SINGAPORE (EDGEPROP) – Last month, a four-bedroom duplex penthouse at The Berth By the Cove was sold for $3.6 million ($1,165 psf), resulting in a loss of approximately $1.93 million. The seller had purchased the 3,089-sq ft unit in August 2007 for $5.29 million ($1,790 psf). We used our analytics tool, Is it a Good Deal?, to evaluate whether the buyer of the penthouse secured a good deal.

Part of an exclusive residential enclave

The Berth By the Cove is a condo along Ocean Drive in Sentosa (see Map 1). The 200-unit condo is also located within District 4 and the Southern Islands Planning Area. The development comprises two-bedroom to six-bedroom units, ranging in size from 1,012 sq ft to 6,028 sq ft. The 99-year leasehold condo obtained its temporary occupation permit (TOP) in 2006, making it 18 years old. However, its land lease began in 2004, leaving the development with a remaining land lease of approximately 79 years.

Amenities within a 1km radius include Sentosa Cove Village, Quayside Isle, W Singapore Sentosa Cove Hotel, and ONE°15 Marina Club. There are no primary schools or MRT stations nearby. However, a shuttle bus service operates between Sentosa Cove Village and VivoCity on the main island.

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In addition to being lower than the prices at two neighbouring condos, our tool also indicated that the transacted price of $1,165 psf for the penthouse unit is lower than the average prices for The Berth By the Cove and the district (see Screenshot 1).

More unprofitable than profitable transactions this year

At the time of writing, The Berth By the Cove has recorded 176 profitable and 33 unprofitable transactions. Profits ranged from approximately $76,000 to $3.32 million, while losses ranged from approximately $2,000 to $2.39 million.

Of these, three profitable and five unprofitable transactions occurred this year. Profits for this year’s transactions ranged from approximately $200,000 to $430,000, while losses ranged from approximately $40,000 to $1.93 million (see Table 1).

Note: Transactions with the same address are matched. Profitability of each round-trip transaction is based only on the change in asset price and does not take into account transaction costs and the effect of financing.

At the time of writing, there have been five unprofitable transactions at The Berth By the Cove with losses of at least $1 million (see Table 2). Notably, the unprofitable transaction that occurred last month resulted in the second-highest loss for the condo.

Note: Transactions with the same address are matched. Profitability of each round-trip transaction is based only on the change in asset price and does not take into account transaction costs and the effect of financing.

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The second-highest unprofitable transaction involved a duplex penthouse unit with four bedrooms (see Floor Plan 1). The lower level of the unit comprises a private lift, living and dining areas, a kitchen, and three common bedrooms. Of the three bedrooms, Bedroom 2 has an attached bathroom, while the other two bedrooms share a common bathroom and a powder room. The en-suite master bedroom with a walk-in wardrobe and a private spa pool are located on the upper level of the duplex unit.

However, the same duplex penthouse was previously involved in a transaction that yielded a profit of $3.32 million, a record high for The Berth By the Cove. The first owner bought the unit from the developer in December 2004 for $2.21 million ($715 psf) and sold it in August 2007 for $5.53 million ($1,790 psf) (see Table 3).

Record-high loss of $2.39 million

The highest loss occurred in a transaction in February 2018, when the seller sold a 2,939-sq ft unit for $3.25 million ($1,106 psf), resulting in a loss of approximately $2.39 million. The seller had purchased the unit in October 2011 for $5.64 million ($1,919 psf).

The unit involved in the most unprofitable transaction is also a duplex penthouse with four bedrooms. The lower level of the 2,939-sq ft unit features a private lift, living and dining areas, a kitchen, and a common bedroom. The other two common bedrooms, an en-suite master bedroom with a walk-in wardrobe, and a family area are on the upper level of the unit. There is also a private spa pool that is accessible via the master bedroom (see Floor Plan 2).

Important of due diligence

The involvement of the same unit in separate transactions that yielded the highest profit and the second-highest loss for The Berth By the Cove underscores the importance of buyers and sellers researching current transacted prices before committing to the sale.

