A higher proportion of them are profitable and the gains have shot up, too
[SINGAPORE] Subsales are becoming more and more profitable.
At the low point of the market in the first quarter of 2009, only 67.5 per cent of the subsales of private apartments and condos yielded a profit.
That proportion grew to 95.1 per cent in Q1 this year and 96.1 per cent in April, according to Savills Singapore's analysis of URA Realis caveats data.
It attributes the trend to improving sentiment and prices in the first four months of this year.
Meanwhile, the average gain per unit from profitable subsales of non-landed private homes increased from $105,663 in Q1 last year to $284,764 in Q1 this year and $363,465 in April.
In terms of percentage return, the average gain from profitable subsales has risen from 13.1 per cent in Q1 2009 to 22.4 per cent in the first four months of 2010.
Subsales, often used as a proxy of speculative activity, refer to secondary-market transactions in projects that have yet to receive Certificate of Statutory Completion. This can take place three to 12 months after Temporary Occupation Permit (TOP).
Caveat matches that Savills traced up to May 12 this year show that the number of subsales that yielded gains exceeding $1 million shot up from seven transactions in Q4 last year to 32 in January-April 2010. Twentyfive of these lucrative deals this year were for properties in Districts 1 (which covers Marina Bay), 9 and 10 (in Singapore's traditional prime districts).
The highest subsale gain this year, of about $3.3 million, was reaped on a 30th-floor unit at Marina Bay Residences; it had been bought (also in the subsale market) in January 2007 for $4.97 million and divested in April this year for $8.29 million.
The next most profitable subsale this year involved a 13th-floor unit at The Oceanfront @ Sentosa Cove. The unit was bought from City Developments in July 2006 for $7.02 million and sold for $10.08 million in March 2010 – a gain of $3.06 million.
The Oceanfront recorded six subsales this year with gains of more than $1 million each. All these units were bought in 2006, before the big push in luxury home prices in 2007. Recent launches in the location – The Residences at W Singapore Sentosa Cove and Seascape – could have encouraged the Oceanfront subsales, said Savills Singapore director of prestige homes and investment Steven Ming.
Oceanfront received TOP in March this year, and it is often around this time that a flurry of subsale activity occurs as projects then have added appeal to buyers seeking properties that they can move into or rent out soon.
This year, up to April, One Amber in Katong had the most subsale transactions (51 deals), followed by The Parc Condominium in West Coast (41 deals) and Marina Bay Residences (MBR) with 39 subsales. One Amber and MBR received TOP in April; The Parc Condominium's TOP is expected in Q3.
Those who bought units on the old deferred payment scheme may also find it opportune to cash out of their investment instead of paying the bulk of the purchase price to the developer at TOP and having to find a bank loan and, possibly, a tenant.
Savills calculated profit or loss as the difference between sale and purchase prices, without factoring in other expenses such as agent fees and stamp duty.
It found 919 subsale caveats for non-landed private homes in Q1 this year, as reflected in URA's Realis system as at May 12. Of these, it found previous caveat records for 86.1 per cent or 791 units. It then compared the latest subsale price with the earlier price. Out of 203 subsale caveats for April, it found earlier caveat matches for 87.7 per cent.
Less than 5 per cent of subsales in January-April 2010 incurred a loss. On average, the loss was $215,802, down from $343,982 in Q1 2009.
The biggest subsale loss this year was for a unit at Leonie Parc View that sold in February for $5 million, or $1.24 million below the $6.24 million it had previously transacted at in July 2007. The seller had bought his unit from the developer.
The 919 subsale caveats in Q1 this year reflect a pick-up from 749 deals in Q4 2009. Savills' Mr Ming attributes this to spillover from strong buying sentiment in the primary market in Q1.
"We believe new launches, which are usually at higher prices, could also have fuelled subsales in projects launched earlier in the vicinity," says Mr Ming.
Knight Frank managing director (residential services) Peter Ow predicts subsale volumes are likely to soften over the next six months amid worries about the fallout from Europe's economic woes. At home, there are concerns about an increase in private housing supply from the bumper state land sales scheduled for H2 2010.
The proportion of profitable subsale deals as well as profit margins could ease as prices enter a period of "stabilisation", Mr Ow says.
Much will also depend on the entry point of these specuvestors. "If they bought in 2008 or early 2009, it may still be possible to walk away with gains."
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THE Housing Board yesterday reminded flat owners who sub-let rooms before Feb 1 that they have until July 31 to register their tenants' details with the HDB.
All flat owners are now required to register the sub-letting arrangements, under a new rule introduced earlier this year.
From Feb 1, anyone sub-letting a room has been given seven days to register, but a six-month grace period expiring July 31 was granted for those who had sub-let before the beginning of February.
In all, 20,258 flat owners had registered their subletting of rooms with the HDB, as of April 30.
That figure includes flat owners with sub-letting tenancies commencing both before and from Feb 1, the board said.
Part of the reason the new rule was introduced was to try to curb the worsening activities of loan sharks.
Some people who borrow from loan sharks and who rent rooms in HDB flats have been known to use their former addresses when borrowing.
That leaves a flat's new occupants to face possible harassment from the illegal moneylenders.
The rule was implemented to track those who borrow from loan sharks.
"There is no need to seek prior approval for subletting of rooms," the HDB said.
