With S$11m price tag, Ardmore Park unit is most profitable resale deal in Q4

Seller walked away with S$6.73 million in profit for the 2,885 sq ft unit in November 2021

Feb 17, 2022



Singapore

A 2,885 square foot (sq ft) unit at luxury project Ardmore Park, which transacted in November last year was the most profitable deal in the resale market in the fourth quarter of 2021 as the seller walked away with a profit of S$6.725 million - a handsome gain which far outstripped the S$4.275 million (S$1,482 per square foot or psf) paid for the house back in 1999.

The 23rd floor unit of the freehold condominium in District 10 went for S$11 million, or S$3,813 psf, and was held for over 22 years. This translates to an annualised profit of 4.3 per cent, showed Edmund Tie Research's data.

The real estate consultancy studied caveats for private homes with a prior purchase history that were transacted in Q4 2021, and then ranked them as the top 5 profit- and loss-making deals, both by percentage and by quantum.

The leading profit-making transaction by percentage in Q4 2021 was a 1,604 sq ft unit on the 22nd floor of 99-year leasehold People's Park Complex in District 1. It was sold for S$1.35 million (S$842 psf) in November after the seller bought it at an opportune time in 2006 for S$350,000 (S$218 psf), prior to a pick-up in the market.

Based on a holding period of over 15 years, this is an annualised profit of 9.3 per cent, and a total profit of about 286 per cent.

Edmund Tie's senior director (research and consulting), Lam Chern Woon, said: "In general, a long holding period, coupled with favourable entry and exit points in the market cycle, remain the key drivers (of) transaction profitability."



Meanwhile, all five loss-making deals by quantum shared similarities: they were in the Core Central Region (CCR) and were bought either at, or near, the previous two market peaks in 2007-2008 and 2011-2013. In addition, they were all sizeable units, with the smallest unit at over 2,100 sq ft and the biggest at around 4,500 sq ft.

The biggest loss-making deal by quantum was for a 3,057 sq ft unit on the 25th floor of a freehold development in District 9 which changed hands for S$11 million (S$3,599 psf), or nearly S$4.5 million less than the S$15.45 million (S$5,053 psf) the seller doled out in January 2008. At a holding period of nearly 14 years, the annualised loss was 2.4 per cent.

By percentage, the top 5 loss-making deals saw losses ranging from some 32 to 45 per cent. Four were leasehold properties in the CCR and the fifth was a freehold property situated in the Rest of Central Region (RCR).

Three of those 5 transactions shared similarities: they were at the same development, under 900 sq ft each and were held by the sellers for less than 9 years. Two of the 3 were bought in 2013, during the prior peak in the market cycle.



Lam noted that an "overwhelming majority" of the profitable and loss-making transactions in Q4 2021 were concentrated in the CCR, particularly in Districts 9 and 10, "attesting to a revival of interest in the prime districts". Of the 10 profitable deals listed, they were largely freehold in tenure and were "considerably spacious" as they were in developments at least 10 years old, if not older. At 19 years, the average holding period for the profitable transactions was longer than the loss-making deals at 11 years, the data showed.

Edmund Tie Research also studied the proportion of loss-making transactions (landed and non-landed) in the resale market in 2021, which continued on a downward path to 8.6 per cent in Q4 2021 from 11 per cent in Q3 2021. Still, "this belies volatility within the quarter", Lam flagged.

For 2021 as a whole, the share of loss-making deals clocked 11.4 per cent, dropping from 16.8 per cent in 2020 when the pandemic tipped the Republic into its worst recession yet. According to Edmund Tie, the improvement came on the back of a recovering economy, an uptick in transaction volumes, as well as new highs in residential prices.

In the non-landed resale market, a similar trend played out as the proportion of loss-making deals slid from 12 per cent in Q3 2021 to 9.2 per cent in Q4 2021.

"As the economy moderates towards trend growth in 2022 and as support measures are gradually phased out, we expect more dislocations in various sectors of the economy, which could lead more homeowners to offload their properties in a distressed state," said Lam. At the same time, he reckons that the sanguine fundamentals, coupled with the pricing trajectory of the residential market, will help to alleviate market distress.

Overall, he projects "some volatility" in the coming months, but a loss-making share at a healthy level of 11-12 per cent as Singapore continues towards endemic living.