Profitable neighbours of unprofitable condominiums

By Elizabeth Choong

/ EdgeProp Singapore |

August 29, 2022 3:53 PM SGT

Recap: top five most unprofitable condos

In June, we wrote about the five condominiums that had the most unprofitable transactions over a 12-month period.

In this article, we examine if these unprofitable condominiums have any profitable neighbours within a 1km radius, and the reasons for their profitability despite their proximity to an unprofitable development.

Reflections at Keppel Bay

In June, Reflections at Keppel Bay had 65 unprofitable and 26 profitable transactions, earning it the dubious honour of being the most unprofitable condominium in Singapore. At the time of writing, the number of unprofitable transactions for Reflections at Keppel Bay still far exceeded profitable ones with 62 unprofitable and 30 profitable transactions over the past 12 months.

The leasehold condominium is located in District 4 and Bukit Merah planning area. Nearby amenities include HarbourFront MRT Station (North-East Line, and Circle Line or CCL), Telok Blangah MRT Station (CCL) VivoCity, Harbourfront Centre and Mount Faber.

Immediate neighbour has only three unprofitable transactions

Reflections at Keppel Bay has seven neighbours with 2,481 units within a 1km radius. Reflections at Keppel Bay is the largest development with 1,129 units.

Uncompleted The Reef at King’s Dock has the highest average price of $2,498 psf, while Harbour View Towers (TOP in 1994) has the lowest average price of $1,405 psf.

It is notable that Caribbean at Keppel Bay has only three unprofitable transactions over the past 12 months compared to 62 unprofitable transactions for its next-door neighbour Reflections at Keppel Bay. Additionally, units at Reflections at Keppel Bay are fetching an average of $1,700 psf – $23 psf higher than Caribbean at Keppel Bay.

Reflections at Keppel Bay has many unprofitable transactions because many owners bought their units when it was launched in 2007 at property prices peaked. In contrast, Caribbean at Keppel Bay is an older development that was launched before the peak.

An examination of the top three most profitable transactions for Caribbean at Keppel Bay shows that all three units were bought before the peak in 2007 at below $1,000 psf, which allowed the sellers to earn profits of above $1.0 million. This is despite two sellers selling their unit at below the current average price ($1,677 psf) for the condominium.

It is also notable that the tenure of Caribbean at Keppel Bay starts in 1999, seven years after Reflections at Keppel Bay. This debunks the myth that older condominiums will always be less profitable than their newer counterparts. In this instance, the timing of purchase is the main determinant of profitability while age and lease decay play less significant roles.

Parc Rosewood

Parc Rosewood is a condominium located in District 25 and the Woodlands planning area. The leasehold development received TOP in 2014. Singapore Sports School, Si Ling Primary School and Seletar Expressway are some of the nearby amenities.

In June, Parc Rosewood had 31 unprofitable and 54 profitable transactions. At the time of writing, the development had chalked up 25 unprofitable and 52 profitable transactions over the past 12 months.

Patience pays off for residents in Woodhaven

There are six condominiums with 1,772 units within a 1km radius of Parc Rosewood. Parc Rosewood has the highest average price of $1,076 psf with Woodhaven bringing up the rear at $774 psf.

The nearest neighbours are Rosewood Suites, Casablanca, Woodgrove Condominium and Woodhaven. Parc Rosewood has the most sales transactions which can be attributed to it being the largest development with 689 units. All other developments in the vicinity have less than 500 units.

Woodhaven would be the closest in age to Parc Rosewood. Woodhaven received TOP in 2015, a year after Parc Rosewood. In contrast to the 25 unprofitable transactions of Parc Rosewood, Woodhaven had only six unprofitable sales.

Out of the top three most profitable transactions for Woodhaven, two were purchased in 2011 when the project was launched. This means the sellers are probably the first buyers who waited for prices to rise to the current high level before liquidating their asset. Their patience earned them a tidy profit despite Woodhaven having the lowest average price among the condominiums in the immediate vicinity.

Although the average price of Woodhaven is the lowest among its immediate neighbours, the average resale price for condominium units in Woodhaven has grown 5% since 2015, outpacing leasehold condominiums in Woodlands (1%).

Eco and Urban Vista

Eco and Urban Vista are located within 500m of each other in District 16 and the Bedok planning area. Both are leasehold condominiums; but Eco is a year younger than Urban Vista, having obtained TOP in 2017. Nearby amenities for both include Tanah Merah MRT Station (East-West Line or EWL), East Village and Anglican High School.

In June, Urban Vista had 26 unprofitable and 10 profitable transactions, while Eco had with 27 unprofitable and 14 profitable transactions. At the time of writing, Urban Vista had 30 unprofitable and 13 profitable transactions, while Eco fared better with 25 unprofitable and 21 profitable transactions over the past 12 months.

