Is it a Good Deal?: The seller lost $770,000 for this 3-bedder in District 9
By Elizabeth Choong
/ EdgeProp Singapore |
At the time of writing, OUE Twin Peaks has 53 unprofitable and three profitable transactions. (Photo: Samuel Isaac Chua/EdgeProp Singapore)
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SINGAPORE (EDGEPROP) – An unprofitable transaction took place at OUE Twin Peaks earlier this month. The seller purchased the 1,399-sq ft unit for $3.969 million ($2,836 psf) in July 2017 and sold it for $3.2 million ($2,287 psf), resulting in a loss of approximately $769,100.
As of the time of writing, the 99-year leasehold development in prime District 9 has had 53 unprofitable transactions and only three profitable ones. Profits range from approximately $55,100 to $263,600, while losses range from approximately $11,500 to $1.105 million. The silver lining is that only two transactions resulted in losses of at least $1 million.
We used our analytics tool, "Is it a Good Deal?", to determine if the buyer of the three-bedroom unit in OUE Twin Peaks secured a bargain.
Located in prime District 9
OUE Twin Peaks is located along Leonie Hill Road within the River Valley Planning Area and District 9. The condo features 462 units, comprising one-bedroom to three-bedroom units that range in size from 549 sq ft to 1,895 sq ft. The 99-year leasehold condo obtained its temporary occupation permit (TOP) in 2015.
Residents of OUE Twin Peaks can walk to the main shopping belt of Orchard Road, making Ngee Ann City, Wisma Atria, Ion Orchard, and Cathay Cineleisure Orchard a short walk away. Residents are also within walking distance of the dual-line Orchard MRT Station (see Map 1). Additionally, the development is within a 1km radius of Great World City, Scotts Square, Tang Plaza, Wheelock Place, The Centrepoint, 313 Somerset, Zion Riverside Food Centre, and River Valley Primary School.
Nearby amenities sweeten the deal for the buyer
Our "Is it a Good Deal?" analytics tool indicates that the transacted price is lower than that of seven nearby projects (see Screenshot 1). Other positive factors include a long remaining tenure and numerous nearby amenities. However, the transacted price is 16.6% above the average price for the district (based on transactions in 2Q2024).
Source: EdgeProp Is it a Good Deal (as at 20 August 2024)
Top unprofitable transaction took place in June
At the time of writing, OUE Twin Peaks has had three profitable and 53 unprofitable transactions. Of these, one profitable and six unprofitable transactions took place this year. The lone profitable transaction yielded a profit of approximately $242,000, while the losses range from approximately $220,000 to $1.105 million (see Table 1).
Source: EdgeProp Buddy (as at 20 August 2024)
When OUE Twin Peaks obtained its TOP in 2015, the take-up rate was only 17.1%, prompting the developer to introduce a deferred payment scheme (DPS) in April 2016 to boost sales. Thanks to the DPS, sales volume increased to 248 units in 2016 and 98 units in 2017, albeit at lower prices. Notably, five out of the six units that generated losses this year were purchased by their sellers in either 2016 or 2017. The lone exception is unit #31-XX, which was purchased in 2010 and yielded the highest loss of $1.105 million.
The unprofitable transaction that took place earlier this month is for unit #29-XX, which measures 1,399 sq ft (see Floor Plan 1). The unit features an en-suite master bedroom and two common bedrooms that share a Jack-and-Jill bathroom. It also has a study nook that can be used as a play area for children. The study’s location adjacent to the kitchen also allows it to be easily converted into additional pantry space or a wine cellar.
The main drawback of the unit is its sizable balcony and planter box. The hot and humid weather in Singapore means that many prospective buyers prefer indoor space over outdoor space.
The unprofitable transaction that took place in June for unit #31-XX yielded the highest loss thus far for OUE Twin Peaks. Its floor layout is a mirror image of the aforementioned #29-XX and is the same size as #29-XX.
The vast disparity in the loss amount could be attributed to the time of purchase. Unit #29-XX was purchased in July 2017 after the introduction of DPS, while #31-XX was purchased in August 2010 before the introduction of DPS. As a result, the purchase price for #31-XX was $333 psf higher than that of #29-XX.
