On April 21, a 7,653 sq ft unit at The Balmoral in prime District 10 was sold at a $5.4 million profit, the highest recorded in the year 2017 so far.

The seller, said to be an Indonesian who is based in Singapore, had bought the first-floor unit for $5.2 million ($679 psf) in August 1997 and sold it at $10.6 million ($1,385 psf). The profit works out to 104%, or 4% a year over 20 years.

In this article, we examine the factors that potentially contributed to the exponential sale profit.

1)     Timing

The seller had purchased the unit in August 1997, amid the Asian financial crisis that gripped much of East Asia from the second quarter of the same year. During this period, the property price index (PPI) of non-landed residential properties fell 11.8% in 2H1997 from 2H1996.

In tandem with the crisis, the median $psf price for units transacted at this medium-rise project plummeted to $931.5 psf in 3Q1997 from its peak of $1,186.5 psf in 2Q1996.

Needless to say, the $5.2 million ($679 psf) price tag of the first-floor unit in August 1997 came at a bargain for the discerning buyer.

2)     Holding power

The saying that patience is a virtue is especially valid when it comes to property investments.

Due to its highly illiquid nature, property investors have to be doubly sure that they have the holding power to weather any dips in property prices and rental demand before making a purchase.

The seller in question here is said to also own several other high-end properties within the Core Central Region (CCR), including a unit at the exclusive precinct of Sentosa Cove.

Greater holding power allows investors to tide over temporary setbacks in the market or wait for the market forces to turn in their favour. In another demonstration on why holding power is so crucial to property investments, a 7,642 sq ft unit that was bought for $4.7 million ($615 psf) in September 1995 was sold at $12 million ($1,570 psf) in September 2013. This translated to a profit of $7.3 million, the highest to be recorded at The Balmoral. The profit works out to 155%, or 5% a year over 18 years.

3)     Uniqueness of the property

According to a source who does not want to be named, the 7,653 sq ft unit at The Balmoral has a “unique” set-up and is something of “a townhouse within a condo development.”

The source added that the buyer, who purchased the unit for his own stay, was a foreigner who was keen on buying landed property, but could not do so within the prime districts of 9, 10 and 11.

The unit also comes with its own parking space, so it is “effectively like owning a landed property without actually buying one,” the source said. Incidentally, based on our research data, close to half of the owners at The Balmoral are non-Singaporeans.

To date, based on the matching of URA caveat data for The Balmoral, there have been 18 profitable transactions, with an average profit of $1.76 million (79%), and seven unprofitable transactions, with an average loss of $536,714 (16%). The 81-unit project is a freehold condominium completed in 1986 and is located within 600m of the Stevens MRT station.

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