However, flat owners are required to notify the HDB when they renew or terminate their sub-letting contracts, as well as when a new sub-let starts.
Registration can be done online or at any HDB branch office.
The board said that those who flout the rule may be fined up to $3,000. For recalcitrant cases, compulsory acquisition of their flats could be carried out.
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DOZENS of house hunters signed on the dotted line to buy new homes over the weekend, despite a jittery stock market hitting property market sentiment.
Most notably, the 1,145-unit The Minton in Lorong Ah Soo sold another 120 units over the weekend, taking total sales at the recently released condominium project to 300 units.
Prices were unchanged at $850 per sq ft (psf) – the price at which the first 180 units were sold the previous weekend.
In absolute terms, the prices ranged from $480,000 to $690,000 for the one-bedroom units, $750,000 to $990,000 for the two-bedroom units, $950,000 to $1.32 million for the three-bedroom units, and $1.3 million to $1.65 million for the four-bedroom units.
The sales included three penthouses priced at $1.7 million to $2.1 million.
Developer Kheng Leong said 85 per cent of the buyers were Singaporeans and 10 per cent were permanent residents. Foreigners made up the rest.
It said it has started releasing another 180 units at the 99-year leasehold condominium.
At the freehold Flamingo Valley in Siglap that was launched last month, buyers picked up another eight units.
This brought total sales to 48 units, out of 120 units that were released for sale, said developer Frasers Centrepoint.
Prices remained at $900 psf to $1,580 psf.
"In the absence of new major launches, the general rate of sales in the market of existing launches is quite healthy," said CBRE executive director (residential) Joseph Tan.
"If you compare last year's January to May sales with this year's numbers, the volume is consistent."
The market will be quieter this month, given that there are fewer launch-ready projects compared with the March to April period, said Mr Tan.
One possible launch later this month is Twin Peaks, on the former Grangeford condominium site in Leonie Hill Road, he added.
Unusually, the units there will be sold on a fully furnished basis
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New developments expected to increase vibrancy in business district – and keep rents up
NIGHTS and weekends in the Central Business District (CBD) are about to get a lot livelier, as the staid office area takes shape as a certified residential district.
Four condominiums are expected to be completed around the Shenton Way area this year and next, adding more than 1,000 homes to the district. Another two have recently been launched for sale, with a third in the pipeline, bringing the total number of condos in the area to 10.
Currently, the only major residential developments in the area are The Sail @ Marina Bay, with more than 1,000 units, and International Plaza and Icon in Tanjong Pagar, with about 850 units in total.
But with the spanking new 428-unit Marina Bay Residences having just received its temporary occupation permit (TOP), more residents will call Shenton Way their home – and as the area becomes more vibrant, rent levels in the district are likely to go up.
At the same time, Jones Lang LaSalle's head of South-east Asia research Chua Yang Liang expects the cost of renting new apartments in the CBD to increase, in line with higher demand across the island as companies hire more expatriates amid the economic recovery.
"The CBD area is likely to benefit as the housing supply remains limited, even with the projects due for completion," he said. The 168-unit Lumiere is expected to receive its TOP this year, while the 312-unit The Clift and the 321-unit One Shenton are scheduled for completion next year but may obtain their TOPs earlier.
Property agents are already advertising units for rent at Marina Bay Residences at $4,000 to $6,000 a month for a studio, $6,500 to $8,000 for a two-bedroom apartment, and as much as $12,000 for a fully furnished three-bedder.
At The Sail, asking rents range from $3,500 to $5,000 a month for a studio, $4,500 to $6,000 for a two-bedroom apartment, and $6,000 to $9,000 for a three-bedroom unit.
And given that many new CBD developments are high-end projects, they will ride on an anticipated boom in luxury rentals, said DTZ's South-east Asia research head Chua Chor Hoon.
"Rents have firmed and we expect more significant increases for the luxury high-end units in the prime areas, as these are rented by senior management with more generous budgets," she said.
As more residential projects reach completion in the CBD, the live-in population will make the night scene in the CBD more vibrant, Ms Chua added.
"More retailers and food and beverage outlets will stay open," she said. "The increase in amenities available after office hours will in turn attract more people to live in the CBD, so even after office hours, in future it's going to be quite lively."
Jones Lang LaSalle's Mr Chua added: "We believe the CBD will gradually loosen up from the current stolid business environment to one that is relaxed, colourful and livelier – similar to Manhattan."
Residents of The Sail, which was completed two years ago, say they enjoy the convenience of living right in the middle of the city.
"You're within easy reach of financial services if you need them, and there's a good mix of high-end dining and local fare," said a 34-year-old Singaporean private investor who gave his name as Mr Choo.
Another resident, German Daniel Knapp, 34, likes the fact that his home at The Sail is only three bus stops and six minutes from his office in Suntec City, where he works for a German car manufacturer.
Even The Sail residents who do not work in the CBD, such as American Vorapong Kritsanajootha, find the commute to work more pleasant.
"In the morning, when everybody's coming in (to the CBD), I'm going out. In the evening, when everybody's going out, I'm coming in. So both ways, I'm going against the traffic," he said.
But the predominance of expat residents in the CBD area means that homes there are heavily dependent on global financial conditions remaining healthy, said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.
"Once there is some financial crisis that reduces the expat population working in the financial industry, rentals of these inner city apartments will be badly affected, maybe more so than those in the suburbs," he said.
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