Bold and savvy property buyers will not miss an opportunity to step in to relieve high end property owners wanting to let go of their assets, given the right price.
Is it time to go treasure hunting for property?
In the current sluggish market, the high-end property sector which was buoyed by luxury home collectors in the mid to late 2000s, is beginning to lose some of its sparkle.
Huge losses have been reported for a handful of properties in the high end residential areas.
The Top 10 2016 property losses, all high end homes from the City Central Areas and Sentosa Cove, were bought during the boom years - seven in 2007 and others in 2011 and 2013.
At that time, foreign interest in the high-end home segment peaked because of the exciting plans envisaged for the integrated resorts and the plans to transform the Central Business District.
Big Financial Losses
A Japanese tycoon took a whopping hit, losing over S$15 million in a penthouse sale at St Regis Residences.
Seascape Condo at Sentosa Cove: ultra-luxury apartment with sea view.
Bought for $11M in 2011 and sold for $6.35M in October 2016.
The Ritz Carlton Residences
A luxury apartment in Cairnhill Road was sold at a loss of over $3M in March 2016.
Turquoise in Sentosa Cove
A unit was sold at a loss of over than $3M in June.
In a cyclical downturn where market sentiment and employment prospects are poor, unprofitable property deals will become increasingly common.
With a slowing economy, more than 800 condo transactions were sold at a loss this year, double the figure in 2015.
Sales of condo units with losses upwards of $1 million rose to 48 transactions this year, compared with 31 in 2015, according to data from SRX,
Going forward, expectations of a US interest rate hike by the end of the year may drive down prices and drive up these loss-making sales.
Mitigation of multi million loses
Luxury properties have and will remain a status symbol. The higher the cost of the luxury home, the higher will be its prestige value. Bragging rights, the indulgences of living in these luxurious apartments and the savings in rent, will go in no small way to ameliorate part of its monetary losses.
Foreign exchange gains from a strong Sing dollar will help to offset some of these losses.
Additionally, by liquidating a property, the bulk of the proceeds could be rewarded by a more profitable investment elsewhere. Seen in this light, a loss may not end up as a loss because it could be mitigated or managed. But it will take a very smart investor to play this game.
In its Financial Stability Review released last month, the Monetary Authority of Singapore has cautioned property investors to take note of rising vacancy rates, declining rentals and impending interest rate increases.
Urban Redevelopment Authority (URA) statistics show that there were nearly 6,000 resale non-landed private property transactions in the first three-quarters of this year.
Turning Adversity Into Gains
When there is doom and gloom, when confidence is low and there appears to be no light at the end of the tunnel, it’s time to step up.
As the saying goes, “One man’s loss is another’s gain.”
10 Top Property Losses For 2016