Making a quick killing from subsales

Many had owned units for less than a year before they sold them for profit

Nearly a quarter of those who profitably disposed of a condo or private apartment in the subsale market in the first four months of this year had owned the unit for less than a year, according to an analysis by Savills Singapore.

This is higher than the 19.7 per cent who had held their properties for under a year before divesting them in the subsale market at a profit in Q4 2009. The figure for Q3 last year was 18.2 per cent.

Market watchers suggest the higher proportion of subsales involving a sub-one year holding period may have underscored the Government’s announcement on Feb 19 imposing a seller’s stamp duty on those who flip a private home within a year of purchase in a bid to deter property speculation.

Subsales – which refer to secondary market transactions involving projects that have yet to receive Certificate of Statutory Completion – are tracked as a gauge of property speculation.

One of the more lucrative subsale deals this year with a sub-one year holding period involved a unit of about 3,900 sq ft at Urban Suites on Hullet Road that was bought from the developer in January this year for $8.8 million and sold for $10.9 million in March, resulting in a cool $2.1 million profit in just two months.

Then there was a 46th level unit at Marina Bay Residences that transacted in the subsale market in March for nearly $8.3 million – nearly $2.2 million above what the seller had paid for the unit just seven months earlier (also in the subsale market).

Savills, which studied URA Realis caveats data up to May 12 this year, traced 969 subsale deals for non-landed homes for the first four months of this year for which there were caveats of previous transactions. From these matches, it identified 923 gains and of these, 224 or 24.3 per cent involved holding periods below a year.

Among the 46 subsales in the first four months of 2010 that incurred a loss, just one unit had been kept for under a year.

Savills also looked at holding periods for overall subsale deals, regardless of whether they were profitable, and this shows that 50.2 per cent of the 969 properties disposed of in the subsale market in the first four months of 2010 had been bought in 2007, the previous peak year for the property market. Another 25.8 per cent were acquired last year and 13.4 per cent in 2006.

Knight Frank managing director (residential services) Peter Ow said: ‘Going ahead, it will be harder to make short-term gains from property as we expect the market to stabilise.’

Source: Business Times – 4 Jun 2010

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