The lone profitable transaction that took place this year was also for a three-bedroom unit measuring 1,399 sq ft. The seller sold the unit in July for $2,323 psf, making a profit of approximately $242,000. The seller had purchased the unit on the 28th floor for $2,150 psf in November 2016. Interestingly, this unit is in the same stack as the aforementioned #31-XX, which generated a loss of $1.105 million for its seller. Both units also share the same layout and size.
The main difference between the two transactions is the purchase price. The seller of #28-XX bought the unit in November 2016 for $2,150 psf, while the seller of #31-XX bought the unit for $3,169 psf in August 2010. The lower purchase price enjoyed by the seller of #28-XX is likely due to the DPS introduced by the developer in April 2016.
Most neighbours are freehold developments
There are 46 condos, representing approximately 4,600 units, within walking distance of OUE Twin Peaks. Of these, only five share the same 99-year tenure as OUE Twin Peaks, namely Tanglin Studio, Horizon Towers, Leonie Gardens, Leonie Suites, and Irwell Hill Residences (see Map 2). Of the remaining 41 condos, one has a 103-year tenure, and the other 40 are freehold developments.
Source: EdgeProp LandLens (as at 20 August 2024)
Among the five 99-year leasehold condos, one is the uncompleted Irwell Hill Residences. This condo features 540 units and is almost fully sold. Based on caveats lodged in the past 12 months, the average price for Irwell Hill Residences is $2,657 psf. The condo is expected to obtain its TOP in 2026.
If freehold developments are included, Devonshire Residences is the closest in age to OUE Twin Peaks, as both condos obtained their TOPs in 2015 (see Screenshot 2). However, Devonshire Residences is a boutique development with only 84 units. Espada is the next closest in age, having obtained its TOP in 2013. It is a larger development with 232 units. Both Devonshire Residences and Espada are located within a 500m radius of OUE Twin Peaks.
Source: EdgeProp Is it a Good Deal (as at 20 August 2024)
More dark clouds ahead for OUE Twin Peaks?
Since 2017, the average resale price for OUE Twin Peaks has fallen at a faster pace of 21.1% compared to Devonshire Residences (9.1%). In contrast, the average resale price for Espada has grown by 6.7% over the same timeframe (see Chart 1). The price decline for OUE Twin Peaks could have contributed to its numerous unprofitable transactions.
The price growth could explain why the average resale price for Espada ($2,481 psf) is higher than that for OUE Twin Peaks ($2,256 psf) and Devonshire Residences ($2,142 psf).
Source: EdgeProp Market Trends (as at 20 August 2024)
Despite its numerous unprofitable transactions, the average resale price for OUE Twin Peaks ($2,256 psf) is still higher than that of 99-year leasehold condos in District 9 ($2,146 psf) and islandwide ($1,635 psf) (see Chart 2). However, the price gap between OUE Twin Peaks and leasehold condos in District 9 has narrowed from $338 psf in 2022 to $84 psf last year and $110 psf this year.
The price gap is expected to narrow further because the average price for OUE Twin Peaks has declined by 3% since 2022. In contrast, the average resale prices for 99-year leasehold condos in District 9 and islandwide have risen by 8% and 16.5%, respectively.
Source: EdgeProp Market Trends (as at 20 August 2024)
Conclusion
The buyer may not have gotten the most bang for his buck despite the significant loss suffered by the seller. The buyer paid $2,287 psf for the unit, which is $31 psf higher than the average resale price for OUE Twin Peaks ($2,256 psf) this year. Furthermore, the average resale price for OUE Twin Peaks is higher than that of its counterparts in District 9 ($2,146 psf).
The average resale price for OUE Twin Peaks is also trending downwards, unlike the average resale prices for leasehold condos in District 9 and islandwide. More unprofitable transactions can be expected if prices for the development continue to decline.
On the plus side, OUE Twin Peaks is well-located in prime District 9 and is a stone’s throw away from Great World City and Orchard Road. Residents in the development can enjoy the convenience and prestige of residing near the main shopping belt of Singapore.
To learn more about this transaction, and whether it is a good deal, click here.
Check out the latest listings for Oue Twin Peaks, Irwell Hill Residences, Devonshire Residences, Espada properties
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