Prices of suburban properties outperform in Q4

Resale transactions in the CCR typically record big gains, due to the sector’s higher current prices and bigger unit sizes said research analyst. But the Q4 sales data reflects the outperformance of the RCR and OCR market, noting that in the last decade, non-landed prices cumulatively grew 36 per cent in the RCR and 47 per cent in the OCR. CCR prices, on the other hand, rose just 8 per cent in the same period.

SUBURBAN and city fringe residential properties proved most profitable on resale during the fourth quarter of 2023, outperforming prime property deals that typically show large gains. A Clementi Park condominium unit sold in November made the most money by quantum in Q4. The seller walked away with a profit of nearly S$2 million after just over six years.

The large, 3,068 square foot unit at the freehold condo in District 21 of the Outside Central Region (OCR) was bought for S$2.8 million or S$913 per sq ft in October 2017. It sold in November last year for S$4.8 million, yielding an annual profit of 9.2 per cent, according to data.

The data showed that three of the five biggest money-making sales by quantum were transacted in the city-fringe Rest of Central Region (RCR), with one in the OCR and another in the prime Core Central Region (CCR). Sellers raked in profits ranging from 38 to 71 per cent.

The caveats for non-landed private homes with a prior purchase history between January 2012 and December 2023, and transacted in Q4 2023. It then ranked the top five profit-making and loss-making deals by percentage and quantum. The analysis excludes transaction costs and taxes, such as Buyer’s Stamp Duty and Seller’s Stamp Duty.

In percentage terms, four out of the five most profitable transactions were done in the OCR, with one located in the RCR. Gains ranged from 102 to 121 per cent. Four units sold at Treasure Crest, a 99-year leasehold executive condominium (EC) in District 19, were held for an average of around seven years before being let go for an attractively high profit by percentage. EC resale deals have scored among the biggest percentage gains for the past three quarters.

The outperformance of suburban and fringe areas may not persist, considering the price premium that CCR properties still command. While price momentum is expected to sustain at a moderate pace (in the RCR and OCR), there could be laggard opportunities in the CCR given the shrinking price gap between the CCR and other regions.

Topping the percentage gains table was a 2,045 sq ft unit at Wing Fong Building, a freehold commercial building with residential apartments. The unit transacted for S$1.9 million or S$919 psf in October 2023 – 121 per cent more than the S$850,000 or S$416 psf that the seller paid for the property in February 2012. This works out to an annualised profit of 7 per cent, given the holding period of 11.7 years.

Cape Royale Singapore

The low levels of loss-making deals in Q4 2023 were mainly due to strong holding power in the market and resilient private residential prices despite higher interest rates. Given the brighter economic prospects in 2024, the overall levels of loss-making deals are expected to remain low.

Excluding ECs, the top two transactions by percentage were for freehold and 999-year leasehold properties, which tend to command a premium. Following a trend seen last year, deals that made the largest losses were all in the prime CCR, purchased during varying periods of the market cycle.

The deal that spilled the most red ink by quantum and percentage was a 2,368 sq ft unit at Marina Bay Residences in District 1. The 99-year leasehold unit was acquired for S$9.3 million (S$3,923 psf) in March 2014, and sold for S$6.9 million (S$2,914 psf) in October 2023. This translates to a loss of 26 per cent or S$2.4 million. The seller made an annualised loss of 3 per cent, based on the holding period of nearly a decade.

Caveats data of landed and non-landed private homes showed that prime CCR properties accounted for 61 per cent of loss-making deals in the fourth quarter. The RCR accounted for 21 per cent of loss-making deals, and the OCR 18 per cent. Still, a majority of deals in the CCR – at 81 per cent – were profitable.

Notably, the proportion of loss-making transactions for the landed and non-landed sectors in the secondary market remained low in Q4. Loss-making deals inched down to 2.9 per cent of all deals, from 3.1 per cent in the previous quarter, and from 4.5 per cent in the year-ago quarter. Two years before, in Q4 2021, loss-making deals made for a significantly higher share – 8.2 per cent – of all deals.

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