Hefty loss incurred despite 19-year holding period
By Feily Sofian
/ The Edge Property |
A gains-and-loss analysis for the week of Oct 4 to 11 unearthed interesting deals. A 2,508 sq ft unit at Chelsea Gardens in prime District 10 was sold at a loss of $810,200, despite being held for more than 19 years. The unit was purchased from the developer in August 1997 for $1,838 psf and resold for $1,515 psf this month. The loss margin works out to 18%, or 1% annually.
Chelsea Gardens is a 40-unit freehold development on Stevens Road. Based on URA caveats, the developer sold 13 units in 1997, including the subject property, at an average price of $1,936 psf.
A 2,508 sq ft unit at Chelsea Gardens in prime District 10 was sold
at a loss of $810,200
Prices fell about 30% to $1,380 psf on average in 1999 after the Asian financial crisis. They rebounded to $1,802 psf on average in 2007, before dipping again the following year and have hovered in the $1,500-to-$1,600 psf range since. As a result, resale transactions involving units bought in 1997 have so far resulted in hefty losses, ranging from $752,000 to $1.9 million.
Two units at Chelsea Gardens touched $2,000 psf back in 1997. Developments that have breached the $2,000 psf mark in the period include Ardmore Park, Cairnhill Apartment, Four Seasons Park, Gardenville, Richmond Park, St Thomas View and Scotts 28. Interestingly, a 1,292 sq ft unit at Gardenville fetched $4,094 psf in August 1997, according to URA caveat record.
Meanwhile, the highest loss in the week of Oct 4 to 11 amounted to $2.2 million. It accrued to a Good Class Bungalow on Margoliouth Road. The preceding caveat appears to be lodged for the purpose of bequeathing the property, though. The house was caveated for $20 million, or $1,572 psf on land area, in 2012 and resold for $17.8 million, or $1,399 psf, this month.
Separately, a 474 sq ft shoebox unit at NEWest, was flipped at a loss of $68,900 after being held for just three years. The unit was purchased from the developer in June 2013 at $748,900, or $1,581 psf. It changed hands in a sub-sale this month at $680,000, or $1,436 psf. The loss margin works out to about 9%, or 3% annually. The seller would also have incurred a 4% seller’s stamp duty (SSD) amounting to $27,200, bringing the total loss to $96,100.
The deal marked the second secondary market transaction in the development. In 2014, a 2,551 sq ft unit in the project also changed hands in a sub-sale at $2.28 million, or $894 psf. Although the deal netted the seller a profit of $52,950, the SSD payable would have amounted to $273,600, as the unit was held for just over a year. As a result, the seller is likely to have booked in a loss of $220,650. NEWest is a 956-year leasehold development on West Coast Drive comprising 141 commercial units and 136 residential units. Completed this year, it occupies the site of the former Hong Leong Garden Shopping Centre.
This article appeared in The Edge Property Pullout, Issue 751 (Oct 24, 2016) of The Edge Singapore.
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