pay the first 10 to 20 per cent of the property purchase price and defer payment of the balance till TOP, was scrapped in October 2007 amidst increasing concern that the scheme promoted excessive property speculation.

Ms Chua noted that 10,122 private homes were completed in 2008, some 17 per cent higher than the past 10-year annual average of 8,671 units.

With another 10,448 units scheduled for completion this year, the subsale market is likely to see continued activity in 2009, she said.

Knight Frank executive director (residential) Peter Ow says the subsales market may be brisk this year if prices are attractive to buyers.

‘It depends on how desperate sellers are to offload their units. If they lack holding power or are not able to get the required loan quantum as the projects near completion, they may just divest in the subsale market,’ he added.

Some analysts have suggested that if desperate sellers offload their units in the subsale market, they may be competing head on with developers trying to sell projects in the primary market in the same vicinity.

‘As well, the price at which these sellers divest their units may set a benchmark in the area and weaken developers’ pricing power,’ said a veteran property consultant.

DTZ’s analysis also shows that the median subsale price slipped to $880 psf in Q4 2008 - down 7 per cent from the preceding quarter and a bigger 27 per cent drop from the same year-ago period, due to fewer high-end private residential properties being transacted last year.

The $880 psf median subsale price in Q4 last year was also the lowest since Q3 2006.

The Sail @ Marina Bay, 2008’s top subsale project with some 100 caveats lodged, saw its median subsale price ease 22.1 per cent for the whole of last year to $1,550 psf; the quarter-on-quarter decline in Q4 last year was 9.4 per cent.

But even at a $1,550 psf median price, the original buyers of The Sail who had picked up their units directly from the developers would still be able to make some gains as the project was launched at $950 to $1,200 psf in late 2004 and 2005, DTZ observed.

Last year also saw median subsale price drops of 10 per cent for Citylights in the Lavender area (to $1,036 psf), 12 per cent at Varsity Park Condo in Clementi (to $659 psf) and 17 per cent for City Square Residences at Kitchener Road (to $835 psf).

Ms Chua expects subsale prices to decline further this year against the backdrop of weaker market sentiment.

Subsale deals pick up as investors bail out

Source : Business Times - 9 Mar 2009

Private condominium and apartment subsales are on the rise as project completions put pressure on investors with weak holding power to exit the market.

The trend is expected to continue this year with official estimates projecting that some 10,448 private homes under construction (comprising both landed and non-landed units) will be completed.

Property firm DTZ’s analysis of caveats captured by the Urban Redevelopment Authority’s Realis system shows that the total volume of private residential property transactions (including both primary and secondary markets) plunged in 2008, but subsales as a proportion of total transactions is up.

DTZ said 12,988 private homes changed hands last year, down 65 per cent from 36,745 units in 2007. Total subsale transactions fell 64 per cent to 1,732 units last year, in line with the general slump in housing sales.

But subsales as a proportion of total sales of private non-landed residential property is on the increase.

Subsales accounted for 18 per cent of total condominium and apartment purchases in the October to December 2008 period, up from 14 per cent in the preceding quarter.

For the full year, subsale transactions’ share of total condo/apartment purchases was 16 per cent - up from 15 per cent in 2007 and 6 per cent in 2006. This is also the highest level since the 23 per cent seen in 1996.

Subsales are secondary market deals in projects that have yet to receive their Certificates of Statutory Completion. This may be anywhere from three to 12 months after the project gets its TOP.

DTZ’s senior director Chua Chor Hoon has an explanation for the trend: ‘Many of those who had bought on the deferred payment scheme (DPS), particularly if they’re not planning to occupy the properties themselves, can be expected to offload their units to avoid incurring additional financial commitment when the projects receive TOP.’

When a project is given a temporary occupation permit (TOP), the DPS expires and that is when buyers must pay up the bulk of their purchase price to developers.

