LUCKY owners of units in cheaper suburban condominiums are selling for huge gains before their projects are even finished - a sign that the speculative activity gripping the high-end market is filtering down.
Some investors of mid- and lower-end projects such as Grandeur 8 in Ang Mo Kio and Twin Regency at Tiong Bahru have resold their flats before completion for tens of thousands of dollars' profit.
About 30 units at the 99-year leasehold Grandeur 8, launched in 2003, have changed hands so far this year, with average gains of $25,000 per unit. One lucky owner made about $103,000 in profit - a gain of almost 20 per cent.
Some 20 buyers who bought units at Twin Regency during its launch two years ago and resold them this year have made an average profit of $100,000 per unit - 12 per cent above what they paid and well over the average rise in home prices of just 7 per cent since 2003.
Market watchers say these projects indicate that speculative activity - so far confined mainly to high-end and niche developments - is now filtering down to the rest of the market.
Compared to a year ago, more buyers of mid- and lower-end homes costing less than $1 million are now reselling their uncompleted units for a profit, according to a check of caveats lodged.
The number of such transactions - called sub-sales and often used as a proxy for property speculation - rose by almost 30 per cent in the third quarter this year. There were 121 sub-sales of homes priced below $1 million in the July to September period this year, compared with 94 in the period last year.
Speculative activity has long had a hold in the luxury segment. But while a significant proportion of demand for high-end properties comes from foreigners, two-thirds of the owners who resold their uncompleted units at Grandeur 8 have Housing Board addresses.
They probably picked up their units cheaply during the market slump three years ago and are now cashing in before the projects are completed, property experts said.
Once a project is completed, the buyer must pay the balance between the initial deposit and the full price.
Other mid-tier projects that have seen profitable sub-sale transactions this year include Gardenvista in Bukit Timah and Meraprime in Tiong Bahru.
More recently, at the preview of The Metropolitan in Alexandra Road two weeks ago, buyers queued up overnight to book choice units.
Some also picked up multiple apartments, with at least one buyer snapping up eight units at one go. Both scenes were reminiscent of the speculative fever of the 1990s, when sub-sales were rife.
Consultants were surprised as The Metropolitan, priced at about $780 per sq ft, is a mid-tier project, and such strong demand has so far been confined to luxury and niche homes.
But they remain cautious about placing too much significance on speculation in the market's lower tiers.
'In the past, people started flipping their units within one or two months,' said Mr Joseph Tan, residential director of CB Richard Ellis.
'Now, for those who have sold before the project has been completed, it is probably because the market has risen and they can get a profit out of it.'
Also, speculative activity outside of the soaring luxury segment is unlikely to be very profitable, said Mr Nicholas Mak, director of research and consultancy at Knight Frank.
'Sentiment is improving in the mass market, but you will find sub-sales only in selected projects... as not all developments are rising significantly in price.'
fiochan@sph.com.sg
