Business Times: Wed, Mar 28
SHOEBOX apartments seem to have fared better in the subsale market than their larger counterparts last year even after taking into account the seller's stamp duty (SSD).
A Savills study showed a total of 115 subsales for private apartments and condos in 2011 which involved payment of SSD. Of these, about 41 per cent or 47 units were up to 500 sq ft, a widely used definition of shoebox apartments.
Compared with units above 500 sq ft, a higher percentage of subsales involving shoebox units still made a profit after factoring in SSD. And their average percentage gain per unit was also higher.
Savills' analysis showed that of the 115 non-landed private homes that changed hands in the subsale market last year which incurred SSD, 47 were shoebox units, and of these, 95.7 per cent were in the black. This is higher than the 85.3 per cent of the 68 units above 500 sq ft that made a profit.
Among the profitable shoebox units, the average gain per unit was 18.9 per cent, higher than a return of around 13 per cent for bigger units.
URA Realis caveats database captured 2,619 subsales for non-landed private homes last year, for which Savills traced caveats for earlier purchases of 2,337 units.
Based on these matches, the most popular projects in the subsale market in 2011 were Livia in Pasir Ris (112 subsales), Double Bay Residences in Simei (99 subsales) and The Clift at McCallum Street in the CBD (70 subsales).
Other projects that were much sought after in the subsale market last year were Martin Place Residences at Kim Yam Road and Clover by the Park in Bishan, with 67 and 65 subsale matches, respectively.
Among these top five subsale projects last year, all but two deals - at The Clift - were profitable.
Savills observed that four of these five projects received Temporary Occupation Permit (TOP) last year. The fifth, Double Bay Residences, is expected to receive TOP in Q2 this year.
'These are all big-scale projects with more than 300 units each. And prices of units in the subsale market are attractive compared with new launches in the vicinity,' said Savills.
SLP International managing director Peter Ow expects the number of subsale transactions to dip this year due to the punitive SSD regime for those who sell private homes which are bought on or after Jan 14, 2011.
The moderation in apartment and condo prices will also contribute to a less buoyant subsale market.
'Those who subsell in 2012 and 2013 are likely to be those who had picked up their properties before 2010 and who think the market has peaked. If this is the case, the percentage of profitable subsales will continue to be high,' said Mr Ow.
He also pointed out that those seeking to dispose of their properties in the subsale market face competition for buyers from new project launches by developers.