High-end homes: Some win, some lose

PHOTO: High-end homes: Some win, some lose

SINGAPORE - Singapore's luxury residential market is presenting a mixed picture, with some buyers accepting hefty losses on upscale homes bought at the market peak.

But others are managing to pocket sizeable profits on these homes despite a generally quieter residential market.

All this comes as luxury home prices are markedly lower now, in relation to the mass market, than before the global financial crisis.

Data from online property portal STProperty showed that three luxury developments had units sold at a loss this year.

At The Marq on Paterson Hill, developed by SC Global, a unit bought in 2007 was sold at a loss of 6.1 per cent. Units at the 66-unit freehold development had set record prices of nearly $6,850 per sq ft after its launch.

Not far away, a unit bought in 2007 at The Orchard Residences changed hands this year for a loss of 2.6 per cent.

The 99-year leasehold project in Orchard Boulevard is part of a mixed development housing ION Orchard mall, which was jointly developed by property giant CapitaLand and Sun Hung Kai Properties.

At Reflections At Keppel Bay in Keppel Bay View, sellers of seven units took a loss on resale this year. Five units bought in 2007 incurred losses of about 6.1 per cent. One unit bought in 2009 was sold for a loss of 3.4 per cent, while another bought in 2011 suffered a loss of 9.6 per cent.

Analysts said the losses could be the result of sluggish sales in the high-end residential segment.

OrangeTee head of research and consultancy Christine Li said luxury home prices were about 2.4 times that of mass-market homes before the financial crisis.

"The gap has narrowed to 1.6 times in 2013, which is below the historical average of two times."

The data also showed that most of the homes that lost money were bought in 2007 and 2008.

Savills head of research and consultancy Alan Cheong said the homes were bought during "the go-go years of leveraged investments and high commodity prices" and could have been sold to cut losses.

"Unfortunately, some of those entrants were nouveau riche who could have built their wealth based on leverage," he said.

The introduction of the Additional Buyer's Stamp Duty (ABSD) in December 2011 had also driven foreigners, who make up the bulk of buyers in the luxury segment, away from the market, said Ms Li.

They made up 19 per cent of the resale market before the ABSD, but only 9 per cent now.

R'ST Research director Ong Kah Seng said properties had been sold at record prices in those years. "Prices never seem to be able to recover to that level," he added.

However, these luxury projects also had more units that made profits for their owners. This year, seven units at Reflections at Keppel Bay were sold at a tidy profit of 6.5 to 23.8 per cent. Last year, 31 units there were sold at a profit of 7.4 per cent.

It was the same story at The Orchard Residences, where a unit was sold for a profit of 13.4 per cent this year and 11 units had been sold at a profit of 20.6 per cent in 2011.

Mr Ong said most buyers who had overstretched themselves to buy a luxury unit would have left the market. "This leaves behind the pool of high-end property owners with strong holding capabilities even if sluggish market conditions continue."


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