The proportion of unprofitable deals in the high-end segment continued to climb. One in three sellers, or 33% of the segment, incurred losses in 2Q2016, up from 30% in 1Q2016. In the city fringe, however, the proportion declined from 16% in 1Q2016 to 13% in 2Q2016.

A majority of the unprofitable deals in the high-end segment were traced to units bought in 2007 and 2010. They were sold in 2Q2016 at an average loss of $1 million (24%) for units purchased in 2007, and $263,000 (10%) for those bought in 2010.

The proportion of unprofitable deals and their loss margins underscore deep value buying opportunities in the prime residential segment. A couple of them were sold through auctions.

The top loss in 2Q2016, which amounted to $2.8 million, accrued to a 1,679 sq ft unit at Paterson Suites. The buyer, a Singapore citizen, picked up the unit at just $2,156 psf, or a 30% discount on the average 2007 price of $3,074 psf. The seller is believed to be an Indone sian family.

Such deals cannot be inferred from the URA price index, which puts today’s prices for high-end non-landed homes at 2% above 4Q2007 prices.

Besides the unit at Paterson Suites, a seller at Turquoise in Sentosa Cove also took a huge loss in May amounting to $2.5 million. The seller, a Singapore citizen, had bought the unit in 2007. The buyer, meanwhile, paid an attractive price of $1,521 psf for the 2,433 sq ft unit, which is on a par with, or just a tad higher than, several city-fringe projects.

Another buyer got a steal when he picked up a 2,282 sq ft unit in Orchard Scotts in June for just $1,468 psf. The seller, however, sustained a loss of $2.4 million, having purchased the unit in 2007 at $2,520 psf.

 

One buyer got a steal when he picked up an Orchard Scotts unit at $1,468 psf. The seller sustained $2.4 million loss, having bought the unit at $2,520 psf

 

The list goes on. At Cuscaden Royale, two units changed hands in May at an average price of $1,771 psf. The units potentially belonged to the same seller as they were bought and resold on the same day. The transaction resulted in a total loss of $3.5 million to the seller(s), who purchased them in 2007 at an average price of $2,925 psf.

A seller at Helios Residences suffered a $1.7 million loss. He purchased the unit in 2007 at $3,378 psf and sold it in May at $2,094 psf.

This study matched resale and sub-sale caveats as at June 28 for private non-landed homes with their previous transactions. Profits and losses were computed based on the difference in selling and purchase prices, taking into account the prevailing Seller’s Stamp Duty (SSD), but excluding other costs.

 

Impact on prices

Deals at rock-bottom prices appear to be a minority at this juncture, although they tend to be highlighted.