‘Specuvestors’, or investors who are open to taking a quick profit if the opportunity presents itself, may be under pressure to offload their properties if they are under the deferred payment scheme and have yet to secure financing for their units. DPS, where buyers pay the first 10 to 20 per cent of the property purchase price and defer payment of the balance till TOP, was scrapped in October 2007 amidst increasing concern that the scheme promoted excessive property speculation.

Ms Chua noted that 10,122 private homes were completed in 2008, some 17 per cent higher than the past 10-year annual average of 8,671 units.

With another 10,448 units scheduled for completion this year, the subsale market is likely to see continued activity in 2009, she said.

Knight Frank executive director (residential) Peter Ow says the subsales market may be brisk this year if prices are attractive to buyers.

‘It depends on how desperate sellers are to offload their units. If they lack holding power or are not able to get the required loan quantum as the projects near completion, they may just divest in the subsale market,’ he added.

Some analysts have suggested that if desperate sellers offload their units in the subsale market, they may be competing head on with developers trying to sell projects in the primary market in the same vicinity.

‘As well, the price at which these sellers divest their units may set a benchmark in the area and weaken developers’ pricing power,’ said a veteran property consultant.

DTZ’s analysis also shows that the median subsale price slipped to $880 psf in Q4 2008 - down 7 per cent from the preceding quarter and a bigger 27 per cent drop from the same year-ago period, due to fewer high-end private residential properties being transacted last year.

The $880 psf median subsale price in Q4 last year was also the lowest since Q3 2006.

The Sail @ Marina Bay, 2008’s top subsale project with some 100 caveats lodged, saw its median subsale price ease 22.1 per cent for the whole of last year to $1,550 psf; the quarter-on-quarter decline in Q4 last year was 9.4 per cent.

But even at a $1,550 psf median price, the original buyers of The Sail who had picked up their units directly from the developers would still be able to make some gains as the project was launched at $950 to $1,200 psf in late 2004 and 2005, DTZ observed.

Last year also saw median subsale price drops of 10 per cent for Citylights in the Lavender area (to $1,036 psf), 12 per cent at Varsity Park Condo in Clementi (to $659 psf) and 17 per cent for City Square Residences at Kitchener Road (to $835 psf).

Ms Chua expects subsale prices to decline further this year against the backdrop of weaker market sentiment.

Property developers get ‘kiasu’

Source : Today - 3 Mar 2009

Some developers are getting so “kiasu” (afraid to lose out) that they are getting the original buyers of homes to indemnify them should a sub-purchaser fail to pay. However, the Controller of Housing has told at least one developer, Keppel Land, that this is wrong.

The issue was raised when the buyer of an apartment at Park Infinia at Wee Nam Road, just off Keng Lee Road, tried to sell the unit bought from KepLand.

The developer had wanted the original buyer to not only be liable for breaches by the sub-purchaser, but also to ensure that property tax and maintenance bills are paid.

Asked to sign such a form, the original buyer asked lawyers to look into its enforceability. The lawyers then wrote to the Housing Controller for advice.

In response to the law firm, the Controller of Housing said in a letter seen by TODAY: “We are of the view that requiring your clients to sign a Letter of Authority with the indemnity clause stated above is contrary to the intention of rule 16 of the Housing Developers Rules, which requires a developer to enter into a fresh S&P Agreement (Sale and Purchase) with the sub-purchasers on the same terms and obligations as the original purchasers. This will place the sub-purchasers in a direct contractual relationship with the developer and releases the original purchasers from their obligations under the original S&P Agreement.”

The Controller added: “We have therefore written to the developer to request that the indemnity clause be deleted from the Letter of Authority which your clients have been asked to sign and complete the sub-sale expeditiously.”

A KepLand spokesman said the matter had since been resolved between the company and the purchaser, and the offending clause taken out of the S&P agreement.

A lawyer-friend of the purchaser said: “The clause should never have been included in the first place. How can any purchaser keep tabs on the financial position of a sub-purchaser down the road?”

