journo
06-09-22, 09:51
Unit at The Nassim had the highest quarterly resale gains, with the seller realising a profit of S$6 million after holding the property for four years
Sep 05, 2022
The transaction for a 4,069 square foot (sq ft) flat at The Nassim was the most profitable deal by quantum in the resale market in the second quarter, as the seller was able to walk away with a cool S$6 million in profit in just a little bit more than four years.
According to data that was compiled by the real estate consultancy Cushman & Wakefield, a unit at a freehold condominium in prime District 10 that was purchased in February 2018 for approximately S$14 million (S$3,440 psf) was sold in May of this year for S$20 million (S$4,915 psf). This equates to a profit increase of 8.7 percent when calculated on a yearly basis. In terms of percentage, the profit came out to 43% based on the amount that was paid for the item being sold.
Cushman & Wakefield analysed caveats for private, non-landed residences that had a prior purchase history between January 2012 and June 2022, and which were transacted in Quarter 2 of 2022, as part of their study. The study focused on the period between January 2012 and June 2022. After that, it listed the top five profitable and unprofitable agreements, both by percentage and by the total amount of money involved. The investigation did not take into account transaction fees or taxes, including buyer stamp duties and seller stamp duties, for example.
Due to the significantly higher prices and unit sizes that are transacted in the Core Central Region (CCR), the data indicated that the five most profitable transactions in terms of quantity that took place in the resale market during the second quarter were all freehold units in that region. The head of research at Cushman & Wakefield, Wong Xian Yang, stated that the CCR market continues to be perfect for high-net-worth investors who are willing to put big sums of cash into the market.
On the other hand, the five transactions that yielded the highest profits in terms of percentage were all conducted either in the Rest of Central Region or Outside the Central Region (OCR), and the sellers racked up gains ranging from 62% to 70% of their initial investment.
The transaction that resulted in the biggest profit for the seller was the purchase of a 2,626 square foot unit located in D'Banyan in Sembawang, which had a 999-year leasehold. The seller made a healthy profit of 70 percent on this sale. In June, the apartment was sold for a price of S$2.1 million, which works out to a price per square foot of S$800. In September of 2016, it was acquired for close to S$1.24 million, which works out to a price per square foot of S$471. The seller realised a return on their investment of 9.6 percent on an annualised basis after keeping the property for over six years.
The fact that the acquisition was made in 2016 just before the market began to pick up steam in the second half of 2017 was a stroke of luck in this particular scenario.
After the implementation of property-cooling measures and lending limitations, Wong observed that RCR and OCR prices had benefitted as a consequence of demand shifting towards more affordable city fringe and mass market properties. This movement in demand was a direct outcome of the measures. In addition, the desirability of real estate in the RCR and OCR has increased in recent years as a result of improvements in accessibility and convenience brought about by the expansion of infrastructure and services.
Wong continued by saying, "An increase in new-launch pricing in both the RCR and OCR would also have good spillover implications for the resale market." The RCR and OCR new-launch median values for non-landed residences with floor areas between 800 and 1,100 square feet have increased by 56.3% and 84.3% correspondingly from the first half of 2012 to the first half of 2022.
A 2,185 square foot unit at the 99-year leasehold Marina Collection in Cove Drive on Sentosa sold for S$3.7 million (S$1,693 psf), which is 37% less than the S$5.87 million (S$2,690 psf) the seller paid for the property in October 2012. This was the largest loss-making resale deal in the second quarter by percentage. Given that the holding period was over ten years long, the loss of S$2.17 million equated to an annualised loss of 4.7%.
A 4,467 square foot unit at the 99-year leasehold Silversea in Marine Parade in District 15 sold for S$9.5 million (S$2,127 psf) in April of this year. This price was S$2.5 million less than the S$12 million (S$2,686 psf) that the seller paid for it in April of 2014. The deal that caused the most red ink by quantum was a 4,467 square foot unit at Silversea. The annualised loss was 2.9 percent when based on a holding period of 8 years.
The largest transactions that resulted in a loss, both in terms of quantity and percentage, shared a number of characteristics. The majority of the developments in question were situated in the CCR, and the majority of the units in question were acquired during the market upturn, prior to the market beginning to cool off again in late 2013, as Wong pointed out.
After the government implemented the total debt servicing ratio (TDSR) framework in June of the same year, the market began to slow down in 2013. This was done to discourage buyers from over-leveraging themselves in the market.
https://i.imgur.com/QwMpkBh.png
Even though borrowing rates were increasing, Cushman & Wakefield found that the percentage of loss-making transactions (both landed and non-landed) in the secondary market continued on a decreasing trajectory, going from 7.9 percent in the first quarter to 6.4 percent in the second quarter.
Despite the existing challenges, Wong believes that the percentage of transactions that result in a loss may continue to be quite low for the remainder of the year. He stated that "while market demand would be tempered by rising interest rates and economic uncertainty, the underlying demand for residential properties remains strong, and market leverage looks manageable due to cooling measures and loan curbs." He was referring to the fact that rising interest rates and economic uncertainty would have a negative impact on market demand.
