In the past year we have seen around 2 out of 5 condos in Sentosa being resold at a loss, a symptom affecting many luxury homes in the area, reported industry watchers. This is due to financing constraint putting potential buyers off.
According to reports from URA Realis and data compiled by STProperty.sg, only 31 units have swapped owns since May of 2013 at 6 projects in Sentosa. These are The Azure, Marina Collection, The Oceanfront, Seascape, The Coast and The Berth.
Sentosa Condominiums hurt by Slow Market
In the more upscale Sentosa district data is showing that there has been a 255 drop in resale prices to around $1,800 per square foot over the first 5 months of 2014. This is in comparison to the January through May period of 2013 where prices were at $2,400 per square foot.
With that being said, it isn’t unusual to see some volatility in price movements where there have been transactions each month in the single digits. In 2014 to date there were only 5 transactions in total and February, March and May had no transactions at all.
Looking at the past year’s 31 transactions, 7 of these were unable to have their profitability analyzed meaning because important factors like purchase pricing were not recorded for those units. The way profitability is calculated is by subtracting a property’s purchase price from the sales price. Of the remaining 24 transaction there were 10 which sold at a loss.
Four of these units that recorded transaction being made at a loss were from The Berth. This was the Cove’s debut project that had been launched in 2004 and then completed in 2006. The Oceanfront also saw 3 of its units making a loss, the Coast had 2 and the Azure just 1.
Pricey units in Sentosa
There were two units in particular however that had the largest losses of all, coming in at a 7 digit loss. One was at The Oceanfront for a 2,982 square foot unit that sold for a price of 5.65 million, which equates to $1,895 per square foot. This was in November of 2013 and came after its April 2008 purchase for $7.2 million, or $2,415 per square foot – making it a $1.55 million loss.
In January of this year The Coast had a 2,820 square foot unit which sold for $4.8 million, equating to $1,702 per square foot. This came just two years prior to its purchase amount of $6 million, or $2,128 per square foot, bringing a recorded loss of $1.2 million.
It was stated by an industry watcher that buyers who purchased a unit for $2,100 per square foot and over seem to have overpaid. It was those who purchased at lower prices who manly saw a profit in their resale dealings. Looking back at 2006, there were a few who even purchased a unit for $800 – $900 + per square foot.
While this is happening we have seen a few units from Sentosa Cove being put up for auction. One unit from the Turquois condo, which offers 2,777 square feet, was placed on sale at one of last week’s auctions by a lender. It ended up receiving no bids even with a reduced opening price of $4 million, down from its previous amount of $5 million.
Two more Sentosa homes being put up for auction by lenders are a unit Marina Collection and one from Turquoise. There are also an additional 4 that are up for sale through private negotiating, two each from Marina Collection and Turquoise.
It is typical for a bank to repossess a home when a borrower is listed as delinquent and they become unable to dispose of their property, or find a buyer, on their own. Putting these homes up for auction is part of this repayment structure.
Using the Cove’s current soft condominium prices, there are those condos in Sentosa, like The Residences at W and Cape Royale, who have made the strategic choice of leasing out those units that have been unlaunched.
The booming sales that were being experience in the waterfront domain during 2006 through 2008 were hot quite hard by the financial crisis. They had hardly had a chance to recover from this when successive rounds of private housing market cooling measures were put in place from 2009 onward.