Grandeur Park Residences is the exception

Including Eco, there are 10 condominiums within a 500m radius. Eco is the largest development with 748 units and Tanah Merah Mansion is the smallest with merely 36 units.

The nearest neighbour to both developments is Grandeur Park Residences which is sandwiched between them. The Tanamera is located beside Urban Vista while Bedok Court is beside Eco.

At the time of writing, Eco and Urban Vista has more unprofitable than profitable transactions over the past 12 months. Interestingly, their nearest neighbour, Grandeur Park Residences, bucked the trend with five times more profitable transactions than unprofitable ones.

Per our earlier article about unprofitable condominiums, the time of purchase contributed to the losses suffered by some owners of Urban Vista. Eco has many one-bedroom units that are more suitable for tenants, but only 11% of the residents in Bedok are tenants and 87% are owner-occupiers.

Additionally, the bulk of Bedok residents are between 45 and 64 years old. Residents who are between 25 and 34 years of age and teenagers also make up a significant group. All this indicates that Bedok residents are mainly local families comprising young couples or older couples with school-going children. As such, larger flats will see more demand in Bedok.

The units with the top three most profitable transactions for Grandeur Park Residences were sold in July and bought in 2017 when the project was first launched. The sellers benefitted from being the first buyers, which allowed them to buy low and sell high. There are many condominiums in the vicinity, but Grandeur Park Residences has the advantage of being the newest kid on the block.

The Sail @ Marina Bay

The Sail @ Marina Bay is a leasehold condominium located in District 1 and Downtown Core planning area that received TOP in 2008. Nearby amenities include Raffles Place MRT Station (EWL, and North-South Line or NSL), Marina Bay MRT Station (NSL, CCL, and Thomson-East Coast Line or TEL), Lau Pa Sat, Fullerton Bay Hotel, Marina Bay Link Mall and Marina Bay Sands.

In June, The Sail @ Marina Bay had 30 unprofitable transactions and 27 profitable transactions. At the time of writing, the leasehold condominium has 28 unprofitable and 28 profitable transactions over a 12-month period.

Window of opportunity for savvy investors?

The Sail @ Marina Bay has five neighbours with 2,199 units within a 500m radius. The nearest neighbour is Marina Bay Suites. The Sail @ Marina Bay is the largest with 1,111 units, followed by Marina One Residences (1,042 units).

It would seem that majority of The Sail @ Marina Bay’s immediate neighbours are still transacting at a loss. Marina One Residences is the exception with more profitable than unprofitable transactions. This could be because Marina One Residences is the youngest development, having received TOP in 2017.

Resale prices for condominiums in Downcore Core have grown only 2% since 2012, much lower than the Central Region (24%) and the whole Singapore (28%). The slower price growth contributed to the numerous Downtown Core units being sold at a loss despite the current buoyant resale prices.

The much weaker price growth for Downtown Core could be attributed to high launch price, which leaves little room for further price growth while still remaining attractive to buyers. Average resale price for condominiums in Downtown Core is $2,141 psf in 2022, much higher than Central Region ($1,879 psf) and Singapore ($1,494 psf).

Average monthly rental for Downtown Core ($5.82 psf) is higher than the Central Region ($4.41 psf) and the whole of Singapore ($3.92 psf). This could be because tenants account for 40% of Downtown Core’s population. The numerous owners selling at a loss presents a window of opportunity for savvy investors to pick up a Downtown Core property for steady rental incomes.

Age of the population in Downtown Core is skewed towards 35 to 49 years old. There are also very few children and elderly. This indicates that the majority are working adults who probably live in the Downtown Core to be near their office in the CBD. Rental demand for condominiums near the CBD is expected to increase, as more expatriates move in line with the gradual easing of travel curbs for Singapore.

Timing of the purchase and sale is very important.

Many unprofitable condominiums have profitable neighbours, so it pays to do your research and shop around before signing on the dotted line.

Many Downtown Core condominiums are still selling at a loss despite the current bullish property market. This could be a window of opportunity for savvy investors to pick up a bargain.

Investors should consider the demographics of an area before buying. It is important to select an area with a significant tenant community. The age of the residents is also important to determine the size of unit to purchase. If majority of the residents are middle-age adults and children, investors should buy larger units which would be more suitable for families. Conversely, smaller units would be a better idea if the population is made up of mainly working adults.

Check out the latest listings near Caribbean at Keppel bay, Woodhaven, Grandeur Park Residences, Marina One Residences, Reflections at Keppel Bay, The Reef at King’s Dock, Harbour View Towers, Parc Rosewood, Woodhaven, Rosewood Suites, Casablanca, Woodgrove Condominium, Eco, Urban Vista, Tanah Merah Mansion, The Tanamera, Bedok Court, The Sail @ Marina Bay, Marina Bay Suites

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