"As a result, we do not anticipate a widespread occurrence of distressed sales in 2022, but transaction volumes may experience a minor decrease."
https://i.imgur.com/JsdkO2z.png
Sep 05, 2022
The transaction for a 4,069 square foot (sq ft) flat at The Nassim was the most profitable deal by quantum in the resale market in the second quarter, as the seller was able to walk away with a cool S$6 million in profit in just a little bit more than four years.
According to data that was compiled by the real estate consultancy Cushman & Wakefield, a unit at a freehold condominium in prime District 10 that was purchased in February 2018 for approximately S$14 million (S$3,440 psf) was sold in May of this year for S$20 million (S$4,915 psf). This equates to a profit increase of 8.7 percent when calculated on a yearly basis. In terms of percentage, the profit came out to 43% based on the amount that was paid for the item being sold.
Cushman & Wakefield analysed caveats for private, non-landed residences that had a prior purchase history between January 2012 and June 2022, and which were transacted in Quarter 2 of 2022, as part of their study. The study focused on the period between January 2012 and June 2022. After that, it listed the top five profitable and unprofitable agreements, both by percentage and by the total amount of money involved. The investigation did not take into account transaction fees or taxes, including buyer stamp duties and seller stamp duties, for example.
Due to the significantly higher prices and unit sizes that are transacted in the Core Central Region (CCR), the data indicated that the five most profitable transactions in terms of quantity that took place in the resale market during the second quarter were all freehold units in that region. The head of research at Cushman & Wakefield, Wong Xian Yang, stated that the CCR market continues to be perfect for high-net-worth investors who are willing to put big sums of cash into the market.
On the other hand, the five transactions that yielded the highest profits in terms of percentage were all conducted either in the Rest of Central Region or Outside the Central Region (OCR), and the sellers racked up gains ranging from 62% to 70% of their initial investment.
The transaction that resulted in the biggest profit for the seller was the purchase of a 2,626 square foot unit located in D'Banyan in Sembawang, which had a 999-year leasehold. The seller made a healthy profit of 70 percent on this sale. In June, the apartment was sold for a price of S$2.1 million, which works out to a price per square foot of S$800. In September of 2016, it was acquired for close to S$1.24 million, which works out to a price per square foot of S$471. The seller realised a return on their investment of 9.6 percent on an annualised basis after keeping the property for over six years.
The fact that the acquisition was made in 2016 just before the market began to pick up steam in the second half of 2017 was a stroke of luck in this particular scenario.
After the implementation of property-cooling measures and lending limitations, Wong observed that RCR and OCR prices had benefitted as a consequence of demand shifting towards more affordable city fringe and mass market properties. This movement in demand was a direct outcome of the measures. In addition, the desirability of real estate in the RCR and OCR has increased in recent years as a result of improvements in accessibility and convenience brought about by the expansion of infrastructure and services.
Wong continued by saying, "An increase in new-launch pricing in both the RCR and OCR would also have good spillover implications for the resale market." The RCR and OCR new-launch median values for non-landed residences with floor areas between 800 and 1,100 square feet have increased by 56.3% and 84.3% correspondingly from the first half of 2012 to the first half of 2022.
A 2,185 square foot unit at the 99-year leasehold Marina Collection in Cove Drive on Sentosa sold for S$3.7 million (S$1,693 psf), which is 37% less than the S$5.87 million (S$2,690 psf) the seller paid for the property in October 2012. This was the largest loss-making resale deal in the second quarter by percentage. Given that the holding period was over ten years long, the loss of S$2.17 million equated to an annualised loss of 4.7%.
A 4,467 square foot unit at the 99-year leasehold Silversea in Marine Parade in District 15 sold for S$9.5 million (S$2,127 psf) in April of this year. This price was S$2.5 million less than the S$12 million (S$2,686 psf) that the seller paid for it in April of 2014. The deal that caused the most red ink by quantum was a 4,467 square foot unit at Silversea. The annualised loss was 2.9 percent when based on a holding period of 8 years.
The largest transactions that resulted in a loss, both in terms of quantity and percentage, shared a number of characteristics. The majority of the developments in question were situated in the CCR, and the majority of the units in question were acquired during the market upturn, prior to the market beginning to cool off again in late 2013, as Wong pointed out.
After the government implemented the total debt servicing ratio (TDSR) framework in June of the same year, the market began to slow down in 2013. This was done to discourage buyers from over-leveraging themselves in the market.
https://i.imgur.com/QwMpkBh.png
Even though borrowing rates were increasing, Cushman & Wakefield found that the percentage of loss-making transactions (both landed and non-landed) in the secondary market continued on a decreasing trajectory, going from 7.9 percent in the first quarter to 6.4 percent in the second quarter.
Despite the existing challenges, Wong believes that the percentage of transactions that result in a loss may continue to be quite low for the remainder of the year. He stated that "while market demand would be tempered by rising interest rates and economic uncertainty, the underlying demand for residential properties remains strong, and market leverage looks manageable due to cooling measures and loan curbs." He was referring to the fact that rising interest rates and economic uncertainty would have a negative impact on market demand.
"As a result, we do not anticipate a widespread occurrence of distressed sales in 2022, but transaction volumes may experience a minor decrease."
https://i.imgur.com/JsdkO2z.png