Sources said this was not first time that KepLand had asked original purchasers to sign the indemnity form. It also appears that other developers have asked their purchasers to sign similar forms or are keen to follow KepLand’s example.

“In the current climate where scores of purchasers are said to be defaulting on their mortgage payments, it’s not hard to see why developers have to resort to such measures to protect their own interests,” said a prominent developer.

Against a backdrop of rising business failures and unemployment, property industry observers think mortgage defaults could increase this year. As a result, banks have become stricter on their mortgage financing, especially for those buying second and third properties.

‘Flippers’ back at condo launches

Source : Sunday Times - 1 Mar 2009

Speculators were among buyers at the recent sell-out sale of all 293 units at Alexis @ Alexandra, a newly launched condominium.

Another project, Caspian, in Jurong, sold around 515 of its 712 units at about the same time.

‘For sale’ ads followed both launches last month - but sub-sale buyers are not rushing in.

Yesterday, there was no huge crowd, but a steady stream of more than 300 people turned up at the launch of developer Hiap Hoe’s The Beverly in Toh Tuck Road.

Its spokesman did not say how sales went for the 31 apartments that were released in the 118-unit development at an average of $750 per sq ft.

Property agents reported signs of attempted ‘flipping’ - quick profit sales from having bought at the developer’s price - but they also said few sub-sale buyers were biting.

They noted that in the case of Alexis and Caspian, shortly after they were launched, ads for subsales began to appear.

An agent who declined to be named said about 10 per cent of Alexis’ 293 units were being flipped.

Property agents cited the relatively low pricing as reasons for buyers wanting to do a flip. Prices for Caspian apartments started at $580 psf, while those at Alexis @ Alexandra were priced on average at $850 to $1,100 psf.

In addition, property agent K.L. Goh, who is marketing two sub-sale units at Alexis, said: ‘Although the market is bad, Alexis is located near Queenstown MRT station and is highly sought after.’

The owners of a two-bedroom apartment are asking for $880,000, up from the $760,000 they paid for it.

Property agent Leslie Yap, who is helping a buyer market a two-bedroom apartment at Caspian for about $580,000, said: ‘She bought it at $527,400 and even if she can make a little profit, I think it’s quite good in such a short time.’

Meanwhile, agents said the response from sub-sale buyers was still rather cautious. Mr Yap said last Friday that he had received only one call that day for the Caspian unit.

‘Even though this is a very popular project, the response is still very bad and it may be difficult for buyers to make a profit right now,’ he said.

Mr John Murray, 41, who works in IT company EMC, was at the launch of The Beverly.

He said: ‘I’ve noticed that the prices are down from when I went house-hunting five or six months ago. This is actually a great time to buy.’

But he did not buy a unit yesterday.

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Not that easy

‘Even though this is a very popular project, the response is still very bad and it may be difficult for buyers to make a profit right now.’ - PROPERTY AGENT LESLIE YAP, on recently launched Caspian in Jurong. He noted that the response from sub-sale buyers was still cautious.

Bargain hunting starts in tepid property market

Source : Business Times - 9 Jan 2009

Four recent sub-sales have been transacted at 20% below launch prices

THE hunting season seems have begun in the property market, with at least four buyers making a killing.

A UBS report says that according to URA data, four recent sub-sales have been transacted at 20 per cent below launch prices.

Two units at Ardmore II were sub-sold for $2,000 per sq ft, compared with the last-transacted price of $2,400 psf. One unit at Scotts Square was sold at $3,050 psf, compared with the last-transacted price of $3,850 psf in the second quarter of last year.

And one unit at Sky @ Eleven was sold at $880 psf, compared with the last transacted price of $1,270 psf in Q2 2007.

‘Prior to this, we believe there has not been a single sub-sale transaction more than 11 per cent below the new sale price for the same unit,’ said UBS analyst Regina Lim.

UBS believes that the sharply lower sub-sale prices signal a major change in buyers’ risk appetite and the outlook for Singapore residential property.