The first owner bought the unit in 2004 for $715 psf when the average price for The Berth By the Cove was higher at $837 psf (see Chart 1). The first owner then sold the unit in 2007 to the second owner for $1,790 psf, significantly above the average price of $1,472 psf for the condo. This year, the second owner sold the unit for $1,165 psf, when the current average price for the condo stands at $1,427 psf.

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The first owner achieved a profit exceeding $3 million because they bought the unit at a below-average price and sold it at an above-average price. In contrast, the second owner purchased the unit at a higher-than-average price and sold it at a lower-than-average price, resulting in the second-highest loss of almost $2 million. If the second owner had sold the unit at the current average price of $1,427 psf, their loss would have been reduced to approximately $1.12 million.

Likewise, the seller of the unit that generated the highest loss of $2.39 million bought the unit at a higher-than-average price and sold it at a lower-than-average price. They purchased the unit in 2011 for $1,919 psf when the average price for The Berth By the Cove was $1,742 psf, and sold it in 2018 for $1,106 psf when the average price for the condo was $1,192 psf. If the seller had sold the unit at the prevailing average price of $1,192 psf, they would have incurred a smaller loss of approximately $2.14 million.

Only two condos within walking distance

There are two condos, with a combined total of 344 units, within walking distance of The Berth By the Cove, namely The Azure and The Residences at W Singapore Sentosa Cove (see Table 4). Like The Berth By the Cove, both of its neighbouring condos have tenures of 99 years. Among the trio, The Berth By the Cove is the oldest, having obtained its TOP in 2006, followed by The Azure (TOP in 2008) and The Residences at W Singapore Sentosa Cove (TOP in 2011).

In addition to being the youngest, The Residences at W Singapore Sentosa Cove is also the largest, with 228 units, followed by The Berth By the Cove (200 units) and The Azure (116 units).

Price trending below immediate neighbours

The average resale price of The Berth By the Cove ($1,427 psf) has been trending below that of The Azure ($1,643 psf) and The Residences at W Singapore Sentosa Cove ($1,795 psf) (see Chart 2). This could be because it is older than the other two condos.

The Residences at W Singapore Sentosa Cove not only has the highest average resale price among the three condos, but it also has the strongest price growth at 2.7% y-o-y. In contrast, the average resale price for The Azure fell by 10% y-o-y, while that for The Berth By the Cove inched up by 1.3% y-o-y.

It is notable that the average resale price for The Berth By the Cove ($1,427 psf) is also trending below that of 99-year leasehold condos in District 4 ($1,774 psf) and islandwide ($1,640 psf) (see Chart 3). The average resale price for The Berth By the Cove has generally been higher than that of its counterparts islandwide, but it slipped below that last year. This could be attributed to a 13% y-o-y fall in the average resale price for the condo to $1,409 psf last year. In contrast, the average resale price for its counterparts islandwide rose by 9.3% y-o-y to $1,533 psf last year.

Conclusion

The buyer seems to have secured a good deal, as the transacted price of $1,165 psf is significantly lower than the current average resale price of $1,427 psf for The Berth By the Cove. Furthermore, the subject unit is a spacious duplex penthouse with four bedrooms, and its own private lift and spa pool.

Additionally, the condo is located in the exclusive residential enclave of Sentosa. While the prime location offers residents privacy and exclusivity, the lack of nearby primary schools, major malls, and an MRT station could mean some inconvenience for residents.

Moreover, the average resale price of The Berth By the Cove has increased by only 1.3% y-o-y this year, compared to an increase of 7% y-o-y for leasehold condos islandwide. The weaker price growth for The Berth By the Cove could be attributed to its age. The 99-year leasehold condo obtained its TOP in 2006 and has a remaining land lease of 79 years.

To learn more about this transaction, and whether it is a good deal, click here.

Check out the latest listings for The Berth By The Cove, The Azure, The Residences At W Singapore Sentosa Cove, Condominium properties

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