March
19, 2009
The Sail generates top gains in subsale deals
Largest windfall of $6.7m achieved for a unit above the 60th floor
TRANSACTIONS at The Sail @ Marina Bay last year topped the subsales
deals that generated the highest gains, both in absolute as well as
in percentage terms, a caveats analysis by Savills Singapore shows.
For more information, please click The
Sail @ Marina Bay
In absolute dollar terms, the biggest gain of $6.66 million was achieved
for a unit above the 60th floor of the 99-year leasehold project. It
was bought for $8.8 million or $1,508 psf in November 2005 from the
project's developer, and sold in the subsale market for $15.5 million
or $2,650 psf in August last year.
The
top percentage gain of 178 per cent was generated by a 49th floor unit
at The Sail that was sold for $1.42 million or $2,400 psf in the subsale
market in May last year. The seller had picked up the unit for $510,400
or $862 psf from the developer (a joint venture between City Developments
and AIG) in December 2004.
Two
other units at The Sail also yielded subsale profits of 176 per cent
and 175 per cent; the sellers had bought their units from the developer.
In
all, there were 74 instances of gains generated from subsale transactions
at The Sail in 2008. Market watchers noted that this was because the
project's launch in two phases in 2004 and 2005 was 'perfectly timed'
before residential property prices shot up in 2006 onwards.
As
for subsale deals that produced losses last year, the biggest loss in
absolute quantum, $1.03 million, was suffered for a unit around the
20th floor at Scotts Square. It was sold in November last year for $3.7
million or $3,050 psf; the seller had bought it up in the primary market
in August 2007 for nearly $4.8 million or $3,890 psf.
The
largest percentage loss (36 per cent) was incurred by the owner of a
26th floor unit at Tribeca on Kim Seng Road who had paid the developer
$885,800 or $1,553 psf in February 2007 and sold his unit at $570,000
or $999 psf in December last year.
Looking
ahead, Savills Singapore director Steven Ming said: 'It's reasonable
to expect that subsale losses may increase this year, unless macro and
global economic problems are ironed out and financing eases,' he added.
Knight
Frank executive director (residential) Peter Ow notes that what would
usually make an investor cut losses in the subsale market is when it
is time to pay up the developer. 'An investor exposed to a few properties
he has bought on deferred payment scheme may want to cut losses on the
first one or two to improve his cashflow, so that when it is time to
pay up for the third one, he can afford it,' he added.
In
the event that a buyer has difficulty getting a bank loan and footing
the bill for a chunk of the purchase price to the developer when the
project receives Temporary Occupation Permit (TOP), some developers
may be prepared to repudiate the sale and purchase agreement and forfeit
the 20 per cent initial payment collected from the buyer and proceed
to resell the unit.
But
other developers may sue the buyers and force them to complete the sale
and purchase agreement at the contracted price. 'Most buyers wouldn't
want to take the risk of defaulting because they don't know the position
of the developer and risk being sued and even bankrupted,' Mr Ow said.
For
projects completing in 2011/2012, most investors will tend to hold their
units as there is a possibility of a property market recovery, he predicts.
'But for projects receiving TOP, say, this year, investors will have
to weigh risks of whether they have the financial means to pay up. If
not, it may be better to cut loss,' Mr Ow said.
Mr
Ow estimates that most investors would be prepared to cut a loss of
up to 20 per cent on their purchase price (assuming they have already
paid an initial 20 per cent to the developer) since they will then not
have to take a further hit.
However,
if they subsell the property at, say, 70 per cent of their purchase
price, they would have to fork out a further 10 per cent to the developer
before the developer agrees to transfer the title to the new buyer.
<<
Some
bleed from subsales but most come out ahead