It noted that some projects sold in 2006 and expected to be completed by Q4 this year could be the subject of defaults by buyers if sub-sale prices fall 30 per cent below launch prices.

‘This is especially as 40 per cent of buyers of new apartments above $1.5 million were foreigners or companies in 2006 and 2007, and it may be difficult not to repudiate the sale-and-purchase agreements for these buyers if they default,’ UBS said.

Cushman and Wakefield managing director Donald Han said that he does not expect many sub-sales to be transacted at big losses because developments that will receive their temporary occupation permit (TOP) this year - and hence, requiring loan draw-downs - are likely to have been launched in 2006 before prices peaked.

But he added: ‘People that bought in 2007 and 2008 will want to get out of the market.’

Knight Frank director (research and consultancy) Nicholas Mak said that ‘not all sub-sales lose money’. Some recent sub-sales showed price increases, he noted.

Still, prime properties are likely see the biggest drop in prices, as these rose the most in the past few years, he said.

In its report, UBS says that prices in the primary market have also been cut.

Among new launches, the 104-unit Newton Edge, priced at $1,201 psf, is some 23 per cent cheaper than Viva, where 15 units were sold in Q3 last year for around $1,550 psf. And at RV Suites in River Valley Road, 19 units have been sold at $1,350 psf, which is 15 per cent below Wharf Residences at $1,600 psf and 38 per cent below Martin 38.

When a price fall isn’t a price fall

SISV Services is fixing problem with caveats lodged for some subsale deals

PRIVATE home prices have fallen but in some cases, the drop may not be as much as suggested by SISV Services’ Realink database.

Savills Singapore has spotted more than 60 instances of ‘duplicate caveats’ listed at different prices for the same transaction and which give the impression of a unit changing hands within a span of a few months at a significantly lower price, when in fact it hadn’t.

The common thread running through these cases is that they involved subsale deals transacted in the past six months for projects which either received Temporary Occupation Permit in 2008 or are nearing TOP.

For example, Realink shows a caveat for a 47th floor unit at The Sail @ Marina Bay sold in the subsale market in September for $508,024 or $858 psf, when actually the unit was sold for $1.45 million or $2,450 psf and which was caveated three months earlier (and also shown in Realink). The lower price was the price at which the developer first sold the unit back in 2005.

In another instance, Realink shows a caveat for a unit at Park Infinia at Wee Nam in November for $1.16 million or $868 psf, one-third lower than the $1.77 million or $1,325 psf caveat lodged for the same unit two months earlier. Actually, both caveats were lodged by the same buyer, who paid the higher price.

Rodyk & Davidson LLP partner Tang Woon Ee told BT that it was ‘good practice’ to advise clients who buy in the subsale market to lodge two caveats. The first is when the buyer exercises his subsale option and has to fully pay up the initial 5 per cent deposit; this caveat will reflect the actual transacted price.

Then, two or three months later, when this subsale transaction is completed and the buyer enters into a fresh sale and purchase agreement (SPA) with the developer, the buyer should lodge another caveat to protect his interest in the unit. This fresh SPA will reflect the original price at which the developer sold the unit, since this is the price it is entitled to collect.

‘So if the developer originally sold the unit to Buyer 1 for $1 million and Buyer 1 later sells to Buyer 2 in the subsale market for $1.2 million, the fresh SPA issued by the developer to Buyer 2 will still reflect the $1 million price; the profit (or loss) made by Buyer 1 from his subsale transaction is not relevant to the developer,’ Ms Tang explained.

As a result, the original sale price of the unit gets reflected in the second caveat lodged by the purchaser in the latest subsale deal. In this instance, two caveats will be lodged by Buyer 2 for the same transaction - the first at $1.2 million followed by another a few months later at $1 million.

SISV’s Realink database, by listing both caveats, gives the impression that the price of the unit has fallen about 17 per cent in the past three months.

Said Ms Tang: ‘A caveat is a legal claim against a property. When the developer issues a fresh SPA to a buyer who picked up his unit in the subsale market, it establishes a relationship between the buyer and the developer - that’s a caveatable interest.’

