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Published March 13, 2006

High-end homes lead increase in sub-sale deals
Total transactions jump 57% to hit five-year high


(SINGAPORE) The number of sub-sale deals, often seen as a gauge of speculative activity in the property market, posted bigger increases in sales volumes for the more expensive categories of private apartments and condos last year, while lower priced units posted more modest gains in sub-sale volumes.

Sub-sales refer to resales that take place before the statutory completion of a project.

The finding on last year's trends, reflected in DTZ's analysis of caveats captured by URA's Realis system, is in line with the overall trend seen in the residential market last year - of the high-end segment leading the recovery.

DTZ said that the number of sub-sales for apartments and condos costing $1 million to less than $1.4 million last year was 61 units, over four times the 14 units in 2004.

The increase was even more impressive for units costing $1.4 million and above, with 78 sub-sale deals last year, nearly 8 times the 10 units in the previous year.

In contrast, sub-sales in the lower price tiers posted more modest increases ranging from 11 to 31 per cent last year, although in absolute numbers, they continued to account for the bulk of sub-sale volume.

As DTZ notes: 'Unlike 2004, where mass market and mid-end projects predominated sub-sale purchases, close to half of the 10 major projects which attracted most sub-sales were premier projects. These include quality projects with exclusive lifestyle concepts such as The Sail @ Marina Bay and The Azure.'

'Notwithstanding, the level of sub-sales is considerably low compared to the total units in each development,' it added.

The total number of apartments and condos changing hands in the sub-sale market rose 57 per cent last year to hit 472. This was a five-year high. 'Nonetheless, last year's sub-sale level is lower than the figures in 1996, 1997 and 1999, which stood at 3,410, 1,329 and 1,850 sub-sales, respectively,' DTZ stressed.

The average sub-sale price rose 27 per cent last year to reach $728 psf.

However, sub-sale deals accounted for only 3.7 per cent of the total 12,888 apartments and condos which changed hands last year in both primary and secondary markets, based on DTZ's figures. For 2004, sub-sales accounted for 3.2 per cent of the total 9,280 overall apartment and condo sales.

DTZ observed that buyers with HDB addresses accounted for 43 per cent of the total number of apartments and condos that changed hands in the sub-sale market last year, down from a 56 per cent share in 2004.

'As sub-sale prices have gone up, perhaps this has become a less attractive source of buying private apartments and condos for those living in HDB flats,' DTZ suggested.

In contrast, foreign buyers' share of sub-sale transactions rose from 18 per cent in 2004 to 25 per cent last year, although this is still lower than the 27 per cent share in 1997. Sub-sales of apartments and condos involving foreign buyers more than doubled from 53 units in 2004 to 116 units last year.

'The rise in sub-sale purchases by foreigners alongside the increase in the average sub-sale price reflects their confidence about the investment potential of quality projects in Singapore,' DTZ said.

Looking ahead, DTZ expects the momentum for the sub-sales markets to strengthen on the back of the property market recovery, and continued interest in several good quality projects launched in late 2005 - such as The Sail @ Marina Bay (second tower) and The Azure at Sentosa Cove - and some high profile projects to expect in 2006.

Analysts say that Hong Leong Group's St Regis Residences and City Developments' and TID's condo on a landmark site in Sentosa Cove are among the upmarket launches this year that can be expected to feature strongly on the sub-sale list.