Suburban properties see the biggest gains in resale prices during Q4
The 3,068-square-foot unit, located in the District 21 of Outside Central Region (OCR), was purchased in October 2017 for S$2.8million. This is S$913 per square foot. According to data, it was sold in November 2017 for S$4.8million, which yielded an annual profit rate of 9.2%.
SUBURBAN residential and city fringe properties proved to be the most lucrative on resale in the fourth quarter of 2020, beating prime real estate deals which usually show big gains.
Clementi Park unit sold by the seller in November was the one that made most money in Q4. The seller was able to walk away with nearly S$2million in profit after only six years.
The proportion of losses-making transactions in the secondary markets for both landed and un-landed goods remained low. The percentage of loss-making transactions in Q4 dipped to 2,9%, down from 3,1% the previous quarter. Two years ago, in Q4 of 2021 the loss-making deal share was higher – 8.2 percent – than it is today.
According to a research analyst, resale sales in the CCR usually record large gains because of the higher current prices for the sector and the larger unit sizes.
However, Q4 sales figures reflect the performance of the RCR market and the OCR. It is worth noting that, in the last decade non-landed prices have grown by 36 per cent for the RCR, and 47 per cent for the OCR. CCR prices grew by just 8 percent during the same period.
Due to the high price of CCR property, it is unlikely that suburban and fringe properties will continue to outperform CCR. Although price momentum will continue to be moderate (in RCR and OCR), laggards in the CCR could exist due to the shrinking gap between CCR and other areas.
The two top transactions (excluding ECs) by percentage were freehold and 999 year leasehold properties. These tend to command a higher price.
In line with a recent trend, all of the losses in prime CCR were made during different periods of the cycle.
The caveats are for non-landed residential homes purchased between January 2012 to December 2023 with transactions occurring in Q4 of 2023. It then ranked top-five deals with the highest profit and loss by percentage and quanta. The analysis excludes taxes and transaction costs, including Buyer’s and Seller’s stamp duty.
The Caveats Data of Landed and Non-Landed Private Homes showed that prime CCR Properties accounted for 61% of the loss-making deals during the fourth quarter. RCR was responsible for 21% and OCR, 18% of the loss-making deals. The majority of CCR transactions – 81% – are profitable.
In percentage terms four of the five highest-profitable transactions took place in the OCR. One transaction was in the RCR. Gains varied from 102 per cent to 121. Treasure Crest Executive Condominiums (ECs) with a 99 year leasehold were held by four units for an average seven years, before they were sold for a high percentage profit. EC resale sales have been among the top percentage gains over the past three months.
The unit of 2,368 square feet at Marina Bay Residences located in District 1 was the one that caused the most damage in terms both of quantum and percent. The 99-year Leasehold Unit was bought for S$9.3 Million (S$3,923 per sq ft) in March 2014 and sold for S$6.9 Million (S$2,914 per sq ft) in October of 2023. This represents a 26 per cent loss or S$2.4m. A loss of 3% was made by the seller based on an annualised holding period of more than a decade.
The low level of losses-making deals during Q4 2023 was primarily due to a strong hold on the market, and the resilient prices for private residences despite higher rates. Overall levels of loss making deals should remain low due to the improved economic outlook for 2024.
Three of the top five sales, based on the amount of money made, were in the rest of central region (RCR) which is located in the outer city. One was in the core central region (CCR) and one was in OCR. The profits for the sellers ranged between 38 and 71 percent.
A 2,045 square foot unit at Wing Fong Building topped the table of percentage gains. This is a residential apartment building that has a commercial lease. The unit was sold in October 2023 for S$1.9m, or S$919psf – 121% more than what the seller paid in February 2012 for S$850,000, or S$416psf. It is estimated that the annualised profit will be 7 percent, given a holding period of 11 years.