SISV Services is in the midst of rectifying the problem, which has been caused by the service provider not eliminating ‘duplicate caveats’ lodged for subsale transactions which show the original price at which the developer sold the unit a few years ago (and which is listed in the fresh Sale & Purchase Agreement issued by the developer to the latest subsale buyer).

An SISV Services spokesman attributes the problem in Realink to an increase in subsale cases involving projects originally sold on deferred payment schemes (DPS) as the original buyers who may have picked up their units from developers a few years ago are now feeling the pinch from the economic downturn and facing difficulty getting bank loans.

This has led to an increase in subsales being registered and duplicate caveats showing up, according to him.

To fix the problem, SISV Services has added a ‘history’ button, next to transactions with two or more caveats lodged, for the professional version of Realink. ‘Users can view the caveats’ history and if they see the latest price is identical to the initial transaction in the primary market say a couple of years ago, they can disregard the latest caveat as being a ‘duplicate’,’ the spokesman said.

‘For the free version of Realink available to the public, we are in the process of devising a computer programme to help us identify the duplicates, so we may remove them.

‘We didn’t remove the duplicate caveats earlier because we could not determine readily that they were ‘duplicates’ as we do not have the buyers’ names in the raw caveats data that we buy from SLA (Singapore Land Authority).’

Savills Singapore compiled a list of over 60 subsale transactions covering projects like The Sail, Cosmopolitan, The Esta, Park Infinia at Wee Nam, The Sea View, The Azure, Watermark, The Calrose and Parc Emily where Realink’s database showed latest caveats at significantly lower prices than caveats lodged for the same units just a few months earlier. Typically, the latest caveated price was also the original transacted price for the unit a few years ago.

Savills did individual searches for a few of these cases using Singapore Land Authority’s Inlis system and, in each instance, found two caveats being lodged for the property by the same buyer, just a few months apart - and with the second caveat at a lower price than the first.

Raw caveats data that SISV Services purchases from SLA does not contain information on the buyers’ or sellers’ identities to protect privacy. SLA confirmed that it provides identical data to both SISV Services and the Urban Redevelopment Authority.

Interestingly, URA’s Realis system does not list these ‘duplicate caveats’ that do not reflect the latest transacted prices.

When asked how it sifts out caveats lodged when developers issue a fresh SPA based on original sale price, a URA spokeswoman said: ‘If a caveat is lodged against a developer, we will ascertain whether it is a new sale or a fresh agreement arising from a subsale.

‘We do this by checking whether a caveat for the same unit has been lodged against the sub-seller, whether a previous caveat has been lodged for the unit when it was originally sold and also against our database on new sales compiled from monthly surveys of developers. If the caveat is lodged against a developer arising from a sub-sale, we will not show the record in Realis.’

On the duplicate caveats in SISV Services’ Realink database, Savills Singapore director for investment sales and prestige homes Steven Ming said: ‘Analysts who do not distil the information carefully can come to very wrong conclusions of the market, thus further aggravating the already weak market conditions.

‘Had end-users, investors and property owners relied on such data without first seeking a professional opinion, they can easily be making a misinformed decision as a result.’

There may also be a minority of rogue agents who may use such erroneous low-priced caveats to their advantage in convincing less savvy owners to close on low offers given market conditions, he added.

Source : Business Times - 3 Jan 2009

Property market now shows classic signs of downturn

Source : Business Times - 2 Dec 2008

Analysis of Q3 caveats by DTZ points to new trends relating to subsales, foreign buying, HDB upgraders

THREE classic signs of a Singapore property downturn have emerged in the third quarter - a slide in subsales and foreign buying, but a bigger share of HDB upgraders in the private home buying pie.

Property consultancy DTZ’s analysis of caveats for private home purchases shows that total subsales of non-landed private homes fell 8 per cent to 473 units in Q3 from the previous quarter. Subsales also accounted for a smaller 13 per cent share of purchases of non-landed private homes in Q3, compared with 16 per cent in Q2.

