District 9’s extreme gains and losses

Located on a busy stretch of Paterson Road just before the junction of Orchard Boulevard and Scotts Road, the 10-storey Paterson Linc is one of the most visible condominium blocks in prime District 9. At end-December, a two-bedroom unit on the seventh floor of the condo was sold for $1.65 million ($2,017 psf). The unit was purchased at the peak of the market in September 2007 for $2.16million ($2,638 psf).

The 35-unit freehold Paterson Linc is a redevelopment of the former Paterson Lodge. Unlike a typical en bloc sale, no money changed hands in this deal brokered by Knight Frank. Instead, in 2007, all 20 owners of Paterson Lodge unanimously agreed to sell the site to Green Aces Paterson Pte Ltd, a subsidiary of the former listed company Ace Dynamics (subsequently renamed Leeden Ltd and delisted in 2012).

A two-bedroom unit at Paterson Linc was recently sold for $1.65 million.

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Instead of cash, the owners of the former six-storey Paterson Lodge received a brand-new, slightly larger condo unit in the new project. In return for redeveloping the project, the developer was able to sell the remaining 15units in the new 10-storey, 35-unit development named Paterson Linc. The units taken up by the former owners of Paterson Lodge span the second to sixth floors. The developer therefore sold the units on the seventh to 10thfloor at $2,638 to $2,750 psf in September 2007.

Paterson Linc was completed in 2010. Most of the units in the development are two-bedroom units measuring 818 to 1,023 sq ft. There are three penthouses on the 10th floor and they are three-bedroom units measuring 1,981 to 2,164 sq ft and priced above $5.3 million. The lowest price per sq ft was set in 2010 when the 1,981 sq ft penthouse changed hands in a sub-sale for $3.44 million ($1,738 psf). That represented a drop in capital value of 35.2%, as the previous owner paid $5.3 million ($2,683 psf) for the unit in September 2007.

Property agents attribute the low transaction volume to the fact that itis a boutique development with just35 units. A property agent is currently marketing one of the 851 sq ft, two-bedroom units in the development for $1.95 million ($2,291 psf).The unit is currently tenanted at $4,000a month, translating to a gross rental yield of 2.5%.

Owners at Martin Place Residences fared better, especially those who purchased units when the project was soft-launched in May 2009.The first 100 units snapped up then were sold at an average of $1,450psf. This was at a discount to the average price of $1,800 psf that the first 28 units were sold for in a private preview in 2008, just months before the collapse of Lehman Brothers investment bank.

The 302-unit freehold Martin Place Residences is located just off Kim Yam Road in River Valley in prime District 9. The 33-storey twin tower development by Frasers Centrepoint was fully sold and completed in 2011.

A one-bedroom unit at Martin Place Residences was recently sold for $1.32 million.

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About 80% of the owners at Martin Place Residences are investors, and only 20% are owner-occupiers, according to JaySong, senior team director of Scotia Real Estate Group. “Landlords can still find tenants easily,” he says. “Every week, there are at least two to three viewings at Martin Place Residences. It’s very popular with the expatriates.”

A 592 sq ft, one-bedroom unit located on the 17th storey of one of the blocks changed hands for$1.32 million ($2,230 psf), according to a caveat lodged on Dec 28.The price translates into a capital gain of 47.8%, as the seller purchased the unit in June 2009 for $893,000 ($1,508 psf).

The seller is believed to be a Singaporean, and the buyer is said to be a local architect who had been looking for a one-bedroom investment property in the prime district. The unit is currently leased at $4,000 a month for two years until September 2017, which translates to a gross rental yield 3.6%. The deal was said to be co-brokered by Scotia Real Estate’s Song.

Last July, an identical size one-bedroom unit on the 22nd floor of the same block changed hands for $1.302 million ($2,200 psf). The capital gain realised by the seller was thin, at 4.8%, as the unit was purchased in a sub-sale for $1.24 million ($2,100 psf) in May 2011. The first owner bought the unit for $930,020 ($1,571 psf) in the soft launch in June 2009.“

It all boils down to timing —when the unit was purchased, and when it’s sold,” says Song.

This article appeared in the City & Country of Issue 711 (Jan 18, 2016) of The Edge Singapore.

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