Gains from subsale deals in Sentosa Cove have been buoyed by the property price increases in the area since the start of the year.
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The average gain for each unit from subsales of condominiums in the upscale waterfront housing district from January to April 2010 has almost doubled from about $762,000 in Q1 2009 to about $1.4 million.
Based on Savills Singapore’s analysis of URA Realis caveats as at May 3, the most profitable subsale deal among condos on Sentosa Cove since the start of 2009 generated a profit of slightly more than $3 million. Such subsale deal took place in March 2010. In fact, out of the 11 subsales transacted since the start of the year, six have yielded a gross profit of at least $1 million apiece.
So far in 2010, only one subsale deal has incurred a loss of $167,000.
According to Mr. Steven Ming, director for investment sales and prestige homes at Savills, those who sold condos on Sentosa Cove in the subsale market this year were the ones who earned profits of about $800,000 or more. “Opportunistic buyers who purchased in 2009 and sold within the same year made smaller gains ranging from about $100,000 to $754,000,” he said.
Mr. Ming noted that all 11 condo subsales in 2010 have been at The Oceanfront @ Sentosa Cove, which obtained Temporary Occupation Permit (TOP) in March 2010. Nine out of the 11 sellers had purchased their units in 2006. “They have witnessed the volatility of the market and took the opportunity to sell into strength or are already very satisfied with the tidy returns against their purchase prices,” he said.
“Moreover the units at Oceanfront are likely to have been bought on Deferred Payment Scheme and the need to fully fund the purchase kicks in when the project gets TOP. This could also have motivated some owners to divest their units rather than assume the burden of any additional mortgages,” he added.
Savills’ study showed that from Q3 2009, the proportion of subsale deals that yielded gains were higher than that during H1 2009, reflecting the surge in the overall prices of private homes. Market watchers considered the opening of the integrated resorts (IRs) as boosting foreign interest in high-end properties, in addition to the upbeat property climate.
Foreigners, including permanent residents, have snapped up around 41 percent of the condos transacted in the subsale market since the start of 2009, according to Savills’ analysis.
“Most of the housing developments on Sentosa Cove are being completed, so you start to appreciate the whole environment better – the waterfront community and lifestyle, you can see yachts passing by, and the water has a very calming effect,” said Ong Choon Fah, consulting executive director of DTZ. “The old concerns about Sentosa Cove being a giant construction yard with road congestion have faded away or are being addressed by the Sentosa Cove management.”
The study also showed that since the start of last year, there were eight caveats lodged for subsales of landed homes on Sentosa Cove, and found previous caveats on five of these. All five subsale deals were profitable.
Mr. Ming said that anecdotally, a good number of buyers, particularly from mainland China, have been purchasing luxury properties in Singapore. “This is particularly so for landed homes on Sentosa Cove, since this is the only place where foreigners who are not Singapore permanent residents are allowed to buy landed homes. Prices of such bungalows are already pushing $2,000 psf of land area and more. Demand appears sustainable and prices are likely to head northwards over the next 12 months. Many bungalow owners bought their land parcels at $400-$800 psf and even with building costs, they stand to make good gains ahead,” he explained.