Owners of non-landed private homes earned a gross profit of S$107 million from quick resales over the five quarters of Q1 2012 to Q1 2013, according to a report from OrangeTee.
It stated that high home prices contributed largely to the profit in this segment, adding that the overall private residential price index “rebounded very strongly”, and is now 60 percent higher compared to levels in 2009.
“In the current bull run, newly completed homes that were resold upon receipt of Temporary Occupation Permit (TOP) yielded good returns for purchasers.”
According to the Urban Redevelopment Authority (URA) and Building and Construction Authority (BCA), 103 projects obtained TOP from Q1 2012 to Q1 2013, of which 68 recorded 348 transactions in the same quarter upon completion.
Sellers of newly completed units saw an average return of 33 percent. The most profitable non-landed private homes were in the Outside Central Region (OCR), where average profit stood at 41 percent compared to 31 percent in the Rest of Central Region (RCR) and 25 percent in the Core Central Region (CCR).
Units measuring 50 sq m or below (shoebox apartments) in all three regions were less profitable than larger units.
“Contrary to common belief, profitability of shoebox units underperformed the general market across all segments. Average profitability per unit was S$132,000 or 25 percent in the last five quarters, lower than that of the overall market,” noted OrangeTee.
Moving forward, the non-landed private housing market is expected to remain strong due to low interest rates, sustained foreign capital inflow and “record land prices” in recent Government Land Sales (GLS).
Source – PropertyGuru – 30 Apr 2013