Deferred Losses for Current Sellers at PUE Twin Peaks

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Of the 10, eight enrolled losses ranging from 2.3percent to 21.7 percent. One transaction saw a gain of 21.8%, while another did not have a previous listed transaction, based on URA Realis caveats.

The device was purchased for $1.71 million ($3,117 psf) at March 2013 at the peak of the market.

Four of those eight transactions were for components purchased between April to June 2016, once the high-end, recently completed condo was relaunched with the choice of a deferred payment scheme (DPS). These declines ranged from 2.3percent to 8.1 percent.

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“These sellers are most likely to be people who took the three-year DPS package and probably couldn’t procure a mortgage at the close of the period of time,” says a real estate consultant who declined to be named. “They were so forced to sell their components at a lower price in a relatively weak market”

The latest sale of such a unit was in August when a 1,399 sq feet, three-bedroom unit on the 15th floor travelled for about $ 3.25 million ($2,323 psf). Earlier this, another similar-sized unit around the 26th flooring sold for about $ 3.3 million ($2,358 psf) in May this year.

The next latest documented deal was also in May: This 571 sq ft studio apartment on the 20th floor was offered for about $ 1.57 million ($2,752 psf). It was initially purchased for near $1.607 million ($2,817 psf) in April 2016.

In February, a 1,604 sq ft three-bedroom unit around the 27th floor was also sold for about $ 4.15 million ($2,588 psf).

It must be mentioned that the gross reductions represented in the table have not taken into consideration the vendor’s stamp duty (SSD) as such sales were done over the first 3 years of purchase.

But, Propnex Realty’s head of luxury team Dominic Lee reckons that some of the losses may have been offset from the rental gains made in case the units were leased out throughout the three-year interval.

According to Lee, monthly rental rates for its three-bedroom units ranged from $7,500 to $8,500 whereas the one-bedroom units command rates of about $3,000. Some were leased out to as large as $3,700, he notesas they were completely supplied.

OUE Twin Peaks was the primary improvement to provide fully-furnished apartments with classic furniture pieces by famous performers such as Hans Wegner, Charles & Ray Eames, Tim Dixon and Matthew Hilton. Landscape layout was acclaimed architect and landscape designer Bill Bensley.

It has two identical 35-storey towers sitting to a site area of 130,983 sq feet with total gross floor area of 436,168 sq ft. The 99-year leasehold condominium in prime District 9 has a total of 462 units, using a mixture of one-, two- and three-bedroom apartments sized out of 549 into 1,604 sq ft.

It was relaunched in November 2015, but sales really took off in early April 2016 when the programmer dangled a DPS supply to buyers — the first to get a finished condominium development.

Between 2002 and 2005, programmers had provided DPS if the residential market was in the doldrums. They continued to provide such schemes because of their new job launches that were under construction till September 2009 if the authorities scrapped it. That marked the first of fourteen days of land heating measures in the past decade.

Novelty of DPS for finished condos

While just about half of the buyers took the DPS provided at OUE Twin Peaks, it sparked purchaser attention and all 462 units were offered by October 2017. This led other programmers with unsold units in completed condos to follow suit with their own DPS offerings, together with varying levels of success.

After the tower 231 units was substantially sold at the end of July that year, Tower 1 was launched in which units were offered at high prices starting from $2,450 psf roughly $1.4 million for a 570 sq ft one-bedroom unit.

Both systems were launched together with the DPS, however they came with strings attached and also a 3% price premium over components sold under the normal payment strategy. There were also two distinct alternatives. Originally the DPS were for 2 years but were extended to 3 years.

At the very first DPS package, a 10% reservation fee was paid upfront followed by another 10% (to be paid a fortnight later) when the choice to purchase was signed. A additional $1,000 was due upon getting vacant possession of this device. The new owner may either go in or rent out the device immediately. The balance 80 percent was postponed for 2 – or three-years later when the option was exercised.

From the next DPS choice, a 20 percent down payment was due upon signing the choice to purchase. Exercising the choice to purchase was deferred until December 30, 2016. Upon exercising the choice to purchase, an additional $1,000 was payable to obtain vacant possession of this device. The balance 80% will be due 2 – or three- years later.

If buyers couldn’t finish their purchase by the conclusion of both – or three-year interval, their 20 percent down payment and $1,000 will be sacrificed.

Initial buyers

Nevertheless, it is not only individuals who purchased under the DPS who suffered losses. Individuals who purchased units when OUE Twin Peaks was initially launched in late 2010 to 2011 at prices ranging from $2,702 to over $3,000 psf also took a hit whenever they offloaded their units at the resale market lately.

These sales made up the remaining of those eight loss-making deals enrolled from the 2018-2019 interval (See Table). For instance, a 571 sq feet, one-bedroom unit on the 18th floor was offered in April for $1.53 million ($2,682 psf).

It was purchased for $1.68 million ($2,945 psf) at Jan 2011. It was also purchased for $1.68 million ($2,945 psf) at Jan 2011.

“The initial launch prices were at a premium because the job has a prime District 9 address, the components are fully furnished, and the job was well implemented,” says Lighthouse Property Consultants managing director Samuel Eyo. “When the project was initially launched in late 2010-2011, land cooling measures such as the greater ABSD [additional purchaser’s stamp duty], tighter borrowing limitations to house loans and also the TDSR [total debt servicing ratio] loan framework weren’t introduced yet,” he continues.

“At a buyer’s market, these individual sellers don’t have exactly the same price advantage that programmers have,” says Eyo.