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Fewer sub-sales but value hits all-time high

Median Q3 sub-sale prices also hit record of $1,246 psf, up 25% year-on-year

(SINGAPORE) The level of sub-sale activity may be just about half of what it was in 1995 but the value of subsale apartments transacted in the first three quarters of this year is already at an all-time annual high of $6.7 billion.

An analysis of data by DTZ Debenham Tie Leung reveals that although the number of sub-sale transactions actually fell to 1,374 in the third quarter of this year – representing a quarter-on-quarter (qoq) decline of 23 per cent – sub-sales made up 19 per cent of the volume, up from 16 per cent in the second quarter.

Equally significant is the fact that median sub-sale prices also hit a new record high of $1,246 psf, a qoq increase of 13.6 per cent and a year-on-year increase of 25 per cent.

The value per transaction of sub-sale apartments is also at a record high this year at $1.71 million per transaction.

But while the level of sub-sale activity can sometimes be an indicator of market bullishness, DTZ executive director Ong Choon Fah points out that factors driving up numbers in the third quarter may have more to do with real demand in the light of short supply and with various new developments becoming available for immediate occupation.

The Icon for instance, has consistently been one of the top two developments in terms of sub-sales this year with its median sub-sale price increasing 26 per cent qoq to $1,495 in Q3. But as Mrs Ong notes, Icon has recently received its temporary occupation permit (TOP), and other attributes like its inner-city location and the affordability of its small units do make it popular.

Another popular development among sub-sellers is The Sail @ Marina Bay which increased 21 per cent qoq in terms of median sub-sale price in Q3 to hit $2,093 psf.

Interestingly, according to DTZ’s analysis, the number of units at The Sail and Icon that have been sub-sold is now 512 and 370 units respectively. And assuming that units were not repeatedly sub-sold, DTZ suggests that almost half of the units in these developments have changed hands already.

More telling perhaps is that of the recent launches, only The Lakeshore, which has received TOP for some phases, and One-north Residences registered a significant number of sub-sales.

The number of sub-sale apartments in the luxury band fell 41 per cent to 317 transactions but it still makes up 45 per cent of sub-sale transactions.

DTZ believes that while the sub-sale market is increasingly competitive and sub-sale activity is not likely to accelerate further, the overall value of sub-sale apartments in 2007 is expected to increase further, backed by potential price increases.

And foreigners could be helping to boost the sub-sale market. DTZ’s report reveals that although the number of foreigners buying sub-sale apartments in Q3 fell by 20 per cent qoq to 460 transactions, this number exceeds that of apartments bought directly from developers.

Indonesians made up 38 per cent of these buyers, followed by Malaysians and Koreans who made up 15 per cent and 9 per cent respectively.

Again, The Sail and Icon proved to be the most popular with these buyers with foreigners buying 26 and 25 units (41 and 36 per cent) respectively in the quarter.

DTZ believes the sub-sale market will continue to receive interest from buyers seeking immediate occupation with some investors looking to realise returns earlier by tapping on the buoyant leasing market. But with the withdrawal of the Deferred Payment Scheme, sub-sale activity may slow and deals look set to be more sustainable.

 

Source: Business Times 4 Dec 07

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