Boulevard 88 unit tops Q4 resale gains; seller reaps S$3.5m profit after 3 years

Jan 20, 2023

A 2,799 square foot (sq ft) unit at Boulevard 88 along Orchard Boulevard was sold for S$13.78 million or S$4,924 per square foot (psf) last month, earning the seller a cool S$3.46 million in profit – making it the most profitable transaction by quantum in the fourth quarter of 2022.

The 22nd floor unit at the freehold luxury condo in prime District 10 was bought for S$10.32 million or S$3,688 psf back in July 2019. Based on a holding period of just under three and a half years, the annualised profit works out to 9 per cent.

This nugget came from data crunched for The Business Times by real estate consultancy Cushman & Wakefield, which studied caveats for non-landed private homes with a prior purchase history between January 2012 and December 2022, and transacted in Q4 2022. Cushman then ranked these caveats into the top five profit- and loss-making deals, both by percentage and by quantum. The analysis excluded the transaction costs and taxes, such as buyer stamp duty and seller stamp duty.

The data also showed that the five biggest money-making transactions by quantum were all in the Core Central Region (CCR); four of them were freehold units. This is mainly by virtue of the relatively higher prices in the CCR, said Wong Xian Yang, Cushman & Wakefield’s research head.

Q4’s top five profit-making deals by percentage were located in the Outside Central Region (OCR) and CCR, with sellers raking in profits ranging from 69 to 189 per cent.

The most profitable deal by percentage was for a 1,281 square feet (sq ft) unit at the freehold Veranda in Telok Kurau in District 15. It was sold for S$1.88 million or S$1,468 psf in November; it was purchased for S$650,000 or S$507 psf in Jan 2014. This works out to a total profit of 189 per cent or an annualised profit of 12.8 per cent, based on the holding period of nearly nine years.

Among the five deals, two were located in the prime CCR area, noted Wong Xian Yang. In previous quarters, most of these deals were located either in the suburbs or Rest of Central Region (RCR).

“With a narrowing price gap between the CCR and other market segments, the value proposition of CCR properties has increased,” said Wong, “and there could be opportunities to unlock value in the CCR.”

The largest loss-making resale deal by percentage, on the other hand, was for a 657 sq ft unit at 103-year leasehold condo development The Scotts Towers in District 9. It was sold for S$1.3 million or S$1,980 psf in October, 41 per cent lower than the S$2.2 million price tag (S$3,351 psf) paid for the property in April 2013. Based on the holding period of nine and a half years, the seller suffered annual losses of 5.4 per cent.

By quantum, the top loss-making deal was for a 2,260 sq ft unit at freehold 3 Orchard By-The-Park in prime District 10. It was transacted for S$6.56 million or S$2,901 in October, 20 per cent less than the S$8.18 million that the seller paid in July 2019. This translates to an annualised loss of 6.5 per cent over some three years.

Like the deal at The Scotts Towers, Wong highlighted that most of these purchases were made during the market upturn in 2012 and 2013.

This was before the market cooled off in late-2013, when the government rolled out the total debt servicing ratio framework to prevent buyers from over-leveraging.

Cushman & Wakefield also studied the proportion of loss-making transactions (landed and non-landed) in the secondary market, which hiked marginally to 4.6 per cent in Q4 2022 from 4.5 per cent in the previous quarter.

This came on the back of rising headwinds, such as surging interest rates, and September’s cooling measures, noted Wong.

Still, the proportion of loss-making transactions remains significantly lower than the year-ago period, which stood at 8.2 per cent.

For the coming year, Wong expects the proportion of loss-making deals to remain relatively low, especially as “owners’ holding power remains strong, given a tight employment market and robust rental market”.