Subsales of high-end condos/apartments slowed down even more in Q3 2008. The number of subsale purchases involving units priced at least $1,000 psf fell 24.2 per cent quarter-on-quarter to only 213 transactions, accounting for 45 per cent of overall subsales of non-landed private homes in Q3, against 54 per cent in Q2 2008.

The number of foreign buyers (including permanent residents) of private homes (both landed and non-landed) slid 6 per cent quarter-on-quarter to 903 in Q3. Also, these buyers made up 22 per cent of total private home deals in the quarter, down from 25 per cent in Q2.

DTZ senior director (research) Chua Chor Hoon said: ‘A large proportion of foreigners buy for investment. Hence when prices are falling, there is less interest. Furthermore, with economies and property markets slowing down all over the world, many of the foreigners have been affected back home and they may pull out their overseas investments.’

DTZ executive director Ong Choon Fah also points out that attractive property values are emerging in other cities which Singapore will be competing with. ‘Foreign investors have lots more opportunities to consider where to invest,’ she added.

The dip in subsales may be due to the fact that it has become more difficult for ’specuvestors’ and speculators to offload their properties in the current quiet market.

‘For investors who take a long-term view, especially for better assets, the tendency would be to ride out the market,’ says Mrs Ong.

HDB dwellers tend to make up a bigger proportion of private home buyers during a property downturn. ‘Many of them are buying for owner occupation. Some may be sitting pretty on gains on their existing HDB flats which they bought directly from the HDB some years ago. Together with CPF savings, it may be easier for them to cross over to private homes,’ notes Mrs Ong.

Buyers with HDB addresses picked up 1,718 private homes in Q3, up 34 per cent from the previous quarter.

Their share of caveats lodged for private home purchases rose to 41 per cent in Q3, from shares of 34 per cent in Q2 and 28 per cent in Q1 this year. HDB upgraders’ 41 per cent share of private home purchases in the July-Sept quarter was the highest quarterly share in four years.

‘The trend was supported by the narrowing gap between HDB resale flat prices and private home prices in Q3, as HDB resale prices continued to increase while private home prices fell,’

Ms Chua said the latest Q3 jump in private homes bought by HDB dwellers was mainly in the primary market. The number of units these HDB dwellers picked up from developers leapt 89 per cent from Q2.

Livia in Pasir Ris and Clover by the Park in Bishan were the two most popular projects among HDB buyers in Q3, with 192 units and 142 units respectively sold to HDB upgraders.

Analysts say HDB upgraders’ share of total private home purchases may rise further. In Q2 2002, their share surged to 81 per cent and at the trough of the Asian Financial Crisis property slump in Q4 1998, the figure was 68 per cent.

Subsales refer to secondary market deals in projects that have yet to receive their Certificates of Statutory Completion. This may be anywhere from three to 12 months after the project gets its Temporary Occupation Permit (TOP).

DTZ said that for total subsale deals of non-landed private homes, the median price continued to fall in Q3, easing 11 per cent quarter-on-quarter to $941 psf - the lowest since Q3 2006, according to DTZ. ‘In view of softening market demand, owners are more realistic in asking prices,’ it said.

The Sail @ Marina Bay got the strongest subsale interest in Q3, with 30 deals (compared with 34 in Q2). The median subsale price for the project slid 6 per cent quarter-on-quarter to $1,719 psf, following a 14 per cent slide in Q2.

Median subsale prices also fell 3 per cent for Park Infinia at Wee Nam to $1,380 psf, The Esta (slipping 5 per cent to $910 psf) and City Square Residences (down 6 per cent to $960 psf).

Mrs Ong expects subsales to continue trending downwards although there will be spikes as major projects get their TOP. That’s when there’s usually more sales activity as the finished product can be viewed by potential buyers and the prospects of renting the units would increase the appeal of such homes to potential investors