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Sub-sales In Private Property Hit 10-Year High

Updated: Apr 6, 2023

In 2022, Singapore witnessed a surge in private property sub-sales, reaching a record high of 765 transactions in a decade. This marks a remarkable 34.7% increase from the previous year, and the highest level since 2013, according to data analysed by ERA Realty for The Business Times.

Although this number is still far below the peak of 4,862 sub-sale deals recorded in 2007, the renewed trading momentum highlights a resurgence in a market that has been dampened by cooling measures. Sub-sales are considered a key indicator of speculative buying in Singapore's private residential market, and the rise in numbers may indicate a return of buying activity in the market.

The analysis found that a significant majority of sub-sale transactions in the previous year resulted in profits for sellers. On average, sellers earned a profit of S$373,230. In the fourth quarter of 2022, sub-sale deals accounted for 5.7% of all real estate transactions, surpassing the 5% mark for the first time since 2013, as per the Urban Redevelopment Authority's latest quarterly data.

A sub-sale occurs when a property owner sells their property they bought directly from the developer to another party before the project is completed. This type of sale is commonly seen in the property market as an alternative way to transfer ownership of a property, especially in cases where the buyer is not able to pay the full amount upfront.

Throughout the last ten years, sub-sales have typically accounted for between 0.3% and 3.5% of all transactions. The majority of sub-sale transactions in 2022 were concentrated in the outside central region (OCR) and the rest of the central region (RCR), with 362 and 375 deals respectively, while the prime core central region (CCR) recorded only 28 transactions. ERA Realty's analysis of 86 sub-sales found that 80 of them resulted in profits, while the remaining six incurred losses.

Further breaking down the data by region, sub-sales in the prime CCR earned an average profit of S$707,640, with an average annualized profit of 3.7%, slightly lower than the islandwide average of 3.9%. In contrast, sub-sales in the RCR city-fringe areas yielded average profits of S$179,277, with an average annualized profit of 3.3%, while those in the OCR gained average profits of S$277,360, with the highest average annualized profit of 4.6%.

The increase in sub-sales is attributed to the rise in speculative buying in Singapore’s private residential market. This is despite the property cooling measures implemented by the government, as well as the limited pipeline of launches.

Experts caution buyers to be careful when investing in sub-sales, as there are risks involved, such as delays in completion or changes in market conditions. Overall, the sub-sale market in private properties is thriving, and it is a reflection of the strong demand for properties in Singapore's real estate market. As the supply of private properties continues to be limited, investors will likely continue to turn to sub-sales as a way to secure properties and make a profit.

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