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 per cent to about $1,800 psf in the first five months of this year, compared to around $2,400 psf 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 2,982 sq ft unit at The Oceanfront sold for $5.65 million ($1,895 psf) in November last year, after it was purchased in April 2008 for $7.2 million ($2,415 psf) - a $1.55 million loss.
Another 2,820 sq ft unit at The Coast sold for $4.8 million ($1,702 psf) in January this year, two years after it was purchased at $6 million ($2,128 psf). This was a $1.2 million loss.
SLP International executive director Nicholas Mak suggests that this could be due to owners struggling to find tenants for their units amid the weak leasing market. Some may also not be able to secure high enough rental rates to service their loans. (Most Sentosa homes are bought not for own occupation, but as investment.) "So they may find it a better option to just liquidate," he said, adding that the location is also not the most convenient for expats to commute to the mainland for work.
Another industry watcher added that buyers who bought units at $2,100 psf 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 also up for sale at auction houses here. A 2,777-sq-ft unit at Turquoise condo, put up for sale by a lender at a Colliers' auction this week, yielded 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.
JLL's head of auction and sales, Mok Sze Sze, said: "The owners of the two Turquoise units bought them at $7 million each, which is quite difficult to match in the current market.
"Auctioning is a good method to garner all interested parties in a room to competitively bid. Potentially, the owner can also expect to get the optimum price because it's a competitive method of sale."
Meanwhile, some Sentosa condos such as Cape Royale and The Residences at W have made strategic decisions to lease out their unlaunched units instead, given current soft condo prices on the Cove.
Roaring sales in the waterfront enclave 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. The way Mr Mak sees it: "For property prices anywhere, what goes up will also come down."