Private housing owners profit from market rebound

(Since the recovery of the property market late 2009, private property owners have been raking in considerable profits. Image courtesy of Thinkstock.)

Caveats lodged with the Urban Redevelopment Authority (URA) of Singapore revealed that these private home owners have collectively pocketed at least $20.3 billion in gross profits since the property sector recovered late 2009. And according to a report from research firm Square Foot Research, this finding explains the period%E2%80%99s robust developer sales.

And if you find the figure of $20.3 billion staggering, the report is quick to point out that actual profit figures should be higher, since gains from collective sales—more commonly known as en bloc sales—were not considered in the calculations. The firm estimated the total value of collective sales from the second half of 2009 to the first half of this year to be over $5.5 billion. “Much of these profits presumably found their way back to the property market, fueling developer sales to more than $60.1b in the same period, based on caveats lodged,” explained the report.

In fact, another reason why the value should be higher, claimed the report, is “we could only match 80% of the caveats in the secondary market”.

That said, the report deemed the first half of 2011 to be the most profitable half-year; private home owners had raked in over $4.0 billion in profits. Since then, however, overall profitability has fallen; owner profits slid 22% to $3.2 billion in the second half of the same year, before dipping another 14% to a three-year low of $2.7 billion in the first half of the current year. Similarly, the number of unprofitable transactions in the secondary market has also inched up from a low of 78 (1% of all transactions) in the second half of 2011 to 99 (2%) for the first half of 2012.

Interestingly, the average profitability per transaction in the secondary market registered an all-time high of $522,056 in the first half of 2012. This figure is almost double the $288,991 figure seen in the second half of 2009. However, the Square Foot Research report noted that “the growth in average profitability is notably slowing down”.

Indeed, according to data from URA and Square Foot Research, the top five most profitable secondary market projects in the first half of this year are, in descending order:

Developments at the bottom of the barrel, in ascending order, are: