Boom time for high-end investors

By Joyce Teo - Dec 9, 2006
The Straits Times
SPECULATORS or eagle-eyed opportunists?

Call them what you want, but some people have made a killing in an otherwise moribund local property market in the past few years.

Some are just lucky while others worked hard at spotting trends.

Most of the action took place in the past two years, when the luxury home market staged a remarkable recovery and the collective sales market hit one record high after another. To hear property agent Andrew Soh tell it, the easy profits are there for the picking.

Two months ago, Mr Soh helped a local investor sell his large high-floor unit at Oceanfront condominium in Sentosa Cove just six weeks after buying it.

The investor pocketed at least $750,000 in profits from the $5.3 million sale - a record $1,750 per sq ft (psf) - to an Asian businessman who runs a business here.

That sale, however, still paled in comparison to the highlight of Mr Soh's seven-year career as a property agent.

Last month, he brokered a deal which raked in a cool $1.2 million for a Hong Kong-based British couple.

The couple received $8.3 million, or $1,347psf, for their 6,200 sq ft townhouse in Tanglin Residences in the Nassim Road area. They had paid $7.1 million, or $1,133psf, for the house two years ago.

'It was because the location is superb. Prices in Nassim are leading Orchard Road prices,' says Mr Soh. 'During the peak in 1996 and 1997, the most townhouses could fetch was about $6.5 million generally. But now, prices have gone up a lot more.'

While stories of spectacular profits abound, not all investments will yield easy profits, property experts warn.

So far, the upturn in prices in the past two years has benefited just those with property in the higher end of the market, they say.

A DBS spokesman says: 'This group of home owners are mostly existing high net-worth individuals and their families who had invested in property in the past three years or longer.'

High-end homes are typically in prime districts. This time round, however, what has also excited investors are new 99-year leasehold waterfront homes.

WATERFRONT FEVER: Apartments in Sentosa Cove (above) and Marina Bay, billed as waterfront living, are pulling in so many buyers that their prices have skyrocketed even though they are 99-year leasehold developments. Photo/ Sentosa Cove

Apartments in Sentosa Cove and Marina Bay - billed as waterfront living - have attracted such strong demand that their prices have soared.

Savvy investors like Mr Arthur Tay, chairman of SUTL Group and the one15 Marina Club in Sentosa Cove, have profited from buying and selling such an apartment.

Mr Tay bought a sea-facing unit at Oceanfront in Sentosa Cove for above $1,400 psf in July for the view, design and location.

'The condo is superbly located at the gateway of the marina,' he says. 'I like to choose properties that offer a lifestyle, that is fun, exciting. Waterfront homes are good addresses.'

But the 49-year-old sold his unit recently after much pestering from his agent, who had a keen buyer.

He declines to reveal his profits but recent transactions have seen Oceanfront units go for an average of about $1,500 psf.

One other group of investors that have benefited from the property recovery are the collective sales millionaires.

Whether they have lived in their homes for years or are new investors, most became overnight millionaires as property developers snapped up choice sites over the past two years.

Mr Richard Lim, a financial adviser, sold his Casa Rosita apartment for $1.5 million in a collective sale in April.

The 53-year-old, who bought the unit for $400,000 17 years ago, is buying an HDB resale flat and going into semi-retirement.

Investors are keen to emphasise that it is not easy money.

One investor, who declines to be named, says it is 'hard work' spotting the opportunities. 'At least one-third of my time is spent on researching the market.'

Timing is also obviously crucial for these savvy buyers.

'It is good to buy when the market is really bad, which was probably back in 2004,' says an experienced Singaporean property investor.

That year, he had bought a unit at the Berth in Sentosa Cove. 'It was a doomsayers kind of situation then but there were a lot of people buying,' he says, adding that many buyers then 'felt the vibes of an improving market'.

'Such opportunities are for you to make money and they don't come by easily.'

A Hong Kong-based investor, who wants to be known only as Mrs Leong, stresses that unique apartments have better chance of appreciating in price.

She bought 'a few' units in the first tower of The Sail@Marina Bay when it was first marketed in late 2004.

'I bought it when everyone had no confidence in the market,' she says.

COLLECTIVE WINDFALL: Among the winners are owners of the Casa Rosita condominium at Bukit Timah Road - they became instant millionaires after the property was sold en bloc in April.

Mrs Leong, 50, and her husband, a banker, paid $900 to $1,000 psf for the high-floor units which offer panoramic sea views.

Prices of The Sail have since risen significantly in the sub-sale market and she is sitting on gains of at least 30 to 50 per cent.

What drew her to the property was the unique design of the tall 1,111-unit building, which is shaped like two sails of a boat.

She says: 'I have stopped buying properties in Hong Kong because the developers are just building up matchboxes.'

The key is to buy the right property, she says. 'Not all developments' prices are appreciating at the same level.'

What would-be buyers should know is that the speed of the high-end recovery in the past two years is unusual, says an investor who declines to be named.

'The market is running away and people are asking, Where's the money coming from? These people will only get in when the market is red-hot. Then they will be burnt again!'