Mass-market and mid-tier projects are hot, but it is taking longer to sell investment properties
The upbeat sentiment in the new private home market has lured out the sellers in the sub-sale market.
Sub-sales – the sale of uncompleted homes by their buyers – of non-landed private properties tripled to 1,200 units in the second quarter, according to a DTZ quarterly report.
This time, though, it is mainly the mass-market and mid-tier projects that are popular sub-sales. In 2007, it was the higher-end projects that found favour with buyers.
Also, the sellers are taking longer to sell their investment properties.
The DTZ study found that a few mass-market projects made their way to the Top 10 list of projects with the most sub-sales. These included Casa Merah, located near the Tanah Merah MRT Station, The Centris in Jurong West and The Quartz in Compassvale.
For instance, there were 54 sub-sales in Casa Merah in the second quarter, and the median sub-sale price rose from $658 psf in the first quarter to $734 psf in July and August.
The most popular sub-sale project in the second quarter was Rivergate, located at Robertson Quay.
The median price of its sub-sale units rose from $1,200 psf to $1,400 psf, and 105 of its 545 units changed hands in the second quarter alone. Prices have since risen further – deals done in July and August ranged from $1,400 to $1,880 psf, according to caveats lodged.
Two perennial favourites are The Sail @ Marina Bay and Icon, prime projects in the central locations of Marina Bay and Tanjong Pagar respectively.
Despite being launched between 2003 and 2005, they still remain popular in the sub-sale market. Their median prices rose 27 per cent and 17 per cent respectively from the last quarter.
Sub-sale buyers tend to be true investors, said HSR Property Group executive director Eric Cheng.
Upgraders, he said, prefer not to buy sub-sales as they do not wish to pay a premium. Those who do, however, find mass- to mid-tier market projects more affordable.
Analysts say that the higher number of sub-sales could be due to the many units that were completed this year.
Ms Chua Chor Hoon, DTZ’s head of South-east Asia research, says there is normally a high level of sub-sales for a project when it is nearing, or just after, completion.
‘In 2006, 6,250 units were completed. This year, 11,367 units are expected to be completed,’ she said.
Mr Cheng pointed out that projects sell out very quickly in today’s market, and some buyers who missed out on the chance of buying a unit do not mind paying a small premium to get a unit if the price is not too far away from the launch price.
These buyers often have compelling reasons, said Mr Cheng. They might have family living nearby, or even on the same unit level.
Despite the higher number of sub-sales now, the number of properties bought and sold within a short span of time is not as high as during 1996 or 2007, said Ms Chua.
‘The number and percentage of units bought and sold within a six-month period in the first half of the year is a lot less than those in 2007 and 1996,’ she said.
Citing data from Realis, she said 88 units were ‘flipped’ in the first half of this year, compared to 517 in 1996 and 835 in 2007.
Flipping occurs when someone buys a property and resells it quickly for a profit.
‘Buyers now tend not to buy another unit so quickly because they often have a choice of other surrounding units that are being sold as well,’ said Mr Cheng.
‘There are a lot of short-term investors who would like to resell for a profit, but might not be able to because they ask for too much. There are also a lot of launches coming up.
‘Market fundamentals are not that strong even though market sentiment is, and we might see a pull-back effect,’ he said.
Source: Sunday Times, 30 Aug 2009