As the proportion of unprofitable property transactions surged from 9% (508 out of 5,433 matched transactions) in 2015 to 17% (1,002 out of 5,924 matched transactions) in 2016, the losses incurred by sellers climbed 62% from $161 million to $260 million over the same period.
The study by The Edge Property matched the latest sub-sale and resale caveats with their previous caveats based on data from URA Realis as at Dec 28, 2016. The computation of gains and losses accounts for Seller’s Stamp Duty (SSD), where applicable, but excludes other costs and duties incurred by the sellers. The study covers strata properties in the non-landed residential, industrial, office and retail segments.
In the condominium and apartment segment, the proportion of unprofitable transactions was 10% (447 out of 4,687 matched transactions) in 2015. In 2016, the proportion rose to 17% (873 out of 5,264 matched transactions). While the majority of sellers enjoyed profits, the average profit per transaction fell from $310,815, or 37%, in 2015 to $224,721, or 28%, in 2016. The losses incurred by sellers of private non-landed homes climbed 57% from a total of $151 million in 2015 to $236 million in 2016 (see chart).
Source: URA, The Edge Property
The biggest loss of $4.65 million in the private non-landed home segment in 2016 accrued to a 4,241 sq ft unit at Seascape in Sentosa Cove. The unit was bought at $11 million, or $2,594 psf, in December 2011 and sold at $6.35 million, or $1,497 psf, in October 2016. This translates into a loss of 42%, or 11% per annum over a holding period of about five years. Transacted resale prices at Seascape have fallen from a peak of between $2,551 and $2,867 psf in 2012 to between $1,403 and $1,497 psf in 2015 and 2016. Completed in 2011, Seascape is a 99-year leasehold condo comprising 151 units.
A 4,241 sq ft unit at Seascape was sold at the biggest loss in 2016
A seller at The Ritz-Carlton Residences incurred the second-highest loss in 2016 when he sold a 2,831 sq ft unit at $7.1 million, or $2,508 psf, in March 2016. He bought the unit at $10.8 million, or $3,815 psf, in June 2013. The seller would likely have incurred an 8% SSD, or $568,000, owing to a holding period of less than three years. Including SSD, the losses total $4.27 million (40%), or 17% annualised. Transacted resale prices at The Ritz-Carlton Residences have fallen from a peak of between $3,768 and $3,896 psf in 2012 and 2013 to between $2,508 and $3,003 psf in 2016. The Ritz-Carlton Residences is a freehold development comprising 58 units on Cairnhill Road in prime District 9. It was completed in 2011.