Top 10 biggest condo losses in 2022/23: What we can learn from them

Whether you're checking the background of a property, or looking for a potentially undervalued unit, it helps to know the losers as well as the winners. It's unusual indeed for projects to see substantial losses in a bull market like 2023 — but there are a number of condos that have incurred bigger losses. Here's a rundown of these condos, as well as what you can learn from some of them:

Condos that have seen the biggest losses for 2022/23

Source: SRI

Notable projects on the list

Some of the following projects have repeated entries on the list. While there are many variables as to why condos may be unprofitable, we've tried to pinpoint the reasons (or combination of reasons) as to why the following hasn't fared well even in a booming market:

• Turquoise, Seascape, and The Marina Collection
• Reflections at Keppel Bay 
• Paterson Suites and The Marq on Paterson Hill

1. Turquoise, Seascape, and The Marina Collection

These properties share a common trait: they are private non-landed homes in Sentosa Cove. 

Sentosa Cove properties are typically purchased by wealthy foreigners, who intend to use the place as a vacation home or retreat. However, foreigners pay the highest stamp duty rates: previously an Additional Buyers Stamp Duty (ABSD) of 30 per cent, and now doubled to 60 per cent after the latest cooling measures. 

After paying the hefty tax, these properties are unlikely to yield any sort of good returns; so these properties are indulgences for owner-occupiers, more often than investments. 

The Marina Collection, for instance, has seen only two profitable transactions in its history (and 15 unprofitable ones). 

Seascape is a regular on "top losses" lists, and has a history of massive loss-incurring transactions; from a $6.6 million loss in 2017, to a $3.7 million loss in 2019. In fact, there are no profit-making transactions recorded from Seascape to date, just a straight run of 18 losses. 

Turquoise is in the same boat, with only one winning transaction to date (and 25 losses). 

We trust you see the pattern by now: Sentosa Cove condos are indulgences and money sinks, albeit beautifully designed and luxurious ones. 

Even putting aside the ABSD, there are several that work against these condos: 

First, most wealthy buyers interested in Sentosa Cove that can afford such properties would probably want landed properties, not condos. These buyers don't need resale strata-titled homes: they want something new and custom-built for themselves. 

Second, buyers who are locals or Permanent Residents tend to dislike the leasehold nature of Sentosa Cove condos. These buyers can, for a comparable or sometimes lower price, purchase freehold counterparts in equally prestigious locations like Orchard, Tanglin, etc. 

So you face a very niche audience when trying to offload such properties. Most Singaporeans would not want to stay in Sentosa (it's terribly inconvenient if you don't drive), and you would likely have to sell to another foreigner.

Lastly, it's a matter of timing, as many of these initial transactions were bought during the last property market high in 2007 and 2008. Take the latest loss at Marina Collection, for example, where a 3,272 square feet unit was sold for just $1,421 psf in April 2023. This was nearly half the $2,842 psf it transacted for in March 2008.

In the years to come, losses are likely to worsen or remain the same, with the ABSD now doubled for foreigners. But don't take this as a condemnation of Sentosa Cove condos: it's simply that these are properties to be enjoyed, rather than invested in. 

2. Reflections at Keppel Bay

Reflections at Keppel Bay topped the list for losses in the month of January this year, so we're not surprised to see it on the list. There have been some other equally huge losses in subsequent months. 

Dragging down the numbers would be three massive losing transactions:

A 2,465 square feet unit (Jan 9, 2023), a 3,391 square feet unit (March 6, 2023), and a 2,357 square feet unit (May 2, 2023). 

These transactions saw losses of $1 million, $1.12 million, and $1.03 million respectively. 

Historically, the performance of this condo hasn't been great, with 72 profitable transactions and 186 unprofitable ones. Realtors gave us a few speculative reasons for this, but one involves the Greater Southern Waterfront (GSW). 

If you look at its location, you'll note that Reflections at Keppel Bay is near the site of the former Keppel Club; this land was taken back by the government. Some believe that, along with the GSW project, there's intent to construct an HDB estate near Reflections, likely as part of the Prime Location Housing (PLH) model. There is some anxiety over how this will affect the view and exclusivity of Reflections. 

Other reasons given are the unsheltered walk to Telok Blangah MRT, or unit layouts that feature odd corners and inefficiencies. This can vary a lot depending on the unit type, and they may not always be entirely efficient.

That said, we should also consider that 2007 — the year when Reflections went up for sale — was close to a former property peak. In subsequent years, a slew of cooling measures and loan curbs (the TDSR) would kick in, making it hard to see strong resale gains. There's also a lot to be said about trying to sell 1,129 units at such prices, as of 2023 there were still some units left for sale by the developer.

Interestingly enough, a massive 7.050 square feet penthouse unit at Reflections did reach a record $6.6 million profit (a bit less minus the Sellers Stamp Duty), so the occasional unit can outperform. This is very much in line with what you'd see in properties that are seen as luxuries, as purchases are dependent on buyer emotion.

3. Paterson Suites and The Marq on Paterson Hill

Paterson Suites took a huge hit in end-2022, over the transaction of a gargantuan 6,663 square feet (!) penthouse unit. This unit saw a loss of $6.2 million. Performance-wise, Paterson Suites seems to be struggling, with 18 profitable and 17 unprofitable transactions. 

This is quite a strange one because, on paper, Paterson Suites seems to make sense. Just three and four bedrooms (which given the location, buyers would prefer), and it is freehold and exclusive with 102 units.

Perhaps this is down to the timing of purchases (those who bought in 2007 - some paid $3,000 psf and above), the views being blocked in the future, and because there have been bigger and more glamorous modern developments that have come up in the area.

The Marq on Paterson Hill saw an even bigger loss on a 3,089 square feet unit, recording a loss of $7.75 million around September of 2022. The Marq has generally been unprofitable overall: there are only four profitable transactions dating back to 2007 (all in the same year), with 13 unprofitable transactions. 

Again, this is likely due to the timing of the launch at the market peak in 2007, where prices here reached a high of $5,200+ psf. Given the large unit size as well, the quantum of such an ultra-luxury development means that it would likely only attract foreigners. Most well-heeled local buyers would be turning their attention to landed properties instead.

This often has nothing to do with the quality or location of the projects, which by all accounts are superb. It may simply be an issue of a few high-quantum units incurring large losses. We note, for instance, four profitable transactions for Paterson Suites so far in 2023, with just one loss. 

With The Marq, transaction volumes are rather low (there are only 66 units), so significant losses from one or two high-quantum units can skew the perspective. 

Some general observations on loss-making condos in 2023

Most of the losses are incurred by prime region, high-quantum condo units. Every realtor we spoke to had the same thing to say: these high-end properties make up a niche and very different market segment. 

Singapore's current property boom stems from mass-market properties, driven by HDB upgraders. A $14 million+ condo like The Marq, or even a $3 million+ unit at Reflections at Keppel Bay are not the sort of condos purchased by said upgraders; they're all way beyond budget. 

As such, it's unsurprising that their prices seem to move independently of the wider market. 

What may be making an impact, however, is the combination of higher interest rates and higher stamp duties. The combination of the two may cool investor interest; and when that happens, it tends to be CCR properties that bear the brunt. This may explain some of the losses above, as interest from more affluent buyers wanes. 

ALSO READ: Can an old condo perform better than a new condo? Here are 3 real-life examples

This article was first published in Stackedhomes.