Is it a Good Deal?: The seller for this condo on Scotts Road lost $1.4 million
By Elizabeth Choong
/ EdgeProp Singapore |
The Scotts Tower has 14 unprofitable transactions. (Photo: EdgeProp Singapore)
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SINGAPORE (EDGEPROP) – Last month, a SOHO unit at The Scotts Tower was sold for $1,980 psf, resulting in a loss of almost $1.39 million. The seller had purchased the 657-sq ft unit from the developer in January 2013 for $4,092 psf, which translates to a loss of $2,112 psf. According to caveats lodged with the URA, this loss-making transaction is the first sale for the development this year.
At the time of writing, the unprofitable transaction is also the sale transaction with the second highest loss, out of a total of 14 unprofitable transactions for The Scotts Tower. The most unprofitable transaction was for a 1,227 sq ft unit that was sold in April 2021 for $2,282 psf, resulting in a loss of $1.6 million. The seller had bought the unit in October 2013 for $3,586 psf.
We used our analytics tool, 'Is it a Good Deal?', to assess whether the unprofitable sale transaction that took place this year constituted a good bargain for the buyer.
Located in prime District 9 and Newton Planning Area
The Scotts Tower is a 103-year leasehold condo located along Scotts Road in District 9 and the Newton Planning Area. The development obtained its temporary occupation permit (TOP) in 2016. The majority of its 231 units are SOHO units or have only one bedroom.
Newton MRT Station, Newton Food Centre, The Tanglin Club, The American Club, Goodwood Park Hotel, Grand Hyatt Singapore, and Far East Plaza are within walking distance. Additionally, Anglo-Chinese School (Junior) and the main shopping belt along Orchard Road are within a 1km radius. Anglo-Chinese School (Primary) is also within a 1km radius but will move to Tengah in 2030.
Source: EdgeProp LandLens (as at 16 May 2024)
A bargain for the buyer?
According to our 'Is it a Good Deal?' analytics tool, it appears that the buyer has secured a very good deal. The transacted price is not only below the average price for the development and the district, but it is also lower than the average prices for seven nearby projects.
Source: EdgeProp Is it a Good Deal (as at 16 May 2024)
Average price for The Scotts Tower trends below its neighbours
In 2022, the average price for The Scotts Tower dipped below that of leasehold condos in District 9. Based on transactions this year, the average price for The Scotts Tower is $1,980 psf, which is lower than the average price of $2,167 psf for its counterparts in the same district.
Source: EdgeProp Market Trends (16 May 2024)
Furthermore, the average resale price for The Scotts Tower has weakened significantly. Since 2018, the average resale price for the development has fallen by 43.3%. In contrast, the average price for leasehold condos in the same district has increased by 21.1% over the same timeframe.
Surrounded by freehold neighbours
Among the closest neighbours of The Scotts Tower, Orchard Scotts is the only development with a leasehold tenure. Orchard Scotts is a 99-year leasehold development located along Anthony Road. The 387-unit development obtained its TOP in 2008. Based on transactions in the past 12 months, Orchard Scotts ($1,770 psf) has a lower average price compared to The Scotts Tower ($2,030 psf).
Among its freehold neighbours, Cairnhill Plaza ($1,859 psf) is the only development with an average price lower than The Scotts Tower. Cairnhill Plaza features 204 units and is located along Cairnhill Road. Having obtained its TOP in 1978, the age of Cairnhill Plaza could have placed downward pressure on its price.
The neighbour whose age is closest to The Scotts Tower is The Vermont on Cairnhill. The development is three years older than The Scotts Tower, having obtained its TOP in 2013. The Vermont on Cairnhill features 158 units and is located along Cairnhill Rise. Despite their proximity in age, The Vermont on Cairnhill ($2,611 psf) still achieved a higher average price due to its freehold tenure. Like The Scotts Tower, The Vermont on Cairnhill, Cairnhill Plaza, and Orchard Scotts are also located in District 9 and the Newton Planning Area.
Source: EdgeProp Is it a Good Deal (as at 16 May 2024)
A comparison of the average resale prices for The Scotts Tower, Orchard Scotts, and 99-year leasehold condos in the Newton Planning Area indicates that the average price for Orchard Scotts trends very closely to that of its counterparts in the same planning area. The average resale price for The Scotts Tower ($1,980 psf) has declined sharply in recent years and is now on par with Orchard Scotts ($1,787 psf) and leasehold condos in Newton ($1,944 psf).
Since 2018, the average resale price for The Scotts Tower fell by 43.3%, compared to a 5.6% increase for Orchard Scotts and a 15.5% increase for leasehold condos in Newton.
Source: EdgeProp Market Trends (as at 16 May 2024)
It is interesting to note that the average resale price for 99-year leasehold condos in the Newton Planning Area ($1,944 psf) is lower than that for their counterparts in the Central Region ($1,975 psf) but significantly higher than that for condos islandwide ($1,632 psf).
However, the average resale price for leasehold condos in the Central Region achieved the weakest growth of 27.2% from 2017 to this year. In comparison, the average prices for leasehold condos in Newton and islandwide grew by 37.9% and 42.4%, respectively.
Source: EdgeProp Market Trends (as at 16 May 2024)
Other factors to consider
It would seem that the buyer secured a good deal because the unit was sold at a price significantly lower than the purchase price paid by the seller. Furthermore, The Scotts Tower is in prime District 9 and surrounded by amenities. The Scotts Tower is also one of the most affordable options in the vicinity. However, the buyer should also note that the average resale price for The Scotts Tower has weakened significantly in recent years.
Buyers might want to note that many of the units in The Scotts Tower are small and unsuitable for occupation by families, hence appealing to a smaller pool of buyers. In fact, only one transaction out of the 14 unprofitable transactions for the development involved a unit larger than 1,000 sq ft.
Furthermore, The Scotts Tower has the disadvantage of being a leasehold development surrounded by freehold neighbours. Most homebuyers prefer freehold developments over leasehold ones because of the longer tenure. They are usually willing to pay more for a freehold, especially in a prime district. Besides The Scotts Tower, OUE Twin Peaks is another example of the negative impact of being a leasehold development surrounded by freehold neighbours.
To learn more about this transaction, and whether it is a good deal, click here.
Check out the latest listings for The Scotts Tower, Orchard Scotts, Cairnhill Plaza, The Vermont On Cairnhill properties
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