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Year in Review: Top 10 biggest property losses in Singapore
SINGAPORE — As property cooling measures and rising interest rates in Singapore continue to impact the private residential resale markets, home owners have had to absorb some heartbreaking losses due to dampened investor sentiments. We look at the top ten largest property losses of 2019 to understand some common drivers behind such transactions.
Project | District | Area (sq ft) | Sales Price ($ psf) | Purchase Price ($ psf) | Loss ($) | Loss (%) | Annualised Loss (%) | Holding Period (years) |
4 | 4,822 | 1,841 | 3,318 | 7,120,000 | 45% | 6% | 9 | |
10 | 6,954 | 2,704 | 3,468 | 5,311,500 | 22% | 3% | 8.1 | |
4 | 2,336 | 1,327 | 2,682 | 3,165,000 | 51% | 7% | 9.2 | |
4 | 2,433 | 1,418 | 2,588 | 2,845,000 | 45% | 5% | 11.2 | |
4 | 2,110 | 1,612 | 2,876 | 2,667,800 | 44% | 6% | 9.2 | |
9 | 6,232 | 4,011 | 4,410 | 2,485,587 | 9% | 1% | 12.3 | |
9 | 2,282 | 1,402 | 2,402 | 2,282,000 | 42% | 5% | 9.9 | |
10 | 3,671 | 1,580 | 2,143 | 2,066,000 | 26% | 2% | 12.2 | |
9 | 2,530 | 2,431 | 3,243 | 2,053,778 | 25% | 3% | 9.5 | |
9 | 5,511 | 1,883 | 2,250 | 2,022,000 | 16% | 2% | 8.3 |
(Source: https://www.edgeprop.sg/analytic/main)
Unsustainable Price Premiums
The top ten properties were either located within the highly attractive and exclusive District 4 (Sentosa) or District 9 and 10 (Orchard/Tanglin). Such prime locations, coupled with the expensive furnishings of these luxury private properties, generally commanded substantial premiums compared to similar residences located in other parts of the city. Hence, during a dovish market, unsustainably priced properties can also be greatly affected by negative market sentiment, given the high costs of maintenance and overall illiquidity of such properties as an asset class.
Cases of Poor Timing
Most of the properties have been held on to for nearly a decade. They were purchased at peak prices and were sold at much lower psf rates, given the falling rent yields and declining sales volume of luxury private residences these past few years.
Most home owners perceived the units to be fairly priced at first, due to the residences being located in prime districts land and experiencing high sales volumes before property cooling measures were implemented. However, due to weakening market conditions, these owners have had to adjust selling prices and expectations accordingly to draw buyers’ interest.
Biggest loss-making transaction of 2019
In contrast to the top 10 biggest private property resale losses of 2018, the majority of the properties on this year’s list were concentrated near the heart of town in Orchard, rather than off the coasts of Sentosa in District 4.
However, the top loss-making sale of the year still harks from offshore resort island, as a ground-unit, 4,822 sq ft apartment of the 41-unit leasehold Seven Palms Sentosa Cove. Even at an auspicious selling price of S$8,880,000, the figures belie an estimated 45% loss compared to the original buying price of S$16 million after sixteen years of ownership. That translates to an overall loss of S$7.12 million in total, or an annualised loss of 6% per year.
The year’s second loss-making transaction pales somewhat in comparison at an overall loss of S$5.31 million in total, or an annualised loss of 3% per year. The fifth floor, 6,954 sq ft apartment of the 100-unit freehold Nassim Hill Residences, which was sold for S$18.8 million after an eight year holding period, was purchased at S$24.1 million.
As Oliver Wendell Holmes once said, “Learn from the mistakes of others…You can't live long enough to make them all yourself!” By identifying the similarities behind some of the year’s largest loss-making resale transactions, one can hope to avoid the same mistakes. Happy house-hunting!
*This story is contributed by EdgeProp.sg
