About two in five Sentosa condominium units have resold at a loss in the past year, symptomatic of the plight of luxury homes here, as financing restrictions put off buyers, industry watchers say.
Since May last year, 31 units have changed hands at six Sentosa projects: Marina Collection, Seascape, The Azure, The Berth, The Coast and The Oceanfront, according to data compiled by STProperty.sg from URA Realis.
The profitability findings is in line with data gathered by HSR Research which shows resale prices at the plush Sentosa district falling 25% to about $1,800psf in the first five months of this year, compared to around $2,400psf over the Jan – May 2013 period.
That said, the price movements tend to be volatile, given the single-digit number of transactions each month. There were just five transactions altogether this year, and none in the months of February, March and May.
Of the 31 transactions in the past year, profitability analysis could not be done for seven because caveats, which include information on purchase prices, were not lodged for the units. Profitability is calculated by subtracting purchase prices from selling prices. Of the remaining 24 transactions, 10 resold at a loss.
Among the loss-making transactions, four were units at The Berth, the debut project at the Cove which was launched in 2004 and completed in 2006. Three units made losses at The Oceanfront, two at The Coast, and one at The Azure.
Two in particular made seven-digit losses. A 2,892sqft unit at The Oceanfront sold for $5.65 million ($1,895psf) in November last year, after it was purchased in April 2008 for $7.2 million ($2,415psf) – a $1.55 million loss.
Another 2,820sqft unit at The Coast sold for $4.8 million ($1,702sqft) in January this year, two years after it was purchased at $6 million ($2,128psf). This was a $1.2 million loss.
Buyer who bought units at $2,100psf and above appear to have “overpaid”. Those who profited from their resale deals mostly bought in at lower psf prices; a handful even got their units at $800, $900-plus psf back in 2006.
Meanwhile, several Sentosa Cove units are up for sale at auction houses here. A 2,777sqft unit at Turquoisecondo, put up for sale by a lender at a Colliers’ auction this week, yield no bids, despite having reduced its opening price to $4 million from its previous $5 million.
Two Sentosa homes are up for auction by DTZ, both by lenders, one at Turquoise and another at Marina Collection. Another four are for sale by private treaty (akin to private negotiations) by JLL – two at Turquoise and two at Marina Collection.
Typically, banks repossess homes and put them up for auction as part of a repayment structure when delinquent mortgagors (borrowers) are unable to find buyers and dispose of their properties themselves.
Roaring sales in the waterfront enclaves back in 2006-2008 were hit by the financial crisis and had hardly recovered when the private housing market succumbed to successive rounds of cooling measures from 2009.
Sources: BT weekend
The wife and I wonder if the “leylonging” of private properties in Sentosa Cove will worsen given the continual slowdown in the luxury market, as foreign buying interests continue to wane in view of the cooling measures and tighter immigration policies. As most of the Sentosa homes are typically bought for investment rather than own occupation, if one is persistently stuck in a “cannot rent, cannot sell” situation, the only option is to liquidate – even if it means at a loss.
But a loss of $1+ million will definitely cause some sleepless nights, even if one can afford it…
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