Landed property deals reap tidy profits in Q1 2021

Singapore

TRANSACTIONS for landed properties dominated the top profit-making deals in the first quarter of this year, with their sellers handsomely rewarded as they walked away with huge profits.

Among the blockbuster deals was the sale of a freehold Good Class Bungalow (GCB) at Nassim Road, setting a record price of S$4,005 per square foot (psf) based on land area. The 32,160 sq ft site in District 10 was sold for S$128.8 million, more than four times the S$30.3 million (S$942 psf) it was purchased for in November 2006.

This is according to data from Edmund Tie Research, which studied caveats for private homes with a prior purchase history that were transacted in Q1 2021. These were then ranked as the top five profit- and loss-making deals, both by percentage and by quantum.

The data for Q1 2021 included both landed and non-landed deals as the landed housing market proved firm that quarter with a number of GCBs changing hands. Given the larger price tag of landed properties, all five transactions for the top five deals by quantum were landed sites.

Lam Chern Woon, senior director for research and consulting at Edmund Tie & Company, said: "Most of the more profitable transactions were for the sale of landed properties, attesting to the buoyant demand for this segment. On the other hand, non-landed properties did not fare as well in Q1 2021 and units were generally purchased during the 2007 property market peak or could have been sold due to unfavourable circumstances."

Edmund Tie also looked at the proportion of loss-making transactions for the overall private home market (landed and non-landed) in Q1 2021, which edged up from 15 per cent in December 2020 to 15.3 per cent in January 2021, before retreating to 14.4 per cent in February and 14 per cent in March.

For the quarter, the proportion of loss-making deals worked out to 14.6 per cent, notably lower from 16.8 per cent in 2020.

A similar trend emerged when narrowing in solely on non-landed deals, with the proportion of loss-making transactions picking up pace from 16.1 per cent in December to 16.5 per cent in January before falling to land at 15.2 per cent in March.

Mr Lam said: "As economic growth picks up for the non-travel sectors of the economy and as the labour market exhibits signs of stabilisation - particularly with the slew of job creation or conversion schemes in place - we are fairly sanguine that the state of distress in secondary property market could be in check for now."

Of the five most profitable transactions by percentage, four were freehold while three were located in the Core Central Region (CCR). The sellers held on to the properties for at least 14 years, which allowed them to reap capital gains ranging from nearly 400 per cent to 650 per cent.

The leading deal by percentage was the sale of a 1,481 sq ft shophouse on Everitt Road in District 15 in March for S$4.2 million (S$2,836 psf) - making it the only one of the five transactions that was located in the Rest of Central Region. The seller scooped it up in December 2004 for S$560,000 (S$378 psf) after the Sars outbreak, which works out to a profit of 650 per cent or S$3.64 million. (see amendment note)

The most profitable transaction by quantum in Q1 2021 - and one which made the headlines - was the sale of the GCB at Nassim Road for S$128.8 million. The 32,160 sq ft site was purchased in March by Jin Xiao Qun, the wife of Nanofilm Technologies International founder Shi Xu. Both are Singapore citizens and the couple were made billionaires after Nanofilm was listed on the Singapore Exchange last October.

The property was sold by the controlling shareholder of Top Global, Oei Siu Hoa (also known as Sukmawati Widjaja) who bought the GCB for S$30.3 million (S$942 psf) in November 2006. The S$98.5 million gain translates to an annualised profit of 10.6 per cent, based on the holding period of nearly 14-and-a-half years.

Meanwhile, the leading loss-making transaction by percentage was a 3,165 sq ft unit at 99-year leasehold The Azure on Sentosa in District 4. It was sold for S$3.6 million (S$1,137 psf) in March, half the S$7.2 million (S$2,275 psf) the seller paid for it in October 2007. Held for over 13 years, this worked out to an annualised loss of five per cent per year.

The top five-loss making deals incurred losses ranging from 36 per cent to 50 per cent, while three of the transactions had losses surpassing S$3 million.

Mr Lam said: "Two of the transactions were purchased unfavourably from a timing point of view in 2007 at a property cycle peak, but the same could not be said for the remaining three properties, originally acquired at various points from 2010 to 2013. The latter three properties could possibly be offloaded in less than willing circumstances."

The data also showed that the biggest loss making transaction by quantum was a villa at Kasara on Sentosa. The villa on the 9,042 sq ft site was sold at about S$14.68 million (S$1,624 psf) in March, or for a loss of over S$5 million. It was purchased for S$20 million (S$2,212 psf) in November 2012, working out to an annualised loss of 3.7 per cent based on the holding period of a little over eight years.

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Amendment note: In an earlier version of this story, Le Nouvel Ardmore was incorrectly included in the table, which Edmund Tie Research has since updated. The article has been revised to reflect this.